KUCHING: Borneo Oil Bhd, which owns fast-food restaurant chain SugarBun, has made massive impairments to the assets and expenditure related to the group’s mining and energy operations.

This has resulted in the company’s mining, energy and related business division to suffer a huge loss of RM73.06 million in fourth quarter ended June 30, 2019 (Q4-2019).
Several years ago, subsidiary Borneo Oil & Gas Corporation Sdn Bhd (BOGC) ventured aggressively into mining activities with big investment on machinery and equipment upon its appointment as the exclusive subcontractor for the exploration and mining of alluvial and lode gold in three districts in Pahang — Mukim Batu Yon and Hutan Simpan Hulu Jelai in Lipis and Hutan Simpan Bukit Ibam in Rompin — covering some 1,561 hectares.

However, in June 2018, BOGC disposed of its entire 95 percent stake in Jursa Mining Merapoh Sdn Bhd, the main contractor appointed to mine five prospecting blocks measuring 1,780 acres in Lipis, for RM10 million.

The disposal, according to Borneo Oil then, was in line with the group’s plan to streamline its mining operations to focus its resources on the hard rock mining operations in Bukit Ibam, which covers nearly 3,000 acres.

The group commenced alluvial gold mining and exploration activities in Bukit Batu Yon in 2014. Besides gold mining, BOGC is into limestone mining operation in Ulu Segama, Lahat Datu in Sabah.   Meanwhile, Borneo Oil has revalued its investment properties, comprising leasehold land and buildings, resulting in a revaluation surplus of RM114.1 million.

The surplus enabled the construction, property and management operations division to contribute RM79.99 million to Borneo Oil group bottomline for Q4-2019.
In Q4-2019, Borneo Oil posted group net loss of about RM6.65 million on revenue of RM25.9 million. Loss per share was
0.13 sen.

About 50 percent or RM12.5 million of the revenue was contributed by the fast food, restaurant and related businesses division. The division, however, recorded a loss of RM1.13 million due mainly to the increase in food and logistics costs.

The company has reported weak market sentiment and stiff market competition to its fast food business. During the quarter under review, one franchised SugarBun restaurant opened for business while five others were shut down. Its pizza chain Pezzo saw the opening of three new franchised outlets while one outlet was closed.

There are currently 88 SugarBun outlets in Malaysia and overseas and 44 Pezzo outlets. The construction, property and management operations division posted revenue of RM12.3 million in Q4-2019.

The mining, energy and related businesses division chipped in revenue of RM1.07 million, mainly from the sales of limestone aggregate and tribute. In financial year to June 30, 2019 (FY2019), Borneo Oil registered group net loss of RM6.74 million on revenue of
RM93.17 million.

“The board has adopted a prudent stance for this financial year and provided for impairment on its mining and energy related assets and expenditure. “Going forward, the board is optimistic for the new financial year with the improvement in its earning base and will continue to identify more robust and strong growth business for the group,” said the company.