MBA-ITB Invesment Class\' Final Take Home Test

1. MBA-ITB : MM6056 - INVESTMENT PROJECT ANALYSIS
LECTURER: UKE MMP. SIAHAAN
QMC’s
Revolving
Working
Capital Loan
Facility
STEPHEN HENDRA GUNAWAN
Executive 44 - 29110330

2. Chapter 1
The
Company
Profile
Quantum Multimedia Communications

3. 1.1
Historical Background
Quantum Multimedia Communications Pty. Ltd. (“QMC”) is a company providing outsourcing contact center services and business
process outsourcing for Australian and future worldwide markets (contact center is a work place dedicated to interacting with customers,
the public and employees via a telephony or technology interface). QMC was incorporated in Australia on September 2000. QMC holds a
Carrier License (ref.: Telecommunication Acts 1997) - approved on July 6, 2001 by the Australian Commonwealth Government through the
Australian Communications and Media Authority (ACMA) that allows the company to have advantages such as not only establishing
network utilizing all prominent carriers in Australia, but also interconnecting carriers and providers.
In a span of 8 years following its establishment, QMC’s business has grown. Currently, QMC rank among the medium-sized contact-
center outsourcing companies in Australia, with 4,000 customers base nationwide churning some AUD 24 million in annual revenue. it
employs more than 250 agents spread over Melbourne, Sydney, Brisbane, and Adelaide, and 95 highly skilled back-office professionals in
various fields (IT, finance, marketing, and sales). QMC also maintained an operations backup office in Jakarta, Indonesia. All combined,
Australia still represent the majority of the workforce.
All QMC’s service products are sold to its customers on contract basis with tenor in majority ranging from 1 year to 2 years. Payments for
the services rendered mostly are made in arrears while a small percentage of the customer population pays in advance. The majority of
QMC’s customers, specially the larger ones, are long staying customers with years of contract renewal, until the present time.
QMC’s business being labor-intensive, it maintains an operations-based office in Jakarta, Indonesia, for cost efficiency in support of its
Australia’s quality business growth and the intermediate-future plan of going international.
This is in line with QMC’s vision to be a leader in its industry by delivering the highest-quality and cost-efficient information dispatching
globally, aiming in 5-year time at $100 million-plus size international contact center outsourcing business worldwide.
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4. In the course of its growth, QMC has earned public recognition
for its service excellence in providing services to Australia’s
markets. QMC is a member of Australian CCMA (Contact Center
Management Association) and belongs to the AGES (Australian
Government Endorsed Supplier) community. In July 2008, QMC
was awarded by Asia Pacific Regional Contact Center World as
“The Best Outsourcing Partnerships”. QMC also nominated as
World Finalist to enter into competition for the World Award for
the World Best Outsourcing Partnership in Las Vegas at
December 2008.
As an AGES, QMC complies with stringent assessment criteria on
streamline government purchasing, such criteria including those
in relation to financial viability, favorable referee reports
(demonstrating a successful track records), product and service
compliance with the industry standards, compliance with related
Australian Government policies, and appropriate insurance
coverage requirements.
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5. 1.2
Company Ownership
Legally domiciled and headquartered in Melbourne, QMC was incorporated, by virtue of its constitution, as a limited-shares company, and
is registered company under the Corporations Act 2001 in the Australian Capital Territory as of September 6, 2000. Its ACN (Australian
Company Number) is 094221379.
QMC’s paid-up capital is AUD$ 2,050,490.-. The ownership structure is as follows:
Shareholders Share’s Nominal Value % Ownership
Mr. Hardianto Kamarga $2,050,285 99.99%
Mrs. Maudy Josephine Kamarga (Wife) $205 0.01%
Total $2,050,490 100.00%
Mr. Hardianto Kamarga himself act as a Chairman and Chief Executive Officer (CEO) at QMC.
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6. 1.3
Banking Relations
QMC maintains active current accounts with ANZ and NAB in Melbourne to pool its cash receipts from trade receivables paid out revenue
generated from selling service products to its 4,000 customers base nationwide, and make payments of its trade payables and expenses
related to its business operations
Until the present-time, QMC doesn’t have any borrowing relationship with banks, other than trade-related short term financing facilities
from 2 finance companies:
Loan outstanding as of
Lender Credit Facility Purpose
30/10/2008
Effective Recoveries Pty. Ltd. Factoring of selected trade
With recourse factoring facility AUD 1,350,000
(Melbourne) receivables
Overseas Central Finance Ltd.
Working capital loan facility Trade receivables financing AUD 1,142,594
(Jakarta, Indonesia)
TOTAL AUD 2,492,594
Remarks:
• The factoring facility of Effective Recoveries Pty. Ltd carries an (effective) interest rate of 3% per month.
• The working capital facility of Overseas Central Finance Ltd, carries an interest of 2.5% per month and is secured by floating and fixed
charges on QMC’s assets and pledge of 70% of shares in QMC.
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7. Chapter 2
Market &
Marketing
Quantum Multimedia Communications

8. 2.1
Business Model
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9. Value Proposition
QMC is engaged in service industry. QMC provides services in the outsourcing contact center industry for companies that decide not to
have its own contact center for various reasons (investment, economy of scale, ease of use, more efficient cost, etc.). QMC aims at
providing a fully functional solution with the intent to offer its clients a “One Stop Shop” service. As a one-stop-shop contact center
solution, QMC goes beyond cost saving and positioned itself as a valuable partner to be part of strategic impact on its clients’ ability to
compete and succeed by:
• Enhance loyalty, experience, and level of satisfaction of its clients’ customer;
• Agent optimization to reach more efficient operation for its clients; and
• Through flexibility and extensibility of technology.
Key Activities
Some of QMC’s key activities that attributable into QMC success are:
• As an infrastructure / data center solution (messaging and payment gateway)
• Daily operational:
★Inbound and outbound calls
★Commodity to complex contact management
★Overflow and after hours
★Fulfillment partnerships
★Payment processing
★FAQ / Technical advice
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10. • Provide Call Center application (messaging, payment, call center, and Interactive Voice Response - IVR)
• Provide web-based application (web-messaging, online payment processing, etc.)
• Call center solution (directory assistance, reception line, customer service, order-line, help desk, data cleansing, emergency line,
appointment settings, workflow automation, surveys, outbound campaign, telesales, and facility management)
• Recruitment (to keep its operational quota fulfilled).
Key Resources
The key resources needed for QMC success and growth are:
• Human resources
Human resources is one element that can’t be replaced for QMC operation. Managing human resource issues is the main challenge
for contact center management. The primary human resource focuses as key success factors for 2009 onwards are: recruitment
(32%), managing staff turnover (33%), training (26%), and managing headcount (26%). QMC has implemented blended calls and
provided for career path policy for its contact center staff that results in a low staff turnover of less than 20% (industry average:
31%).
