KUCHING: A Rimbunan Sawit Bhd unit is disposing land and shophouses in Sibu for RM4.3 million in cash.
Wholly-owned R.H. Plantation Sdn Bhd entered into a sale and purchase agreement with Golden Star Ace Sdn Bhd for the proposed disposal of three parcels of land together with one unit each of four-storey commercial shophouse as well as fixture and fittings on Monday (Dec 31, 2018) in a related party transaction.
R.H. Plantation and Golden Star have common shareholders.
R.H. Plantation acquired the said land and shophouses in 2005 and 2008 for a total of RM2.75 million. The company spent an additional RM919,600 on the renovation, fixture and fittings as well as equipment and facilities for the utilisation of the shophouses as offices.
The shophouses, which were occupied by the Rimbunan Sawit group until 2014 before it moved to a new corporate office the following year to cater for expansion. The shophouses are currently leased to two different tenants for a total monthly rental of RM5,800.
“Upon completion of the proposed disposal, the tenants are expected to discontinue the tenancy and the shophouses will be vacant, “ Rimbunan Sawit said in a filing with Bursa Malaysia. The net book value of the property is about RM1.78 million.
The Rimbunan Sawit group said the disposal of the property would enhance its current operational working capital requirement, especially during this low crude palm oil (CPO) price season, and also to release capital from unutilised assets.
It said about RM4.16 million from the proceeds of the disposal would be used as its working capital, with the balance to pay for stamp duty, real property gain tax (RPGT), legal and professional fees.
The latest proposed disposal came barely two months after Rimbunan Sawit completed a major disposal of plantation land known as Simunjan Estate in southern Sarawak to Subur Tiasa Holdings Bhd for RM150 million in cash, also in a related party transaction, in October. Both Rimbunan Sawit and Subur Tiasa are the listed entities under the diversified Rimbunan Hijau stable.
The Simunjan Estate has a landbank of 15,000 hectares of which 5,775 hectares have been planted with oil palm trees mostly between five and 11 years old. The estate produced some 31,500 tonnes of fresh fruit bunches (FFB) and generated a revenue of RM14.8 million in 2016.
The Rimbunan Sawit group has not been doing well as its pre-tax loss widened to about RM52.8 million in the nine months to Sept 30, 2018 from losses of RM20.8 million a year ago despite increase in revenue to RM245.2 million from RM232.6 million year-on-year.
In the latest quarter, group incurred pre-tax loss of RM20.6 million as compared to pre-tax profit of RM30,000 in third quarter 2017 as revenue dipped marginally to RM81.4 million from RM82.6 million.
The company attributed the dismal financial performance to lower average selling prices of CPO, palm kernel and FFB.
At end-2017, the group total oil palm estate area stood at 55,278 hectares, representing 61 per cent of its total landbank of 90,940 hectares. These plantations are located in the Sibu, Kuching and Miri regions.
In 2016, the group initiated the review of its plantation’s value chain as part of three main initiatives to enhance crop collection and distribution channels.
As mechanisation has become more vital as the manpower conundrum continues to badger its operation, the group loaded another 13 units of mini crawlers and tractors to facilitate and spur the crops evacuation, according to chief executive officer Datuk Jin Kee Mou .
Another 25 units of heavy machineries, such as excavators, tractors, and loaders, were brought on board to expedite the ground works preparation, including compaction and levelling, which is expected to be ready by 2019.
All these developments at replanted oil palm areas, said Jin in the company 2017 annual report, had been tailored to pave the way for field mechanisation.
At end-2017, the group had replanted 1,021 hectares with high-yielding seedlings while replanting of the remaining 3,417 hectares are to be completed in three to four years. Replanting of the old estates, which are more than 20 years old, commenced in 2014.
The group is also venturing into mechanising its fertiliser and chemical applications in the estates.
