WE have fulfilled all financial responsibility to Felda since our inception in 2012, said FGV Holdings Berhad.
In a statement today, it pointed out that to date, the establishment has paid up to RM248 mil a year, as stipulated under its Land Lease Agreement (LLA).
“And from 2012 to 2019, we have paid more than RM2.5 bil to Felda,” it said.
Two days ago, Felda chairman Datuk Seri Idris Jusoh told Malay daily, Berita Harian that Felda’s revenue from its plantation operations had fallen since FGV was listed on Bursa Malaysia in 2012, with the most recent profits of RM16.51 mil recorded for the 2019 fiscal year.
He noted the figure was vastly different from Felda’s highest recorded profits of RM1.85 bil back in 2011.
Idris, who is also an Umno member of parliament, claimed that FGV was due to pay dividends from the land it had leased from Felda at a rate of RM800 mil per year, but only managed to pay RM250 mil annually.
“With the new business model, we believe that not only can we service our debts but also generate revenue. As a start, we want to take back the 350,000 hectares of land leased to FGV,” he was reported saying.
In its defence, FGV explained that when the LLA was signed in 2011, the price of crude palm oil (CPO) was about RM3,000 a tonne.
However, Felda, through the LLA, decided on the price of RM2,800 per tonne instead.
“CPO pricing plays an important role in determining the company’s profit or loss. After the IPO in 2012, the payment to Felda from FGV did not meet Felda’s projections due to a dip in CPO prices.
“And the yield was lower than expected as 50% of the trees inherited by FGV were considered old (more than 21 years old).
“In addition. 15,000 hectares of land a year was allocation for replanting purposes, inevitably reducing FGV’s income,” it remarked.
Sustainable initiatives cost money
FGV added that the replanting expenses on the 15,000 hectares of land came up to RM300 mil per annum, excluding another RM 300 mil yearly for fertilisation and rehabilitation.
“Due to our hardwork, FGV managed to replant and upgrade the states for the sake of long-term sustainability. We also managed to reduce old trees by about 30%.
“The LLA land is now in a better condition compared to when it was given to us by Felda,” it said.
FGV added that it was incorrect for Felda to say that the former was supposed to pay RM800 mil a year from the LLA.
“In the agreement, it is stated that the amount payable to Felda is RM248 mil a year, plus 15% of the operating profit from LLA land.”
Touching on its listing, FGV said that Felda cannot blame the initial public offering (IPO) for the latter’s failure, adding it all depended on how both parties managed the earnings gained from the process.
“Felda earned RM5.7 bil from the IPO while FGV has earned RM4.5 bil. Unfortunately for FGV, part of the proceeds were not well invested.
“As of 2018, FGV has made substantial impairments amounting to RM780 mil for those new investments,” it said. – Oct 20, 2020