• Technology and infrastructure
As provider of contact center solutions, technology and infrastructure are major resources and capital for QMC. QMC have invested
in the new PABX field and software-driven computer telephone integration technology. Important investment was also made in
equipment and software development for Link to expand its SMS Gateway System service capabilities and capacities. Budget for
technology over the next 12 months (2009) is around $526,143.- which is a 3% increase in estimated spending during 2007-2008
period. Approximately 36% of the budget will be allocated for upgrading the technology, the remaining 64% for new purchases.
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11. Strategic partners
Some of QMC’s strategic partners are:
• Australia Contact-Center Organizations
QMC is a Carrier License holder that approved by the Australian Commonwealth Government through Australian Communications
and Media Authority (ACMA). This license allow company to establishing network utilizing all prominent carriers in Australia and also
interconnecting carriers and providers.
QMC also a member of Australia’s CCMA (Contact Center Management Association) and belong to AGES (Australian Government
Endorsed Supplier) community. As an AGES member, QMC have its quality controlled by stringent assessment criteria by the
government and also allows company to access government related projects.
• Infrastructure Providers
QMC established cooperation with infrastructure providers like Lucent Technology and Alcatel Genesys.
• Banks and Financial Institution
QMC maintains active current accounts with ANZ and NAB in Melbourne to pool its cash receipts from trade receivables paid out
revenue and make payments of its trade payables and expenses related to its business operations. Until the present-time, QMC
doesn’t have any borrowing relationship with banks, other than trade-related short term financing facilities from 2 finance
companies: Effective Recoveries Pty. Ltd. & Overseas Central Finance Ltd.
• Indonesia operation backup
QMC has an operation backup office in Indonesia to route large volume of overcall traffics to Indonesia at lower agent costs.
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12. Customer Relationship
The majority of customer relationships activities are done through direct contact, professional communication, and
partnerships. The evidence of this method’s success can be assessed by the number of recurring customers. The
majority of its 4,000 customer based are recurring customer with years of relationships.
Distribution channels
Differ from companies in manufacture industry, service industry doesn’t require physique distribution
channels for its product. The distribution channel for QMC products are virtually digital, but still supported by
QMC’s office spread nationwide (Melbourne, Brisbane, Sydney, and Adelaide).
Customer segment
In addition to a relatively large number of customer base (4,000), QMC’s customers also belong to diverse industries.
Industries Percentage
Emergency services / Government 23% 3% 23%
4% Emergency Service / Government
Banking / Insurance / Finance 18% 7% Banking / Insurance / Finance
Telco / Media / Utilities 10% Telco / Media / Utilities
8% IT
IT 9%
18% Retail / Wholesale
Retail / Wholesale 9% 9% Outsourcing Bureaus
Outsourcing Bureaus 9% Manufacturing
9% Professional / Business Services
Manufacturing 8%
10% Hospitality / Tourism / Entertainment
Professional / Business Services 7%
9%
Transport & Freight
Hospitality / Tourism / Entertainment 4%
Transport & Freight 3%
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13. Revenue
All QMC’s service products are sold to its customer on contract basis with tenor in majority ranging from 1 to 2 years. Payments for the
services rendered mostly are made in arrears while a small percentage of the customer pays in advance. QMC has its established
historical pattern for trade receivable collection where 45% of service billed to customers are collectible within 30 days, another 45%
within 60 days, and remaining 10% within 90 days.
From QMC income statement, revenue from paging and call center portion are dominantly increasing (47.23% of revenue in 2005 increase
to be 82.08% of revenue in 2008); while other service revenue portion are decreasing significantly (52.41% of revenue in 2005 decrease to
be only 16.87% of revenue in 2008).
QMC experience positive revenue growth from 2005 (11,964.5) into 2008 (23,560.27 - forecasted). Its 3 year
compounded annual growth ratio (CAGR) is 25.34%
Cost
QMC’s cost structure are dominated by employee expense (outsourced) which accounted for 53.14% (average) of revenue and IT expert
(inhouse and outsourced) which accounted of 17.3% (average) of revenue. Other material costs are: administrative and selling employees,
infrastructure, and financial expense (interest expense).
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14. 2.2
QMC’s Five Forces (Microeconomic Analysis)
QMC’S FIVE FORCES
1. Competitors and Rivalry
2. Bargaining Power of Suppliers
3. Bargaining Power of Customers
4. Substitute Products or Services
5. Barriers to Entry and Threat of New
Entrants
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15. Competitors and Rivalry
Facts:
There are some 1,800 organizations operating 3,820 contact centers in Australia. 60% of them run single centers, the remaining 40%
running multiple sites including 17% with more than three centers. The average organization in Australia operated 199 seats but the
median is 40 seats. This high average is a reflection of a number of organization that operate many thousands of seats. 76% growth in
seat numbers comes from organizations operating large contact centers (100+ seats) while the major growth industry sector is in contact
center outsourcing companies.
An average contact center handles 27,789 transactions/week, but some larger ones handle over 300,000 transactions/week. The majority
of contact centers are measured as cost center (87%) and almost half of them (47%) are measured as as profit center, which means that
some centers are measured both as cost and profit center.
Australia’s contact center industry is still largely dominated by in-house contact center operation (82%), while outsourced contact center
services accounting only for 18% of the entire market. The average individual market share of the larger contact center outsourcing
services to which QMC belong is 2%. QMC’s market share itself being 1%. The contact center outsourcing service business has enjoyed
a 9% annual growth in recent years. The distribution of market shares in Australia’s contact center industry:
3%3%
2%
2%
2%
2%
2%
1%
1% In-House Service Stream
Link:Q Sirius
Salmat SalesForce
UCMS Teletech
Sitel Others (Private Companies)
82%
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16. Analysis:
Even though in-house contact center are dominate the market share, they can’t be seen as a competitor. It’s because they only create
contact center for their needs, not for commercial use. It leaves 18% of total contact center industry that is the real war-ground for
outsourced contact center service. The chart will become:
6% 6%
Service Stream Link:Q 11%
Sirius Salmat 17%
SalesForce UCMS
Teletech Sitel 11%
Others (Private Companies)
17%
11%
11%
11%
With no companies have dominant market share (more than 20%) in the market, the market is in perfect competition. Link:Q (QMC’s
brand) with only 6% market share can be classified as weaker player between the giant (Sitel with 17% is the biggest player). In the
world arena, QMC face contender from India and Philippines. It can be concluded that the competition in this industry is FIERCE. This
condition will affect QMC profit. The QMC’s NPM (Net Profit Margin) always low (about 1%-2%), because the companies in perfect
competition will only receive normal profit (no abnormal profit).
