KUALA LUMPUR, Feb 28 — Boustead Holdings Bhd (BHB) is taking various initiatives to ensure that it is on the right track to resolving its challenges, particularly to pare down its debt level and restructure the shareholding structure of its subsidiaries.
Managing director Datuk Seri Amrin Awaluddin said despite being dragged down by impairments, amortisation and provision in the financial year ended December 31, 2019 (FY2019), BHB is position of better prospects in 2020 and beyond as the impairments, amortisation and provision that occurred in FY2019 results were one-off items.
“Our business was running as usual for 2019, as our revenue is positive, earnings before interest tax, depreciation and amortisation (EBITDA) are positive, and losses from operations have been reduced from FY2018.
“From 2020 onward, we hope to see all our assets value and the cost from operations will reflect the true value and situation of the company, as long as we are not hindered by legacy issues,” he told Bernama.
The legacy issues referred to the many investments made in the past by BHB’s subsidiaries that did not have the right focus in making them more profitable, aggressive in the market, competitive and structurally sustainable in the respective industries.
BHB’s divisions in 2019 comprise the plantation, property, pharmaceutical, heavy industries, finance & investment, and trading & industrial sectors.
“We have started to turnaround underperforming subsidiaries and we hope to see a significant improvement in the coming year.
“The key consideration is to make sure that the group is generating enough cash to support all the interests of the group and pay up the banks in an orderly manner,” said Amrin.
In FY2019, BHB’s net loss rose to RM1.4 billion from RM577.2 million in FY2018, while revenue increased 1.4 per cent to RM10.3 billion from RM10.1 billion previously.
During the same period, the loss from operations was reduced 46 per cent to RM127.7 billion from RM236.3 million previously.
On EBITDA, it increased 30.7 per cent in FY2019 to RM441.1 million from RM337.4 million previously.
On impairments and amortisation, Amrin said the plantation division had a one-off impairment on the Boustead Pertama Estate (acquired in 2018) and Boustead Tawai Estate (acquired in 2019) amounting to RM176 million.
While in the pharmaceutical division, the Pharmacy Information System (PhIS) developed by Pharmaniaga Bhd for the government, was initially planned to be amortised over a duration of 10 years (initial duration of contract). With a new revision of the contract from 10 years to five years, the company (Pharmaniaga) decided to undertake an accelerated amortisation for the remaining five years in 2019 at RM247.3 million.
On heavy industries, RM763.3 million was registered as an impairment of goodwill due to uncertainties in securing future businesses, while another RM80.4 million was due to a progressive impairment of idle aircraft in MHS Aviation.
As for the property division, an impairment of RM47.1 million was registered following an assessment of business Royale Chulan Cherating Villas business prospects. — Bernama