Boustead bites the bullet, opts for kitchen-sinking to clean up its books

TheEdge Fri, Feb 28, 2020 11:20pm - 4 years View Original


KUALA LUMPUR (Feb 28): Boustead Holdings Bhd opted for a kitchen-sinking exercise in the fourth quarter ended Dec 31, 2019 (FY19), to clean up its books for the way ahead.

The diversified conglomerate booked in impairment, amortisation and fair value loss of RM1.15 billion in 4QFY19, bringing the full-year figure to RM1.33 billion, compared with RM262.1 million in FY18.

As a result of the kitchen-sinking exercise, Boustead posted a net loss of RM1.13 billion in 4QFY19, compared with RM540.1 million in 4QFY18.

Excluding the one-off items, Boustead’s losses before interest, tax, depreciation and amortisation more than halved to RM73.3 million in 4QFY19 from RM189.7 million in 4QFY18.

The massive impairments comprise RM844 million write-off for the heavy industries segment, and RM176 million impairment for its assets — Pertama and Tawai estates — under the plantation segment.

“In addition, the pharmaceutical division was affected due to recognition of the remaining unamortised Pharmacy Information System (PhIS) costs amounting to RM247 million,” said Boustead.

“Having fulfilled the PhIS under the concession agreement with the Government, following the new contract arrangement, the remaining unamortised PhIS costs were fully recognised as a non-cash item,” it said, referring to the change in contract period from 10 years to five years.

A change in valuation method for its properties to investment method from market approach also contributed to fair value losses, and restating of its FY18 numbers to reflect the changes.

The lower losses were a result of lower operating costs, which more than offset the 10.67% decline in revenue to RM2.55 billion from RM2.85 billion previously.

Boustead said its operational performance in the quarter was mainly impacted by heavy losses incurred in the heavy industries division for littoral combat ship (LCS) projects.

For the financial year ended Dec 31, 2019 (FY19), Boustead’s net loss stood at RM1.28 billion compared with RM554.3 million in FY18.

Minus the one-off items, Boustead’s FY19 EBITDA stood at RM441 million in FY19, up 30.7% from RM337.4 million in FY18.

Annual revenue grew 1.45% to RM10.33 billion from RM10.19 billion in FY18 as higher contribution from pharmaceutical segment more than offset weaker revenue from plantation, heavy industries, property and trading segments.

The group’s financial health is affected by its debt-laden balance sheet. As at Dec 31, 2019, the group’s total borrowings amounted to RM7.9 billion compared with its shareholders’ equity of RM3.74 billion.

For FY19, Boustead made loan payment of RM591.9 million plus interest payment of RM460.6 million, as its cash flow statement showed. During the year, the group took up a new loan of RM1.38 billion.

Bousted managing director Datuk Seri Amrin Awaluddin noted a “challenging” year for the group amid the impairments, amortisation and fair value loss.

“Nonetheless, the fact that we continued to see positive growth in revenue augurs well for the group’s various business units and we will continue to build on this momentum,” said Amrin.

“Moving forward, we remain focused on our transformation strategy for the group. Conscious of tough market conditions, we are committed to improve the way we do business with a view to strengthening our prospects over the long-term,” he added.

The diversified group, which is one the key contributor to its controlling shareholder Lembaga Tabung Angkatan Tentera’s (LTAT)  income, did not declare any dividend for FY19.

Shares of Boustead Holdings fell one sen or 1.23% to close at 80 sen on Friday, giving it a market capitalisation of RM1.62 billion.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






Related Stocks

2771 0.000

Comments

Login to comment.