In notes to its accounts when releasing the fourth-quarter results for the financial year ended Jan 31, 2009 (4QFY09), KEuro said that the new state government of Selangor has requested changes to the original privatisation plan, including omission of the main canal and its related work.
It stated that as such, the land already alienated to Canal City Construction Sdn Bhd (CCC), a 35% associate of the company, would be considered sold to CCC, at a price to be mutually agreed upon.
“While revised terms and conditions are being worked out with the state government, canal construction work has stopped,” stated KEuro. KEuro is jointly controlled by Tan Sri Chan Ah Chye and IJM Corp Bhd, which has a 25% stake.
Under the Canal City project, KEuro is to undertake a flood mitigation programme in Selangor and construct a highway linking certain portions of Shah Alam under the terms of privatisation. In return, KEuro will get land. But with the revised terms, KEuro has to pay for the land alienated.
On the West Coast Expressway (WCE), KEuro stated that the company has submitted all the necessary documents to the Works Ministry to satisfy the conditions precedent of the concession agreement and awaiting the reply from the ministry.
It said that the fund raising exercise for WCE has been delayed mainly due to changes made to the original alignment as requested by the authorities and current uncertainties in the bond market.
KEuro’s 64.2% subsidiary Konsortium LPB Sdn Bhd is the concessionaire of the WCE, which ws mooted some 14 years ago. KEuro has on March 17 submitted the documents to the Works Ministry for the concession agreement to be signed.
Meanwhile, for its 4QFY09, KEuro recorded a net profit of RM3.83 million compared to a loss of RM4.55 million for the previous year’s corresponding quarter. Revenue however came in lower at RM8.22 million compared to the previous year’s reported revenue of RM41.13 million.
For the full financial year, KEuro posted a net profit of RM11.24 million compared to a net loss of RM24.82 million.
KEuro explained in the notes accompanying its results that the lower revenue was due to lower billings from construction activities.
“The improvement in the group’s net profit was mainly attributable to the writeback of provision for doubtful receivables no longer required, higher interest income earned and an increase in share of profits of associates,” said KEuro.
KEuro’s 41.98% associate Talam Corp Bhd saw its net profit for its 4QFY09 jump to RM20.3 million compared to the RM1.24 million recorded for the previous year’s corresponding quarter. Revenue grew by 23.3% year-on-year (y-o-y) to RM136.74 million from RM110.9 million.
On a cumulative basis, revenue grew to RM294.1 million from RM248.35 million, while net profit came in at RM60.33 million for the quarter under review compared to RM3.42 million.
According to Talam, the improved results were due to certain land sales transacted and recognised for the quarter under review in addition to progress billings generated from its development in progress.
“The increase in pre-tax profit was mainly contributed by the full recognition of debt waiver granted by the lenders pursuant to the regularisation plan,” said Talam. The regularisation plan included the issuance of Islamic debt securities, preference shares and loan stocks and hiving off of non-core assets.
This article appeared in The Edge Financial Daily, March 31, 2009.