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17. Bargaining Power of Suppliers
Facts:
As company that engaged in service industry with key resources consist of human resources, technology, and infrastructure; QMC’s
suppliers are the parties who provide these needs. With the majority of its expenses derived from outsourced call center employees and
outsourced Telecom/IT expert, the supplier of these human resources needs are considered of a high significance. The average full-time
agent turnover, measured at center level is 24%, while the figure is 31% in contact centers with 100+ seats.
Apart from human resources needs, QMC established cooperation with infrastructure provider like Lucent Technology and Alcatel
Genesys. These parties are also considered as supplier.
Analysis:
As a labor-intensive business, QMC need a lot of worker, and it derived the supplier of human resources to be important. The human-
resources itself, as the parties who spend its energy for companies, can be considered as a supplier. From this part, the bargaining power
of supplier can be concluded as HIGH.
For QMC’s infrastructure supplier (Lucent Technology and Alcatel Genesys); these corporation has build long-term relationship with QMC,
and QMC need them. But QMC can search for other infrastructure provider if needed. So the power from the infrastructure providers is
MEDIUM.
Conclusion: The bargaining power of suppliers of key resources is MEDIUM to HIGH.
Bargaining Power of Customers
Analysis:
The perfect competition will bring more options for customer. With a lot of options in the market, customer can switch contact-center
services with ease. So, it can be concluded that the bargaining power of customer is HIGH.
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18. Substitute Product or Services
Analysis:
Companies can always decide to create their own in-house contact center. Some of the reasons that keep companies from create their
own contact center are:
• Big investment;
• Haven’t reach the economy of scale;
• More cost for recruitment and training;
• Need considerable learning time before the service quality is stabilized;
• Doesn’t have enough room for contact center / the room alternatively used for other purposed;
• Outsourcing are deemed cheaper; etc.
But, creating their own contact center will always in their option for companies’ course of action because of several issues like:
exclusivity, more tailored (customized) service, the ease of propaganda, sensitive company’s information (sales data, etc.), and higher
degree of control.
Because of the thing stated above, the potential for companies substitute outsourcing service with in-house service are always loomed in
the horizon like a damocles’ sword. So, it can be said that the threat of substitute is relatively HIGH.
Barriers to Entry and Threat of New Entrants
The investment needed to build a contact service business is considerably very-high (technology, infrastructure, and people). It also need
strict legal and licensing activity. The industries is in perfect competition, industry growth are not spectacular, and only generate normal
profit (there’s no economic rent). So it can be said that the barriers to entry is high and the threat of new entrants is LOW to MEDIUM.
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19. 2.3
QMC’s PEST Analysis (Macroeconomic Analysis)
Political Condition
The Commonwealth of Australia is made up of six states and two mainland territories. It is an independent Western democracy with
almost 22 million people. Australia is a constitutional monarchy, recognizing Queen Elizabeth II of Great Britain as head of state. Her
representative in Australia is the Governor-General.
The Australian Government is based on the liberal democratic tradition, which has age-long political stability, strong competitive economy
with a highly skilled workforce, upholds the right to freedom of speech, association, and a commitment to religious tolerance. No wars
and conflicts within the country, but active as Peace Keeping force in various countries. Australia has good inter-country relationship with
other countries. It has established council with various countries like China, Japan, India, Korea, and other countries.
The main political parties are the Labor Party, Liberal Party and the National Party. For the last 50 years Australian politics has been
dominated by two political groupings - a Conservative coalition of the Liberal and National Parties and the Labor Party.
Australian maintains active and diverse international trade policy agenda which combines multilateral, regional, and bilateral strategies to
break down world barriers to trade. Trade policies are equally based on structural economic reforms to improve its international trade
competitiveness and initiatives to promote liberalization of international trade and investment rules. The Government of Australia has open
door policy, which always motivates various international business to invest their resource for the benefits of Australian consumer.
Australia political can be said to be stable and comfortable to do business.
(http://www.international.mq.edu.au/macquarie/australia/political)
(http://www.scribd.com/doc/35280009/Pest-Analysis-for-Australia)
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20. Economy Outlook
Australia Key Macro Statistics 2008 was the year when the global economic crisis began to be felt by the whole world. Initiated
Population 22 Million by the subprime mortgage crisis in the U.S., European and Asian countries began to feel the
impact of weakening economic conditions. But in 2008 Australia continues to enjoy political
Gross Domestic
$1,046 Billion stability and its economy has been relatively resilient to economic cycle.
Products (GDP)
GDP Growth 3.7%
Into 2009 as the world continues to be overshadowed by the global financial crisis and potential
GDP Per Capita $50,277 recession, Australia is poised to meet challenges of business downturn, falling local shares prices,
Unemployment Rate 4.2% and decline in AUD exchange rate, consequential to this world’s unfavorable economic and
Inflation (CPI) - 2005 4.5% financial trend.
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21. However, Australia may expect to potentially be able to remain as resilient, given its economic strength and positive measures so far take
to mitigate vulnerability risks entailing such world depressive trend. Australia is among few countries in the world that fully guaranty public
deposits with banks and is also recognized as among the 3 countries of world’s G-20 that has still economic growth for 2009. The country
also has made a series of significant interest rate cuts and launched considerable amount of financial incentives to keep propelling its
economic growth.
Australian dollar may sustain a downward bias for the 2009’s first quarters. While significant improvement in credit market has taken
place, there may be still uncertainty among investors that could cause to heighten risk aversion and deleveraging. Other influences
include weakening global economic growth, prospect for more rate cuts by the RBA and further losses in commodity prices. Australia’s
economic growth outlook, however, should remains better than that of the world’s major economies and the flow through effect of past
rises in terms of trade will limit the downside for its currency.
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22. Sociocultural Condition
In 2008, Australia has a population of approximately 22 million (age 0-14:18.6%; age 15-64:67.9%; over 65:13.5%), with a population
growth is 1.3% per annum. 92% of the population is Caucasian, and 7 % Asian. There are many ethnic groups from over 160 countries to
underline the growing influx of migrants since 1950’s. State governments have the responsibility for education with the Federal
Department of Education funding and administering it in Federal territories. Australia has extensive system of universities and colleges,
mostly government-financed and open to all students. Over 30% of Australian workforce across all industries has tertiary qualifications.
Every year, 0.2 million people immigrate to Australia. Australia family size and structure in majority are nuclear family structure with
average of 2.5 people per household. As per 2008, Australia has Purchasing Power Parity of $39,000.
As per 2008, Australia spends approximately 10% of its GDP for health care of its citizen. Australia has health care system called
Medicare, which gets funded by the 1.5% of the income tax. Average life expectancy of Australia is 81.63 years (male: 79.25 years and
female: 84.14 years)
Australians are flexible to work with. People have proper balance between their work life and personal life. As for management style,
democratic and consultative style of management is highly preferred.
