KUALA LUMPUR: FGV Holdings Bhd posted RM849.25 million net loss in the third quarter ended September 2018, dragged by lower palm oil prices and impairments totalling RM788 million, the bulk of it from its unit Asian Plantation Ltd (APL).
FGV’s third quarter loss is in contrast with the RM41.52 million net profit posted a year ago.
Chairman and interim chief executive officer (CEO) Datuk Wira Azhar Abdul Hamid said this second consecutive quarterly loss was broadly reflected in other plantation companies, due to falling palm oil prices but FGV's results were exacerbated by impairments.
Apart from the bad APL deal, FGV also had to book in a further impairment of RM102 million for FGV Green Energy Sdn Bhd, RM53 million for the acquisition of FGV Cambridge Nanosystems Ltd and RM1.22 million for the purchase of two units of Troika condominiums, Azhar said at a press conference today.
Also present at the media briefing were FGV acting chief financial officer Aznur Kama Azmir, chief investment officer Fakhrunniam Othman and chief transformation officer and chief operating officer of plantation sector Syed Mahdhar Syed Hussain.
FGV’s third quarter revenue fell 23 per cent to RM3.19 billion from RM4.14 billion a year ago.
For the nine months, the group posted RM871.15 million net loss compared with net profit of RM80.48 million, previously. Its nine months revenue also fell to RM10.23 billion from RM12.66 billion.
Azhar, in shedding more light to the huge impairment noted in 2014, FGV bought APL for RM567.9 million via a voluntary conditional cash offer at £2.20 per share, a 294.7 per cent premium over APL’s net asset value per share as at December 2013.
“FGV also assumed APL’s borrowings amounting to RM517 million. Therefore, the total cost to FGV was RM1.1 billion,” he said.
Azhar said FGV was seeking to recover RM514 million for loss and other damages from the purchase of APL.
Last week, FGV announced it had initiated a civil suit against 14 defendants consisting of a former group president and CEO, former chairman and other former board directors and employees over the deal.
They included former FGV chairman Tan Sri Mohd Isa Abdul Samad, former group president and CEO Datuk Mohd Emir Mavani Abdullah, former business development of downstream cluster vice-president Farisan Mokhtar, former chief financial officer Ahmad Tifli Mohd Talha and former downstream cluster senior general manager Rasydan Alias Mohamed.
On whether there would also be criminal charges arising from wrongdoings that resulted in FGV having to make the impairments, Azhar said it was in the hands of the authorities.
“The Malaysian Anti-Corruption Commission did initiate investigation into the APL case, some time ago. I, myself have met up with the MACC officers. The FGV board of directors is open to co-operate if the authorities and enforcement bodies decide to pursue criminal prosecutions,” he added.
Azhar admitted that there had been “leakages” at FGV.
When asked to elaborate, he said there had been open credit lines, poor purchasing trading practices and poor palm oil sales that resulted in bad debts.
