Sarawak builder Ibraco is now PN17 firm

KUALA LUMPUR: Ibraco Bhd has been categorised as Practice Note 17 (PN17) company as the property developer’s revenue is less than 5% of its paid-up capital of RM99.5 million.

The Sarawak-based company’s revenue for the financial year ended Dec 31, 2009 (FY2009) slid almost 95% to barely RM3.5 million from RM66.5 million in FY2008.

As for the bottom line, Ibraco’s net loss widened to RM7.5 million for FY2009 from RM3.5 million the year before.

The company’s financial statements show that its revenue has been declining since FY2005 when its revenue was at RM154.6 million. It has been loss making for the past three years.  

The share price tumbled ahead of the announcement on May 10. The property counter shed 13 sen or nearly 14% to an eight-month low of 81 sen.

In the announcement, the company explained that the sharp drop in revenue was mainly because of the slowdown in property launches in view of the unfavourable economic conditions in FY2009.

“No new project was launched in 2009 for fear of being not able to sell in such an unfavourable time and the company will end up with huge inventory leading to excessive working capital being tied down unnecessarily,” it said.

Sales revenue during the year was mainly from the remaining property projects carried forward from previous years, with the management concentrating on the timely collection of sales proceeds.

Nonetheless, according to Ibraco, its financial position has improved and borrowing pared down to RM8.91 million from RM18 million during FY2009. And it currently has a cash pile of RM11.36 million.

Presently, Ibraco has 865 acres of land mainly in Kuching which the company characterises as being “at strategic locations”, of which 365 acres have been approved for development.

Ibraco has to complete a regularisation plan with a timeline to submit it to the Securities Commission within 12 months of yesterday’s announcement.

If the company fails to regularise its condition, its securities will be suspended from trading on the next market day after five days from the date of notification of suspension by Bursa Malaysia.

The announcement said the company is in the midst of formalising its regularisation plan and appointing a principal adviser.

This article appeared in The Edge Financial Daily, May 11, 2010.

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