Technological
Australia is developed country with good availability of technology-related vendor. It’s easy to get a service and maintenance for QMC
technology in Australia (example: QMC established cooperation with infrastructure provider like Lucent Technology and Alcatel Genesys).
Contact center related technology is still advancing and QMC will need to keep up with new technology to serve their customer better.
Budget for technology investment over the next 12 months is around $526,143.- which is a 3% increase in estimated spending during
2007-2008 period. Approximately 36% of the budget will be allocated for upgrading the technology, the remaining 64% for new
purchases.
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23. 2.4
Future Prospect
Ample Room for Growth
QMC may look forward to having an ample room for its business growth in 2009 for the following reasons:
• Shares of outsourcing contact center services in Australia’s contact center industry which is still largely dominated by in-house contact
center operation may potentially have a robust growth as businesses may, under the duress of the upcoming recession, increasingly
resort to outsourcing contact center services out necessity for cost efficiency. Further, by the same token and supported by the
depreciation of Australian dollar, opportunities would also be open for Australia’s outsourcing contact center businesses to do global
transactions and offshoring, e.g gaining entry to USA and the United Kingdom as the world’s major contact center markets.
• In addition to the growth opportunities described above, QMC would also be poised to exploit revenue growth opportunities from its
present 4,000 customers population base by developing further its service products relationships with them.
Capacity and Capability to Exploit the Growth Opportunities
By and large QMC has adequate capacity and capability to be well positioned to tap the growth opportunities in 2009 for the following
reasons:
• Leading National RF Pager Network
QMC’s Link:Q brand name has been dully acknowledge as Australia’s leading national RF Pager Network with approximately more
than 50% market share, and the company has the capacity and capability to growth its market share further.
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24. • Highly Skilled Contact Center Staff
QMC has ever since provided an in-house staff training and development program in compliance with the requirements of the RTO
(Registered Training Organization). This has resulted into QMC’s ability to manage its client service quality with low average handling
time (around 34.75 second).
• Low Contact Center Staff Turnover
QMC has implemented blended calls and provided for career path policy for its contact center staff that results in a low staff
turnover of less than 20%. This level is considered very low compared to the industry average of 31% for large contact centers.
• Call Centers Technology Infrastructure
QMC’s technology infrastructure has the capacity and capability to handle large transactions volume and produce ranges of services
from messaging, call center services, and applications to Contact Management Solutions (CMS) on a 24/7 basis with an average of
675,000 calls per week, compared to industry average of 23,789.
• Cost Efficiency and Capacity to Handle Overcall Traffics
QMC has a operation backup office in Indonesia to route large volume of overcall traffics to Indonesia at lower agent costs.
With its capacity and capability as described above, QMC should also be well positioned to meet challenges in tapping the business
growth opportunities in 2009, such as pricing competition from competitors, typically high technology, telecommunications, infrastructure
maintenance costs, and contact center employee expenses.
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25. Chapter 3
Product &
Technical
Aspect
Quantum Multimedia Communications

26. 3.1
Feature Of The Services
Under the “Link:Q” brand name, the main features of QMC’s outsourcing contact center services currently in Australia’s markets are
differentiated as follows :
• Infrastructure/Data Center
This covers messaging gateways (paging and SMS system) and payment gateway. In the near future the plan is to expand the
service to provide call center space and hosting and co-location for customers’ servers.
• Call Center/Application
This covers messaging applications, payment gateway applications, call center applications and IVR (Interactive Voice Response) for
various uses in customer services (e.g., outbound telemarketing, after-hours calls, and others).
• Web-Based Applications
This covers provision for web-messaging applications and online payment processing. The web messaging applications are for
numerous purpose such as reminder, appointment booking, SMS alert, and are capable of sending messages to mobiles, pagers,
email and fax.
• Call Center
Service products under this category include directory-assistance, reception line (basic call answering), customer service, orderline,
help desk, data cleansing, emergency line, appointment settings, workflow automation, surveys, outbound campaign, telesales, and
facility management.
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27. 3.2
The Service Products
Under the Link:Q Brand name, QMC provides various products and services under
4 main products brands and each product brand provide various functions and
features that enables the company to specifically tailor the needs of its clients’
business. QMC’s product together with their functions and features provide the
1. Link:Q “Direct Product”
clients with the ability to modify the service offered based upon their business
2. Link:Q “Contact” needs, the direction of their business, and most importantly they are provided with
3. Link:Q “Respond” competitive products and solutions to keep them ahead of their own competitors.
Shown below are QMC’s 4 main products and beneath each product are some of
4. Link:Q “24/7”
their functions and features:
DIRECT
QMC’s “Direct Product” is designed to allow customers to utilize the company’s
latest technology, infrastructure, and equipment remotely. The DIRECT product is
versatile and flexible to suite businesses of all sizes to generate messages from
their own office. The customers are able to generate SMS messages to phone
numbers on their database in volumes of 50,000 messages with the click of a
button from their personal computer. Functions also are provided to be able to
send messages to pagers, mobile phone, email, and faxes. DIRECT access
provides QMC’s remote clients with the ability to communicate to their clients in a
fast and efficient method.
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28. CONTACT
Marketing Campaign:
- Dial-in numbers for media surveys
- Customer contact projects
- General information line
- Telemarketing
Customer Retention & Growth Services:
- Complaint resolution line
- Cross-sell / up-sell projects
- Customer Feedback line
Customer Service Enquiry:
- Simple issues / answers to FAQ’s
- Complex issue resolution
- Information pack delivery trigger
Contact
Management Help Desk & Technical Support Services:
Solutions - Product assembly, set-up and maintenance
- FAQ support
- Repair service dispatch
Billing Services:
- Inbound phone-based bill payment
- Outbound collection services
- Inbound billing information lines
Data Entry, Order Management & Processing:
- Phone-based sales channel services
- Database validation/cleansing
Call Overflow or After Hours Services, up to 24/7 operations
Disaster Recovery Services
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29. RESPOND
Receptionist Professional call answering using the client’s name, with call forwarding options.
Switchboard Professional call answering using appropriate business name, with multiple call forwarding options.
Help Desk Customer service solution, from business hours to full 24-7 support. Can handle simple and complex enquiries.
Critical situation support, contacting designated staff in case of emergency. Also features an escalation roster for
Emergency
progressive alerts.
Ordering solution featuring payment processing. Payment can be made using credit cards, fulfillment back-end
Order
optional.
Solution for gathering customer information, for warranty and other purposes; can be used to establish a
Registration
database for further action.
Information Solution for providing company and product information to customers.
Customer Service Clients can combine a number of Link:Q services to create a fully featured customer service experience.
24/7
Personal Connect Professional basic call answering for individuals, with real-time message forwarding.
Business Connect Professional call answering for businesses, with real-time message forwarding.
