KEuro continues to pare down stake in Talam

KUALA LUMPUR: Kumpulan Europlus Bhd (KEuro), which is 25%-owned by IJM Corp Bhd, has continued the disposal of its shares in Talam Corp Bhd.

According to its latest filings to Bursa Malaysia Securities, KEuro sold off 2.33 million shares on March 9 and 10, 2010, thereby reducing its stake in Talam to 26.52%.

KEuro is Talam’s largest shareholder, followed by the latter’s non-independent non-executive director Tan Sri Chan Ah Chye with 5.67%. Meanwhile, Chan is KEuro’s founder and largest shareholder with a 28.87% stake in the company as at June 5, 2009.

According to past filings, KEuro has been selling off its shares in Talam since April 2005 when it held 47.19% of Talam.

In the span of five months from Feb 20 to June 25, 2009, it sold off 160.4 million shares in Talam, reducing its stake from 41.51% as at Feb 20, 2009 to 33.64% as at July 17, 2009.

Speaking to The Edge Financial Daily, an analyst with a local research house said while the disposals could be seen as part of a normal trading exercise, it was possible that the shareholders were frustrated waiting for Talam to unlock the value of its landbank.

“IJM and KEuro to some extent went into Talam with their eyes open, to try and talk to some of Talam’s debt holders and resolve issues,” the analyst said. “But in any case, both companies may find that their exposure (direct and indirect) to Talam may not be worthwhile anymore.”

Last week, KEuro posted a net loss of RM5.30 million for the fourth quarter ended Jan 31, 2010 from a net profit of RM3.83 million a year earlier following a significantly smaller contribution from its associates at RM1.05 million compared to RM11.38 million.

However, its revenue was slightly higher at RM10.18 million from RM8.37 million a year earlier, due to higher billings from construction activities and its manufacturing division.

No dividend was declared for the period.

For the cumulative 12 months, KEuro registered a net loss of RM33.08 million from a net profit of RM11.24 million a year earlier. Revenue was 5% lower at RM41.57 million from RM43.95 million previously while loss per share was seven sen compared with earnings per share of 2.4 sen. No dividend was declared.

For FY2010, KEuro saw huge pre-tax losses of RM33.72 million from a pre-tax profit of RM10.81 million in FY2009 mainly due to exceptional impairment of leasehold land, provision for liquidated and ascertained damages claimed by clients for previous projects, and a RM19.79 million loss from its partial disposal of investment in Talam.

The losses were mitigated by a RM37.07 million gain from a debt purchase transaction.

In a separate announcement, Talam posted a full-year net profit of RM7.09 million for the year ended Jan 31, 2010 from RM59.11 million a year earlier, representing a 88% decline.

Revenue fell 16.7% to RM250.98 million due to lower progress billings generated from its development projects.

Talam also said it would apply to Bursa Securities to lift its Practice Note 17 (PN17) status “soon” as its last few defaulted loans with its lenders have been settled.

Shares of Talam closed half a sen lower last Friday at 12 sen with 9.95 million shares done, while KEuro gained one sen to close at 47 sen with 959,400 shares traded.

This article appeared in The Edge Financial Daily, March 29, 2010.