FGV Holdings Bhd believes that it is past the financial impact of the money it had lost from a number of cases it currently has under investigation, said chairman Azhar Abdul Hamid.
He noted that all that is left to be done is to conclude the investigations, and to take the next step. Recent reports have FGV filing a police report for criminal breach of trust against former CEO Zakaria Arshad and former CFO Ahmad Tifli Mohd Talha. At the same time, FGV is in the middle of resolving a case concerning Asian Plantations Ltd (APL), where five former directors are being sued over the company’s acquisition of APL, which was seen as questionable.
The case concerning Zakaria and Tifli is reported to have cost the company RM75 mil, while the APL case is for RM514 mil in losses from the acquisition.
For the former, Azhar acknowledged that it is actually the end of a prolonged investigation that began in 2018, and had warranted a police report, which he stated is in line with FGV policy.
“A lot of things are ongoing, and there are probably a few more (cases) to address. As and when we are ready, we will either take matters to court or we will make a police report, so that the authorities can start their investigations,” he said at a press conference on June 19.
“This is exceptional in nature, but we feel we are following our group policy and we are making sure we are doing the right thing,” he added.
In his opening remarks, Azhar shared that, in view of the Covid-19 pandemic and its effect on FGV, the board of directors have agreed to take a 20% cut in fees, effective July 1 to Dec 31, 2020.
“In the current environment, most businesses and industries have been affected by the Covid-19 pandemic. From the board’s perspective, it is only right that we play our role to help with whatever little we can,” said Azhar.
He also noted that further streamlining of costs is a possibility, but things remain dynamic, and he hopes that things will turn around by the end of the year.
“Frugality has always been part of our culture even before Covid-19, and we will continue to make sure that we minimise whatever wastages as we move along in transforming the FGV group,” he said, adding that the senior management team has also agreed to two days of unpaid leave a month, and a 20% reduction in car allowances until the end of 2020 as well.
To streamline costs, FGV has been disposing of non-core and non-performing assets with the target for the year coming in at RM150 mil in proceeds. According to Azhar, this includes the sale of Trurich Resources Sdn Bhd and APL, though no prices were mentioned.
“We are due to complete the Trurich sale very soon. We have the final two interested parties looking at it,” he said, adding that APL has five interested parties, and is looking forward to completing a sale by the end of the year.
In terms of the outlook for FGV, Azhar shared that, in terms of fresh fruit bunch (FFB) production, numbers are up, but FGV may “end the year with a slight dip, but not a drastic drop.”
“We should recover in the second half, and steps are being taken to ensure everything is working nicely, to ensure production is not affected,” he said.
FGV is also looking at a capital expenditure of RM300 mil a year to replant its target of 15,000ha per annum. This aids in lowering the number of old trees among its crop, which now stands at 31%.
For crude palm oil (CPO) prices, Azhar shared that FGV is sticking to its estimate of between RM2,200 and RM2,400 per tonne, saying that “we are not that far off.” According to the Malaysian Palm Oil Council, the settlement price of CPO as of June 18 is at RM2,367 per tonne.
At the end of the trading day, FGV’s shares were last done at RM1.03, up 2 sen, with 16.5 million shares changing hands. – June 19, 2020