Expanded Business Connect with pre-defined message delivery options for up to 20 staff. It can also supply
Business Connect Plus
other information to callers, such as website details and contact numbers.
Front Desk Pre-defined answering scripts for multiple call types.
Front Desk Plus Enhanced Front Desk with customized answering scripts for up to 20 people.
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30. Chapter 4
Human
Resources &
Management
Quantum Multimedia Communications

31. 4.1
Human Resources
The industry currently has approximately 191,000 seats. In 2009, it is predicted to growth by another 7% to 205,000 seats. The average
organization in Australia operated 199 seats, but the median is 40 seats. This high average is a reflection of a number of organizations that
operate many thousands of seats. Based on the 191,000 seats in the contact center industry in Australia, the industry is estimated to
spend $9.1 billion per year in wages and other human resources related expenses.
The average full-time agent turnover, measured at center level is 24%, an increase from 22% in 2007, while the figure is 31% in contact
centers with 100+ seats. The average cost to replace an agent leaving the center is $19,610 in recruitment, training and lost productivity.
Managing human resource issues is the main challenge for contact center management over the next 12-month period. Recruitment
(32%), managing staff turnover (33%), training (26%) and managing headcount 926%) are the primary human resource focuses.
Outsourcing still Largely Based in Australia. Organizations that provide contact center outsourcing services in Australia predict strong seat
growth over the next 12 months. A significant growth is expected from in-house contact centers adopting outsourcing strategies, with
17% of them outsourcing some functionality.
QMC has ever since provided an in-house staff training and development program in compliance with the requirements of the RTO
(Registered Training Organization). This has resulted into QMC’s ability to manage its client service quality with low average handling time
(around 34.75 second).
QMC has implemented blended calls and provided for career path policy for its contact center staff that results in a low staff turnover of
less than 20%. This level is considered very low compared to the industry average of 31% for large contact centers.
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32. 4.2
Management
QMC’S MANAGEMENT The QMC’s business is managed by a management team led by a Chief Executive
1. CEO and Board of Directors Officer and assisted by a team of management executives in their respective fields
of professional specialty and supervised by a board of directors. All directors and
2. Senior Management Members
members of management executives of the company are seasoned professionals
with years of proven track records in their respective fields of specialty that have
overtime brought the company to its present growth position. Brief resumes of
directors and management executive team members of the company are shown
below:
CEO AND BOARDS OF DIRECTORS
• Hardianto Kamarga - Chairman and Chief Executive Officer
★Co-inventor of the Advance Rural Telephone System (ARTS)
★Founder and the first Chairman of Indonesia Telecommunication Society (MATEL)
★CEO of PT Radio Frequency Communications
★President of PT Multi Kontrol Nusantara, PT Bakrie Communications, and PT Ratelindo (known as PT Bakrie Telecom)
31

33. • Irawan Kamarga - Director
★Engineering consultant at PT Rekayasa
★Developing electronic payment system at PT Bakrie Communication Corporation
★Implementing information technology in Bakrie Communication Corporation and all its business units
★Reorganizing information technology of Link Communication Corporation, Australia
• Neil Ricardo Tobing - Director
★Law graduate from the University of New South Wales, Sydney, majoring in law for information technology and communication media
★Worked at Wanamurti & Associates, an affiliate office of Coudert Brothers International, a US based international law firm
★Developing PT Bakrie Communications’ telecommunication business (1996-2000)
★Director of QMC (since 2001)
• Siam Nugraha - Director and Chief Financial Officer
★Senior manager and asset management executive of IBM Indonesia
★National Technology Operations Manager - QMC Link:Q (since September 2001)
★National Corporate Development Manager - QMC Link:Q
★General Manager - Management Control - QMC Link:Q (Late 2002)
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34. SENIOR MANAGEMENT MEMBERS
• Myrna Sunardono - Chief Operations Officer
★Joined QMC in 2006 as an executive consultant to the company’s BOD in IT and business strategic direction
★26 years of experience working with multinational companies in IT, telecommunication, retail, banking, and oil industries
• Murwantoro Panijan - General Manager, Finance Controller
★Joined QMC’s finance department in November 2007 as GM, Finance Controller
★Has worked as accounting and finance manager for more than 10 years in various industries in Indonesia
• Rick Costa - General Manager, Strategic Business & Project Management
★Joined “Link” in 1997: Contact Center Representatives, Team Leader, Call Center Supervisor, Call Center Trainer, and Specialized
Service Manager and after that become Senior Project Manager
★Moving to QMC as GM, Strategic Business & Project Management
• Mozu Bhojani - General Manager, Corporate Business & Commercial Projects
★“Link”: began with business administrative support position and National Manager - Commercial Projects
• Judi Ruggiero - National Manager, Government-Related Business
★“Link”+QMC for over 35 years (Contact Center Manager, Customer Service Manager, Business Development Manager, etc.)
• John Betts - General Manager, Corporate Paging and Messaging Business
★“Link”+QMC for over 20 years and has held various senior roles in Sales, Branch & Regional Management, Manager of Cust. Service
33

35. Chapter 5
Financial
Performance
Quantum Multimedia Communications

36. 5.1
Activity Ratios
Activity ratios are also known as asset utilization ratios or operating efficiency ratios. This category intended to measure how well a
company manages various activities, particularly how efficiently it manages its various assets. Activity ratios are analyzed as indicators of
ongoing operational performance - how effectively assets are used by a company. Efficiency has a direct impact on liquidity, so it’s
important to assess and control company’s activity ratios.
RECEIVABLE TURNOVER AND DAYS OF SALES OUTSTANDING (DSO)
2005 2006 2007 2008
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Receivables 744.95 1,564.53 2,940.39 4,497.67
Receivable Turnover 16.06 9.59 6.21 5.24
Number of days in period 360 360 360 360
Days of Sales
22.41 37.53 58.01 68.72
Outstanding (DSO)
The number of DSO represents the elapsed time between a sale and cash collection, reflecting how fast the company collects cash from
customers it offers credit. A relatively high receivable turnover ratio (and commensurately low DSO) might indicate highly efficient credit
and collection.
QMC’s receivable turnover becomes smaller every year and its DSO are respectively get bigger. This condition is Not favorable and raise
questions about the efficiency of the company’s credit and collections procedures.
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37. WORKING CAPITAL TURNOVER
2005 2006 2007 2008
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Working Capital 1,619.82 1,643.17 221.14 212.14
Working Capital Turnover 7.39 9.13 82.52 111.06
Working capital is defined as current assets minus current liabilities. Working capital indicates greater efficiency (revenues relative to
working capital). A high working capital turnover ratio indicates greater efficiency. QMC’s working capital turnover ratio is getting bigger
overtime, shows greater efficiency of utilizing working capital relative to the revenue it generate. This is a Favorable condition for QMC.
