FHL records $45M Profit, $355m Revenue
SUVA
Fijian Holdings Limited (FHL) Group recorded revenue of $335 million and a profit of $45 million as of June 30, 2019, the Group’s CEO highlighted at their 34th annual general meeting yesterday.
Held at the Holiday Inn, Suva, Nouzab Fareed said they looked to change their strategy in the next few years in order to increase their revenue.
Of the $335 million revenue, the company paid close to $32 million to Government in various forms of taxes.
Revenue by sector
The group received most of their revenue from the retail sector, which contributed about 40 per cent, construction - 33 per cent, tourism - 16 per cent, media and finance 5 per cent each, and property - 1 per cent.
Group performance
Mr Fareed said as of 30th September 2019, FHL Group assets totalled $651 million, making the company one of the largest in the country.
Of the $651 million, $351 million of the group assets is owned by the shareholders and the balance is Group borrowing.
Out of $262 million borrowing, $149 million is borrowed by Merchant Finance. “They borrow from public, we borrow from the banks, [and] collectively we’ve borrowed $262 million.”
To reduce the amount borrowed and increase revenue and profit for the Group, Mr Fareed said they planned to list a few of their companies.
Planned public listings
“We are going to list some of our group companies and before listing, we are doing some restructuring.
“We are putting Pacific Cement into Basic Industries. Pacific Cement is a $30 million company, Basic Industries is about $70-$80 million, combined it will be about $100 million, and then we are going to take it to public. “At this stage we are confident this company will go public by next June.”
Mr Fareed said so far, the value of FHL is $1.70 per share in the stock market.
Other listings include Merchant Finance, South Sea Cruises and also taking FHL properties public. “Each of these companies, on FHL books, can be less than $60 million right now, but if restructured and taken to public, you are looking at $150 million company, Mr Fareed added.
FHL properties
The group’s property portfolios amounts to around $110-$120 million.
“We are looking at another property portfolio of another $100 million, so basically you are looking at a property portfolio of $200 million. Again make this $200 million portfolio, [and] then take it to public.
“Why public? To have a visible, transparent value. You [take] your company to the market; the market cap is the reflection of the value.”
In terms of FHL portfolios, retailing sits at 31.4 per cent; finance – 16.0 per cent; properties – 8.4 per cent; buildings and construction – 11.2 per cent; media – 12.4 per cent; and tourism – 15.3 per cent.
New products/investments
“We spent $30 million in investments last year, and next year we will invest $35 million. The economy may not be growing at a fast rate, but we need to invest.”
Mr Fareed said they were investing in a flat catamaran worth $3.8 million that was being built in Asia and expected to arrive into Fiji in March, 2020 and sail in June next year.
“Our brand name for that is South Sea Sailing. So this will replace Sea Spray.”
He said Basic Industries was also involved in the construction of houses under a new division called Basic Homes.
“For the time being we are only working with the government because of guaranteed return. We have 35 projects on this, 22 we have completed and the value is $19 million. These are not only houses, but classrooms, principals’ quarters. We are yet to venture out. ”
Mr Fareed said the number of companies they had acquired was increasing, which included 30 per cent of Sheraton Tokoriki.
“[We] acquired 100 per cent of an island last week and we have some joint venture partners,” he said.
“We are also negotiating with one mataqali, [so] technically within this month we have been negotiating four different deals.” Mr Fareed said those were small acquisitions in terms of dollar value, but they had great potential.
He added they were investing in tourism so they could control the value chain. “Another hotel we are building in Lautoka, Shirley Park [has] 142 rooms, [costs] $32 million. We are still negotiating who is going to operate this hotel. This is a joint venture between FHL, RC Manubhai and P Meghi because it is always better to share your risks with other partners. Construction will start probably in February-March next year.
“[the] FHL tower [has] 17 storeys, 13, 300 square meters, at a cost of close to $65 million. We have just started construction. The incompletion value is around $80 million and at this stage, we are fairly certain, if not for any weather impacts, this should be ready by September 2022.
“Already two-three diplomatic missions are in touch with us. This building is largely for international community because they pay good rent. Out of the 17 floors, at least 10 floors will be given to diplomatic missions or international agencies.
“At this stage, you will see the foundation completed by February - March next year, and [takes] 24-30 months to complete. At this stage, September 2022 is our target.
“[The] 37-year-old Ratu Sukuna House, we just spent close to $2 million and put new lights and new panels, and we’ve improved the safety.
“We will make sure that this gives you enough returns. All buildings give a good return, so we get about 7 per cent of revenue from all buildings.”
Mr Fareed said they were looking into acquiring large tourism enterprise. “Right now we own South Sea Cruises, Blue Lagoon Cruises, a few islands and a hotel. But I also need the balance of the value chain.
“Healthcare, we are looking at it [as] it’s a very sensitive business; hopefully it will give us something positive. Logistics again, we are looking at it, not to do it ourselves, probably a complete logistics solutions.
“Last two-three years we’ve been talking about renewable energy. We have two-three companies in Fiji, but still we are not getting the mix right, the partner right.
Losses and challenges
Pacific Cement Limited made a loss of $1.6 million last year, and just recently recorded a price increase of 4.5 percent, but that alone is not enough to make a lot of money, the CEO said.
Mr Fareed said current law restricting the amount of weight carried by trucks on roads contributed to the loss by Pacific Cement. But they are trying to overcome this through barging as an option to ensure they still generate money from the cement plant.
“A new cement plant will cost more than $20 million, [so] we are still trying to figure out whether this should go on or not. But before we go on, we will do a feasibility study too because we do not want to make another loss.”
Life Cinema made total sales of $5,675,609, of that $2522, 493 was the total cost of payment made to distributor, Duty etc. with tax $945,935. Mr Fareed said they were looking at ways to try and overcome this tax challenge.
Dividends
A total of $7.5 million dividend was paid out this year compared to $7.4 million last year. “Throughout the years, we are increasing the dividend. Every year, the dividend is growing by .1 per cent.
“I give you assurance that the dividend will grow.”
Mr Fareed said in the last 35 years, they had paid out $124 million in dividend.