Annual General Meeting 2021
- Approval received from shareholders for the proposed disposal of IJM Plantations Berhad
- Timing of special dividend to coincide with the release of 2QFY2022 financial results
- Execution of IJM’s three-year strategic focus to navigate short-term uncertainty
- Financial performance to recover in 2HFY2022
PETALING JAYA, 26 August 2021 – IJM Corporation Berhad (“IJM” or “the Group”) held its 37th Annual General Meeting (“AGM”) today, which was conducted as a fully virtual event in adhering to Covid-19 standard operating procedures (SOP). Meeting proceedings were broadcasted to shareholders via remote participation and electronic voting on a designated online meeting platform.
All of the resolutions on the agenda were approved at the AGM and the company’s audited financial statements for the financial year ended 31 March 2021 (“FY2021”) were adopted. Details of the voting results, presentation from the CEO & Managing Director and questions received, as well as responses provided during the meeting are available on IJM’s corporate website at www.ijm.com.
During a presentation to shareholders at the AGM, Mr Liew Hau Seng, CEO & Managing Director, reviewed the Group’s FY2021 performance and prospects against a backdrop of challenges and uncertainties brought on by the Covid-19 pandemic. The progress made in implementing the Group’s three-year strategic focus and priorities for FY2022 were highlighted, reaffirming the company’s strategic agenda. Mr. Liew also presented on the strategic merits of the proposed disposal of the Group’s equity stake in IJM Plantations Berhad.
Approval from shareholders for the proposed disposal of IJM Plantations Berhad
The Group had secured shareholders’ approval at the AGM for the disposal of its entire 56.2% stake in IJM Plantations Berhad (“IJMP”) to Kuala Lumpur Kepong Berhad, for a cash consideration of RM1.53 billion.
Salient points of the transaction include:
- The proposed transaction fits with IJM’s strategic focus to streamline its construction-property-industry-infrastructure related businesses. This enables the Group to establish a more efficient business structure that will accord the company better value appreciation by the market, narrowing the conglomerate discount.
- Proceeds of the RM1.53 billion is sizeable and would enable the Group to pursue new growth opportunities, fund existing working capital or capital expenditure requirements, and reward shareholders by way of a special dividend as well as share buyback activities – further enhancing value to shareholders.
- RM800 million is earmarked for capital management activities, which includes an indicative special dividend amounting to RM542 million, or 15 sen per share, as well as a share buyback programme. The declaring of the special cash dividend to shareholders is expected to coincide with the release of IJM’s 2Q FY2022 financial results in November 2021.
- An immediate one-off gain from the disposal will be recognised by IJM in the second quarter of FY2022.
“IJMP has been a valued part of the Group and its contributions to the Group’s financial performance, particularly during periods of major economic downturns is recognised. The decision to dispose IJMP was a strategic one to streamline the Group’s focus on its construction-property-industry-infrastructure business. With this change in ownership, we believe IJMP will also be well-positioned for long-term success,” commented Mr Liew on the transaction.
“The utilisation of the proceeds from the disposal of IJM Plantations to fund future growth opportunities is consistent with the Group’s past practice of ‘recycling’ its mature assets while we uphold our commitment to reward our long-term shareholders who ride this journey with us,” he added.
Execution of the Group’s three-year Strategic Focus to navigate short-term uncertainty
In early 2020, the Group launched its three-year strategic roadmap for the financial years 2021 to 2023 to build resilience, drive growth and nurture capabilities against a backdrop of changing consumer behavior, technology advancements, stiffer competition, growing importance of sustainability and macro-economic uncertainties.
- In FY2021, the Group’s primary thrust was to build resilience amidst the Covid-19 pandemic. Its focus centered around ensuring cash flow and balance sheet strength, the identification and disposal of low-yielding assets as well as the adoption of a more proactive stance on capital management.
- The Group saw higher cash at bank and lower debt levels than a year ago. This resulted in the Group’s net gearing strengthening to 0.44 times at the end of FY2021 compared to 0.49 times in the prior year, underlining the Group’s disciplined approach to managing its balance sheet.
- In FY2021, the Group continued with efforts to pare down property inventory and dispose low-yielding assets. The disposal of assets such as Industry Division’s Jiangmen factory and property, plant and equipment netted proceeds of RM114.20 million. The Group also successfully pared down its Malaysian property inventory in the financial year by RM605.95 million.
- The strong financial performance and cash flow position allowed the Group to declare a higher dividend payout of 6 sen per share to its shareholders.