FIXED ASSET TURNOVER
2005 2006 2007 2008
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Fixed Assets 4,935.03 5,183.65 1,030.14 809.44
Fixed Asset Turnover 2.42 2.90 17.71 29.11
Fixed Asset Turnover measures how efficiently the company generates revenues from its investments in fixed assets. Generally, a higher
fixed asset turnover ratio indicates more efficient use of fixed assets in generating revenue. A low ratio can indicate inefficiency, a capital-
intensive business environment, or a new business not yet operating at full capacity. This ratio would be lower for a company whose
assets are newer than the ratio for a company with older assets because of depreciation treatment.
In 2007, there was significant surge in QMC’s Fixed Asset Turnover Ratio. It’s caused by corporate action in 2007 at which QMC write off
its $2,200,488 shares investment in Link Communications Corporation Pty. Ltd. (“Link”) following in the light of Link’s unfavorable financial
condition. Exclude this effect, the ratio was moving in normal condition, thus deemed in Neutral condition.
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38. 5.2
Liquidity Ratios
Liquidity analysis, which focuses on cash flows, measures a company’s ability to meet its short term obligations. Liquidity measures how
quickly assets are converted into cash. Liquidity ratios also measure the ability to pay off short-term obligations. In day-to-day operations,
liquidity management is typically achieved through efficient use of assets. In the medium term, liquidity in the non-financial sector is also
addressed by managing the structure of liabilities.
CURRENT RATIO
2005 2006 2007 2008
Current Assets 6,181.07 9,872.93 7,767.62 8,190.20
Current Liabilities 4,561.25 8,229.76 7,546.48 7,978.07
Current Ratio 1.36 1.20 1.03 1.03
Current ratio expresses current assets in relation to current liabilities. A higher ratio indicates a higher level of liquidity while lower ratio
indicates less liquidity, implying a greater reliance on operating cash flow and outside financing to meet short-term obligations. The
current ratio implicitly assumes that inventories and accounts receivable are indeed liquid.
QMC’s current ratio is getting smaller overtime and close to 1. This condition indicate that QMC try to optimized its short-term liabilities to
generate revenue while still keep its current ratio above 1. This condition is considered Neutral for the assessment of the company.
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39. QUICK RATIO
2005 2006 2007 2008
Cash + Short-term marketable investment +
6,112.59 9,793.90 7,680.07 7,879.04
Receivables
Current Liabilities 4,561.25 8,229.76 7,546.48 7,978.07
Quick Ratio 1.34 1.19 1.02 0.99
The quick ratio is more conservative than the current ratio because it includes only the more liquid current assets in relation to current
liabilities. The quick ratio reflects the fact that certain current assets (prepaid expenses, some taxes, etc.) represent costs of the current
period that have been paid in advance and cannot usually be converted back into cash. This ratio also reflects the fact that inventory
might not be easily and quickly converted into cash (or even able to be sold). QMC’s quick ratio hasn’t move to far from the current ratio
because QMC have a very small inventories (not directly related to its business) and small size of prepaid expenses. Thus the number still
considered Neutral for the assessment of the company.
CASH RATIO
2005 2006 2007 2008
Cash + Short-term marketable investment 284.40 769.47 261.20 680.43
Current Liabilities 4,561.25 8,229.76 7,546.48 7,978.07
Cash Ratio 0.06 0.09 0.03 0.09
The cash ratio is more conservative than quick ratio and normally represents a reliable measure of an individual entity’s liquidity in a crisis
situation. Only highly marketable short-term investments and cash are included. QMC’s cash ratio is significantly differ from current and
quick ratio. This condition shows that the majority of QMC’s current asset is mostly receivable. This condition is deemed Not favorable or
even Dangerous for company’s going concern and QMC’s ability to meet its short term obligations is questionable. In light of event like
economy crisis, the probability of this receivable to be “non-performed loan” is high and can seriously hurt QMC’s condition.
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40. 5.3
Solvency Ratios
Solvency refers to a company’s ability to fulfill its long-term debt obligations. Assessment of a company’s ability to pay its long-term
obligations generally includes an in-depth analysis of the components of its financial structure. Solvency ratios provide information
regarding the relative amount of debt in the company’s capital structure and the adequacy of earnings and cash flow to cover interest
expenses and other fixed charges as they come due. The amount of debt in a company’s capital structure is important for assessing the
company’s risk and return characteristics, specifically its financial leverage. Higher level of debt in a company’s capital structure increases
the risk of default and results in higher borrowing costs for the company to compensate lenders for assuming greater credit risk.
TOTAL DEBT TO ASSET RATIO
2005 2006 2007 2008
Total Debt 8,506.22 12,319.84 8,442.52 8,344.67
Total Assets 11,116.10 15,056.60 8,797.79 8,999.64
Total Debt to Asset Ratio 76.52% 81.82% 95.96% 92.72%
This ratio measures the percentage of total assets financed with debt. Generally, higher debt means higher financial risk and thus
indicates weaker solvency.
QMC’s Total Debt to Asset Ratio is getting bigger since 2005 into 2008 and this means that the percentage of total assets financed with
debt is increases, thus bring higher credit risk and weaker solvency. This condition is considered Dangerous for the assessment of the
company because QMC business is roughly 92.72% financed by financial institution without proper equity to back it up.
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41. LONG-TERM DEBT TO ASSET RATIO
2005 2006 2007 2008
Long Term Debt 3,944.97 4,090.08 896.04 366.60
Total Assets 11,116.10 15,056.60 8,797.79 8,999.64
Long Term Debt to Asset Ratio 35.49% 27.16% 10.18% 4.07%
WIth the Long-Term Debt to Asset Ratio significantly decreasing from 2005 to 2008, it shows that the majority of debt used by QMC is
short-term debt. And from the liquidity ratio section, it’s clear that this short-term debt are used to financing QMC’s receivable. Even
though it seems like easy for QMC to meet its long-term obligation, this condition can be significantly worsened so fast in unfavorable
economy condition (because receivables can be non-collectible if the economy condition worsened). Moreover, the so called short-term
debt is not really a short-term debt. It’s under the impression of short term debt because the term is under 1 year for every transaction,
but QMC factoring its receivable every month and create disguised long-term debt. Thus, this condition is considered Dangerous for the
assessment of the company even though the long-term debt to asset ratio is seems in favorable condition.
TOTAL DEBT TO EQUITY RATIO
2005 2006 2007 2008
Total Debt 8,506.22 12,319.84 8,442.52 8,344.67
Total Equity 2,609.88 2,736.76 355.27 654.97
Total Debt to Equity Ratio 3.26 4.50 23.76 12.74
This ratio measures the amount of debt capital relative to equity capital. Higher ratio indicates higher financial risk and thus weaker
solvency. The significant increase in QMC total debt to equity ratio shows the increasing financial risk burdened to QMC financial
condition. With total debt to be 12.74 times of QMC’s total equity net-worth (means that QMC’s equity only amount to 7.27% of its
assets), it is considered Dangerous and company’s ability to fulfill its long-term debt obligations is questionable.
