KUALA LUMPUR (June 7): Furniture maker Euro Holdings Bhd (KL:EURO) said it is disposing of an 8,000 sq m industrial land in Rawang, together with a two-storey detached factory and an annexed three-storey office building sited on it,  for RM17.3 million, cash.

This is part of its business transformation plan to rationalise non-core assets and to move its warehouse from Rawang to its steel furniture manufacturing plant in Melaka, the group said in a bourse filing on Friday.

Of the proceeds from the disposal, Euro Holdings said RM5.5 million will be used to repay borrowings and another RM10.5 million to fund its working capital, while the remaining RM1.3 million will be allocated for estimated expenses related to the disposal exercise.

Based on the net book value of the property as at June 30, 2023 of RM20 million, Euro Holdings is expected to realise a pro forma net loss of approximately RM4 million from the disposal of the freehold land to storage racking supplier TTF Marketing Holdings Sdn Bhd.

However, the group said the net book value is inclusive of a revaluation surplus and deferred tax liabilities of RM15.3 million in the group for FY2023. "If the revaluation surplus and deferred liabilities are not included in the carrying amount (net book value), the pro forma profit is approximately RM11.3 million," it said.   

Euro Holdings said it acquired the property between 1996 and 2004, and the cost of investment was RM2.1 million for the land and RM5.7 million for the buildings erected on the land.   

The disposal is expected to be completed within the next four months, the group said.

Euro Holdings’ share price finished 0.5 sen or 7.14% higher at 7.5 sen on Friday, bringing the group a market capitalisation of RM93.37 million. Year to date, the counter has declined by 25%.