What Keuro's 4Q15 results says

The latest quarterly results for Kumpulan Europlus was just announced yesterday and here are what can be deciphered.

- The West Coast project seems to be slow although it has started.
- lower contribution from Rimbayu for the month.
- adjustment for the fair value of holdings in Talam Transform is the major factor for its losses.

West Coast project

It seems that it has started to record in revenue and there are some progress in the project, albeit slow. By looking at the Other Intangible Asset (Concession Assets are intangibles under accounting standards), one can know that the amount has increased from RM139.7 million to RM158.5 million. Additionally, it has recorded construction revenue (Diagram 2) for the quarter of RM14.8 million. As one can see, previously construction revenue was rather non-existent. I am not sure whether project has been delayed or is it normal that it registers such low revenue, as it has just only begun.

Diagram 1: Assets representation for 4Q15

Diagram 2

Contribution from Rimbayu

Based on its Income Statement as below, I would think that RM3.12 million was part of the share of profit from the Rimbayu's project. The other sharing being in the forms of distributable income totalling RM2.92 million in Diagram 4. Few reasons, properties has slowed down and its progress billing was also slowed in the review period. Keuro has mentioned that the project for Phase 1 has been delivered but I doubt all have been delivered during the period. Would think that it would have spilled over to subsequent quarter.

Diagram 3

Diagram 4

Adjustment of fair value of Talam Transform

The main reason as mentioned for the losses was that provision for impairment on investment in associate. Keuro mainly only has Talam Transform as the significant associate. As depicted below, since it has already decided to sell those shares to Tan Sri Chan Ah Chye for RM99 million, I am just wondering why it devalue the investment held for sale as I highlighted in Diagram 1 above. On the books, those are now valued at RM78.5 million although would be sold at RM99 million. Is the sale not going to be completed?

All in all, I am not too happy with the disclosure by the management of Keuro on the progress.