KUALA LUMPUR: The 2024 Auditor-General's Report has put Human Resource Development Corporation (HRD Corp) under the spotlight following reports of its nearly RM50 million in unrealised losses that made headlines last week.
What was not highlighted, however, was HRD Corp's unrealised profits of RM118.67 million as at Dec 31, 2023. At net level, the unrealised profit stood at RM69.18 million during the period.
Any changes in value are considered unrealised, or on paper until an investment is divested. A realised profit or loss occurs when an investment is sold for a higher or lower price than it was bought.
According to documents sighted by Business Times, HRD Corp's unrealised investment profits stood at RM81 million as at Dec 31 last year.
Breaking down the RM81 million, a total of RM68 million consisted of equities, while unit trusts and bonds accounted for RM2 million and RM11 million respectively.
In that same period, HRD Corp's unrealised losses amounted to RM49.49 million as at Dec 31, 2023.
HRD Corp's overall investment portfolio stood at RM3.6 billion or 98.7 per cent of its portfolio, with unrealised losses accounting for 1.3 per cent, which came from 29 investment transactions.
According to the 2024 AG Report, more than a third of the RM49.38 million investment losses reported by HRD Corp as of June 2023 came from its investment in listed Widad Group Bhd.
The Human Resource Development Fund acquired Widad's shares under a put and call option agreement (PCOA) on Oct 15, 2020 when it was 62 sen each.
Under the PCOA, HRD Corp has the right to buy (call) and sell (put) Widad stock at a specified price within a specific period.
As at April 2024, HRD Corp held a 3.12 per cent stake in Widad. It reported a loss of RM18.52 million from its investment in the company.
A financial expert told Business Times that the loss that came from its investment in Widad would not be substantial as HRD Corp received a guaranteed eight per cent annual return from its original RM60 million investment.
The expert added that the Widad loss did not affect HRD Corp's overall financial standing as it accounted for a small fraction of the corporation's investment portfolio.
It is a misrepresentation to cherry-pick certain key facts to be presented in an audit report, the expert said, adding that It is expected that while some investments may lose money, others gain in value.
Widad's share price closed unchanged at 5.5 sen on Monday with a market capitalisation of RM156.11 million.
According to the AG Report 2024, despite its unrealised losses in Widad and decisions taken at two separate investment panel meetings in 2022 and 2023 to not renew its investment in the company, HRD Corp had submitted a renewal of investment application to the former Minister of Human Resources on Oct 16, 2023 for approval.
This was on the basis that the investment agreement in Widad would expire in November 2023. That year, V Sivakumar was minister of human resources.