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42. FINANCIAL LEVERAGE RATIO
2005 2006 2007 2008
Total Asset 11,116.10 15,056.60 8,797.79 8,999.64
Total Equity 2,609.88 2,736.76 355.27 654.97
Financial Leverage Ratio 4.26 5.50 24.76 13.74
This ratio measures the amount of total assets supported for each one money unit of equity. For example, a value of 13.74 for this ratio
means that each AUD$ 1 of equity supports AUD$ 13.74 of total assets. The higher the financial leverage ratio, the more leveraged the
company is in the sense of using debt and other liabilities to finance assets. QMC’s financial leverage ratio is high and considered not
satisfied the normal capital requirement for credit proposals (with equity only amounted to 7.27% of its assets). Thus it’s considered
Dangerous for the assessment of the company.
INTEREST COVERAGE
2005 2006 2007 2008
EBIT 723.64 1,276.62 1,708.55 1,176.57
Interest Payments 434.45 955.33 891.71 812.26
Interest Coverage 1.67 1.34 1.92 1.45
This ratio measures the number of times a company’s EBIT could cover its interest payments. A higher interest coverage ratio indicates
stronger solvency, offering greater assurance that the company can service its debt from operating earnings. For QMC case, because of
its vast receivable condition, accompanied by not-favorable assessment from “receivable turnover and days of sales outstanding”
section, it’s suspected that some part of QMC’s EBIT haven’t yet collected, thus make QMC’s EBIT to be overstated. However, because
there’s some margin of safety given in interest coverage ratio (2008 margin of safety: 0.45), this condition is considered Neutral for the
assessment of the company.
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43. 5.4
Profitability Ratios
The ability to generate profit on capital invested is a key determinant of a company’s overall value and the value of the securities it issues.
Profitability reflects a company’s competitive position in the market, and by extension, the quality of its management. Profitability ratio
further classified into two categories: Return on Sales profitability ratio and Return on Investment profitability ratio.
• Return on Sales profitability ratio express various subtotals on the income statement as a percentage of revenue.
• Return on Investment profitability ratio measure income relative to assets, equity, or total capital employed by the company.
GROSS PROFIT MARGIN
2005 2006 2007 2008
Gross Profit 3,492.49 3,795.36 3,767.42 6,715.02
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Gross Profit Margin 29.19% 25.29% 20.65% 28.50%
Gross Profit Margin indicates the percentage of revenue available to cover operating and other expenditures. Higher GPM indicates some
combination of higher product pricing and lower product cost. The ability to charge a higher price is constrained by competition, so gross
profits are affected by competition.
QMC can maintain its GPM over 25% of its revenue (except for 2007). Because the company is in perfect competition where QMC act as
“price-receiver”, this success are attributable to company’s efforts in maintaining its cost. This condition is considered Neutral for the
assessment of the company.
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44. OPERATING PROFIT MARGIN
2005 2006 2007 2008
Operating Income 1,417.06 1,920.76 2,205.20 1,487.15
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Operating Profit Margin 11.84% 12.80% 12.08% 6.31%
Operating profit is calculated as gross margin minus operating costs. So, an operating margin increasing faster than the gross margin can
indicate improvements in controlling operating costs, such as administrative overheads. In contrast, a declining operating profit margin
could be an indicator of deteriorating control over operating costs. QMC’s operating profit margin usually maintains more or less at 12%,
but in 2008, it’s only 6.31%. It could be one-time only happenstance, or it could give an early signal of deteriorating control over operating
cost (especially in employee expenses). QMC have give its best to control its turnover which could results in more savings (recruitment
expenses and loss profitability). This condition is considered Neutral to Not favorable for the assessment of the company.
PRETAX MARGIN
2005 2006 2007 2008
EBT 244.51 375.92 -2,344.85 364.31
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Pretax Margin 2.04% 2.50% -12.85% 1.55%
Pretax income is calculated as operating profit minus interest, so this ratio reflects the effects on profitability of leverage and other (non-
operating) income and expenses. If a company’s pretax margin is rising primarily as a result of increasing non-operating income, the
analyst should evaluate whether this increase reflects a deliberate change in a company’s business focus and, therefore, the likelihood
that the increase will continue. QMC pretax margin is considered small and also slightly decreases (if the effect of non-cash-out-flow
expense from Link-event is excluded and treated as an outlier). This is considered Not favorable for the assessment of the company.
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45. NET PROFIT MARGIN
2005 2006 2007 2008
Net Income 188.95 126.88 -2,344.85 299.70
Revenue 11,964.50 15,008.00 18,248.55 23,560.27
Net Profit Margin 1.58% 0.85% -12.85% 1.27%
Net Profit Margin (NPM) is the percentage of after tax net income relative to revenue. Higher NPM means higher profitability and good
management performance, while low NPM means lower profitability and higher risk in light of deteriorating economic condition. Higher
NPM also means more safety cushion for unfavorable conditions and higher portion for future growth of a company.
QMC NPM is very low (under 2%) and can be dangerous if something wrong happen (like 2007). QMC’s NPM can be better if QMC found
cheaper financing cost instead of using expensive factoring facility from Effective Recoveries (3% per month) and working capital loan
facility from Overseas Central Finance (2.5% per month). However, for now, this condition is considered to be Not favorable for the
assessment of the company.
RETURN ON ASSET (ROA)
2005 2006 2007 2008
Net Income 188.95 126.88 -2,344.85 299.70
Total Asset 11,116.10 15,056.60 8,797.79 8,999.64
Return On Asset 1.70% 0.84% -26.65% 3.33%
ROA measures the return earned by a company on its assets. The higher the ratio, the more income is generated by a given level of
assets. This measure reflects the return on all assets invested in the company, whether financed with debt or equity. QMC’s ROA is very
small. It can change if QMC found cheaper financing cost that in turn will render its net income better. However, for current condition this
condition is considered to be Not favorable for the assessment of the company.
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46. RETURN ON EQUITY (ROE) or RETURN ON NET-WORTH (RONW)
2005 2006 2007 2008
Net Income 188.95 126.88 -2,344.85 299.70
Total Equity (Net-Worth) 2,609.88 2,736.76 355.27 654.97
ROE or RONW 7.24% 4.64% -660.02% 45.76%
ROE measures the return earned by a company on its equity capital, including minority equity, preferred equity, and common equity. ROE
is the amount of net income returned as a percentage of shareholders equity. ROE measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested. ROE is also known as "return on net worth" (RONW).
