Ekovest(8877) - 32nd AGM, 23rd November 2017

board of directors

digitize vote for the 10 resolutions

The AGM started with queries posted by Minority Shareholder Watchdog Group(MSWG) and Ekovest replies. Didn't managed to record down but I believe they will upload the meeting minutes just like how they did on last year AGM.

Questions from the floor : (please note that the order of how's the question being asked or answered during the AGM might not be the same as how I record here)

Question 1) The question is regarding to Islamic medium term notes(IMTM) and why is it issued in lump sum instead of in progressive way so that interest can be saved, the cost of IMTM is about 6% while the return of reinvest into investment funds is 3 to 4%





I believe it is pertaining to this

Answer 1) Duke 1 and 2 have implemented this method in their funding, it is also safer in the sense that the company can secured the funds first and make sure the project can be complete, instead of trying to raise the rest of the fund from time to time. When market is good, every bankers can guarantee you but if market is bad, the cost could be even doubled. We have a team of risk management committee to look out for all the potential risk and cost of debts have been factored into our financial cash flow. The management would like to save some interest too but that will be risky unless Ekovest has parents company like EPF or PNB.



Question 2) Second question is about Duke 2A highway and how is the funding is going to be done with a project that cost more than RM6 billion GDV.





question in regarding to this

Answer 2) The company has finished the design and they have few options when it comes to funding. They are looking for interest rate of around 6% so that the project can be done in cheaper rate. The company wanted to provide value-in-money to the road users and that is why they are success in Duke 1.




Question 3) The question was about the profit guarantee of IRR 12% to EPF for the disposal of 40%Kesturi stake and the listing of DUKE highway



Answer 3) This morning 12.01am Duke 2 has started to collect toll fees, the company will monitor the traffic for couple of months and so far the traffic number are very accurate as per estimation. If the traffic number is good they will try to list the highway earlier and they are confident to achieve the 12% IRR as promised to EPF.





Question 4) One of the shareholder question about the effective tax rate is quite high





The standard corporate tax rate is 24% while the tax incurred by the company is way higher 

Answer 4) The reply from management is despite toll business is generating good cash flow, it is still not making profit  yet in accounting due to amortization, and the expenses is not deductible. Besides that, the higher tax rate is also due to different timing in tax expenses. (I do not quite understand this part maybe someone else can explain better)



Question 5) Why is the other income so much lesser compare to FY16



the income statement is self explanatory

Answer 5) It was due to fair value gain on investment properties of 123 million



Question 6) Why is the admin cost increased so much compare to FY16? (refer to the income statement above)


Answer 6) The one off ESOS expense of 22.6million is one of the reason, however, excluding this one off expense the admin cost still increased around RM 33 million. The management explanation on this matters is due to the company has achieved more than 1 billion revenue at the first time and that is the reason for admin cost increase. Due to my limited knowledge, I am somehow not quite understand and convinced by it.


Question 7)Can the company provides more information in regarding to the provision for liquidated and ascertained damaged (LAD) and when will it be actually realized.

Answer 7) (I don't quite get the answer at the beginning part) based on my understanding, the provision for LAD that comes from the late of completion is because of the enhancement job after completion. The impact is minimal and could be reversed. Such provision is due to accounting treatment.


 Attached together with the result of poll

 

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