Mulpha ... Jan11

Mulpha International Bhd may see a recovery in dividend income from its Australia associate FKP Property Group in 2011, compared with 2010 and 2009 where dividends from FKP dropped significantly.

Reports said that FKP is planning to distribute a dividend of three cents per unit for its FY2011 ending June 30, which is double the 1.5 cents per unit distribution for FY2010. Based on FKP’s 1,174 million shares issued, the three cents dividend translates into a gross distribution of A$35.22 million (RM110.5 million).

For Mulpha, which owns a 25% stake in FKP, its gross receipt of the dividend could come up to about RM28 million. This could be a vast improvement from the previous year where Mulpha saw its dividend from quoted shares overseas drop severely.

For Mulpha’s FY2009 ended Dec 31, dividend received from overseas quoted shares, mainly from FKP presumably, stood at RM189,000 compared with RM32.3 million in FY2008 and RM21.8 million in 2007.

Industry observers say increase in dividend expected from FKP for FY2011 is reflective of the positive results from the cautionary measures put in place by the company during the global financial crisis. Meanwhile, FKP is also expected to post stronger than expected earnings from the development of residential properties and operation of retirement villages moving forward.

Australian-listed FKP is the largest private owner and operator of retirement villages in Australia and New Zealand.

FKP and Mulpha hogged the news at the end of October spilling over into November 2010 over rumours that FKP’s second-largest shareholder, Stockland, a leading Australian property developer, was seeking to take over FKP. That speculation was discarded by FKP that it might strike a deal with Stockland.

A fortnight ago, Mulpha announced that it sold its Hilton Melbourne Airport Hotel and will use the RM327 million proceeds from the sale to trim down its debt unless new investment opportunities arose.

As at Sept 30 2010, Mulpha group’s net borrowings stood at RM854.5 million, against a shareholders fund of RM2.87 billion. The group has not been paying any dividends over the last ten years.

Given its lack of dividend track record, industry observers point out that Mulpha is likely to use the impending dividends from FKP to repay its borrowings or reinvest it.

For FY2009, Mulpha narrowed its net loss to RM9.7 million compared to a net loss of RM121.7 million a year before. Meanwhile, for the nine months ended Sept 30, the group registered a net profit of RM50.7 million compared with a net loss of RM71.6 million in the previous corresponding period.

Mulpha has also been buying back its own shares. Between August and December 2010, the group has bought back 7.8 million shares.