It’s unclear whether the significance drop of its equity caused by 2007’s loss in Link-write-off event, but this equity drop caused the big
surge in RONW value. However, this condition favorable only for QMC sides (owner and stockholder), but not for the Bank sides. It’s
because the majority of QMC’s financial risks will be burdened by the Banks. This condition is considered Not favorable for the Banks.
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47. 5.5
Du-Pont Analysis
Du-Pont analysis is a method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method,
assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is also
known as "Du-Pont identity". Du-Pont analysis tells us that ROE is affected by three things:
• Operating efficiency, which is measured by profit margin.
• Asset use efficiency, which is measured by total asset turnover (The amount of sales generated for every dollar's worth of assets. It is
calculated by dividing sales in dollars by assets in dollars. The higher the number, the better).
• Financial leverage, which is measured by the equity multiplier.
QMC Net Profit Margin Total Asset Turnover Financial Leverage Return On Equity
2005 1.58% 1.08 4.26 7.24%
2006 0.85% 1.00 5.50 4.64%
2007 -12.85% 2.07 24.76 -660.02%
2008 1.27% 2.62 13.74 45.76%
Based on Du-Pont analysis, the dominating surge in Return on Equity are not caused by increase in NPM and total asset turnover (even
though total asset turnover also increase), but caused by significant increases in Financial Leverage, thus deemed unhealthy and
Dangerous for the assessment of the company and also for the Banks.
46

48. Chapter 6
General Risk
Assessment
Quantum Multimedia Communications

49. 6.1
Summary of Assessment
This section is dedicated to summarized the assessment for every ratio in previous chapter to objectively assess the risk of QMC’s proposal
of revolving working capital loan facility:
Ratios Assessment Notes / Remarks
RECEIVABLE TURNOVER AND DAYS OF SALES OUTSTANDING NOT FAVORABLE
WORKING CAPITAL TURNOVER FAVORABLE
FIXED ASSET TURNOVER NEUTRAL
CURRENT RATIO NEUTRAL
QUICK RATIO NEUTRAL
CASH RATIO DANGEROUS Too much Receivable
TOTAL DEBT TO ASSET RATIO DANGEROUS Too much Debt (92.72% of Asset)
LONG-TERM DEBT TO ASSET RATIO DANGEROUS Long-term debt in form of Short-term
TOTAL DEBT TO EQUITY RATIO DANGEROUS Debt to Equity ratio is too high
FINANCIAL LEVERAGE RATIO DANGEROUS Too much Leverage (13.74x of equity)
INTEREST COVERAGE NEUTRAL
GROSS PROFIT MARGIN NEUTRAL
OPERATING PROFIT MARGIN NEUTRAL TO NOT FAVORABLE
PRETAX MARGIN NOT FAVORABLE
NET PROFIT MARGIN NOT FAVORABLE
RETURN ON ASSET (ROA) NOT FAVORABLE
RETURN ON EQUITY (ROE) or RETURN ON NET-WORTH (RONW) NOT FAVORABLE
DU-PONT ANALYSIS DANGEROUS 48
Too much Leverage (13.74x of equity)

50. 6.2
Other General Risk
Apart from risk assessed from the financial ratios, there are other risks available that can hurt QMC performance. Some of them are:
• Customer Risk
★Customer can have too high expectation of QMC product
★Late payment from customer
★Bad word of mouth from unsatisfied customer
• Technology Risk
★Rapid technology change will required QMC to keep investing in latest technology
• Competitor Risk
★Competitors can play dirty and give cheaper price to destroy other companies
• World Economy Downturn
★World economy downturn will bring devastated effect to QMC and its clients.
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51. 6.3
Credit Equation
CHARACTER
Because of the limited resources, the writer cannot assess the character of QMC owner and stockholder. However, the board of directors
and senior management are seasoned professional with lot of experience and exposure from the previous companies. The writer assumes
that no one can build network without being trusted by its surrounding, thus render the character of QMC’s BOD and senior management
to be “Not Questionable” and deemed to be Neutral element in the credit equation.
CAPACITY
Capacity is the ability of company to fulfill its short-term and long-term obligations. The ideal ratio of income relative to the interest plus
principal installment is 3 times (the interest + principal installment is only 30% of one’s income). QMC capacity to pay its interest (interest
coverage) is in good standing and will be better if they switch their financing into a cheaper one. However, even though the loan’s principal
will be paid at the end of each factoring transaction, but QMC’s profitability is low, thus make the QMC financial condition still a little bit
dangerous (relatively low capacity). This condition render the Capacity of QMC to be Neutral to Negative element in the credit equation.
CAPITAL
The ideal Capital (equity) for one company is about 30%-40% of its assets, and so the owner assumed to put more efforts into his/her
business. However, QMC capital (net-worth) is only 7.27% of its total assets, thus make it Dangerous/Negative element in the credit
equation.
SUMMARY
CHARACTER (Neutral) + CAPACITY (Neutral to Negative) + CAPITAL (Dangerous/Negative) = FAIR to INFERIOR assessment.
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52. Chapter 7
Conclusion &
Recommendations
Quantum Multimedia Communications

53. 7.1
Conclusion & Recommendations
Even though its condition are assessed to be FAIR to INFERIOR, the aforesaid risk are the contingency risk that have its own probability
to be really come true. The major emphasized to be watched is the QMC’s receivable and equity condition.
Judging that QMC is a member of AGES in which have adhere to the stringent assessment criteria on streamline government purchasing,
with criteria assessed including those in relation to financial viability, favorable referee reports (demonstrating a successful track records),
product and service compliance with the industry standards, compliance with related Australian Government policies, and appropriate
insurance coverage requirements.
Judging that 23% of QMC’s business comes from government and 18% of its business comes from banking/insurance/finance industries
(amounted to 41% of QMC’s businesses); that more or less of its payment is in good standing.
Judging that QMC have a good standing banking relation with ANZ and NAB with years of cooperation and willing to fulfill the indicative
terms and conditions stated on QMC’s proposal to the Lending Bank (subject to more negotiation).
Judging that QMC have survived in the pressure of high interest rate from Effective Recoveries Pty. Ltd. and Overseas Central Finance
Ltd. and will be better if this loan facility with smaller interest are approved; and will be willing to negotiate on appropriate interest rate to
mitigate the risk shouldered by the Lending Bank.
Assume that QMC willing to increase the equity portions to appropriate level (subject to negotiation) and asserts appropriate efforts to
maintains government and banking/insurance/finance industries client to be major part of their business.
Assume that QMC are willing to fully restore the facilities acquired in a responsible manner when they are asked to (because of the breach
of one or several conditions stated above).
The authors recommend the Lending Bank to FACILITATE the QMC revolving working capital loan. Otherwise, it’s not advisable to do so.
52