- Due to the undervaluation of the IJM share price by the market, the Group stepped up the share buyback programme and has bought back 54 million shares to date.
“Through our concerted efforts, the Group achieved a commendable financial performance despite uncertainties in our operating environment. We ensured that there was sufficient liquidity and cash flow at all times to meet our financial obligations. At the same time, we re-prioritised capital expenditure and working capital efficiencies to enhance our balance sheet strength. This can be observed from the relatively strong cash flow from operating activities generated during the year as well as higher cash in the bank balance and lower net gearing at the end of FY2021 compared to a year ago,” said Mr Liew in summary of FY2021.
Notwithstanding the resilience demonstrated by its businesses, the Group is also mindful of the need to push for growth.
- The Division’s outstanding order book as at 31 March 2021 was RM4.0 billion. The Division has since secured three projects amounting to RM586 million in FY2022 and targets to replenish the order book by RM2 billion this year. This will hinge on the revival of infrastructure spending as part of the Malaysian and Indian Government’s economic recovery plans.
- The Group has a pipeline of large-scale projects to drive long term value creation:
- Current road concession projects are the development of the West Coast Expressway which is expected to be completed by 2024; and the construction of the Vijayapura-Solapur Tollway that is scheduled for completion by end-2021.
- Kuantan Port is also well-positioned for further brownfield expansion following the successful implementation of Phase 1A of its New Deep Water Terminal. The prospects for cargo throughput growth are promising, in line with the development of nearby industrial parks, namely, the Malaysia-China Kuantan Industrial Park (MCKIP).
- The Light City Development in Penang is currently one of the Property Division’s major undertakings and has a total gross development value (GDV) of RM4.5 billion. When completed in four years, it will be a major MICE destination, given its strategic location and unrivalled MICE offerings in the Penang Waterfront Convention Centre, hotels, office towers, retail and residential components.
Given the increasing demands of the business landscape, the Group has identified a few long-term priorities in the areas of digitalisation, sustainability, corporate governance and performance management culture that are vital to its long-term success.
“We have defined our strategic focus in order to rise to the challenges of our time. Today, a year after the launch of our strategic focus, we are well on track. With our existing assets, we are focused on delivering robust returns. By divesting selected businesses and through strategic investments in new ventures, we will further strengthen the performance of our business, while positioning the Group for further growth.,” said Mr Liew on the Group’s three-year strategic focus.
Improved financial performance expected in the second half of FY2022
IJM released its FY 2022 first quarter financial performance two days before the AGM on 24 August. Highlights include:
- Marked improvement in the financial performance of 1Q FY2022 compared to 1Q FY2021, after stripping out the one-off forex gains in 1Q FY2021.
- Operating results for the Group is expected to be hampered in the first half of the year due to pandemic lockdowns imposed under MCO3.0, but will be bolstered by a sizeable one-off gain from the disposal of IJMP.
- The financial performance of the Construction, Property, Industry and Infrastructure divisions should recover in the second half of FY2022 when operational activities are recommencing.
- Given the economic outlook and the competing priorities of Government finances, the Group anticipates that Private-Finance-Initiative (PFI) types of infrastructure spending will likely have to increase to revitalise the economy.
Commenting on the outlook, Mr Liew concluded: “Looking ahead, we remain optimistic about our prospects for continued growth in the long-term, supported by a number of external factors including the gradual reopening of the economy, increasing vaccination rates and easing Covid-19 restrictions. With a strong balance sheet, track record and experience in developing PFI projects, IJM will be well-placed to participate in a recovering economy.”
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About IJM Corporation Berhad
IJM Corporation Berhad (“IJM”), formed in 1983, is today one of Malaysia’s leading construction groups and is listed on Bursa Malaysia. Its business activities encompass construction, property development, manufacturing and quarrying, infrastructure concessions and plantations.
Headquartered in Selangor, its operations are located in 8 countries, with primary focus in Malaysia, India and Indonesia. The Group presently has a market capitalisation of around RM6.7 billion and as of June 2020, the Group employed around 3,800 employees and has total assets of RM23 billion.
The Group’s belief in a shared destiny with its employees remains pivotal to its growing success while its reputation for professionalism, performance and good governance is acknowledged by customers and investors alike from its numerous corporate and industry accolades. IJM is committed to ethical business conduct and subscribes to the principles of good corporate citizenship for sustainable growth and development.
For more information, visit www.ijm.com
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