20 Nov REDtone shareholders say ‘no’ to payment of dividend
Shareholders of REDtone International Bhd voted against a proposal to reward shareholders with a 0.2 sen dividend yesterday, saying that it is better spent investing in the company’s growth.
REDtone group managing director Datuk Wei Chuan Beng said it made a profit of about RM14 million last year and has allocated 10% of the profit for dividend, which translated to RM1.4 million or 0.2 sen per share.
“Shareholders have indicated that the dividend declared is small so the majority are of the opinion that this need not be paid out.
“My view is that in view of the growth plan of the company, and since shareholders feel that a dividend need not be declared as it’s a small amount, we can use the cash for the expansion of the business,” he told reporters at its AGM in Bukit Jalil here yesterday.
The proposed single-tier dividend of 0.2 sen per share is in respect of the financial year ended May 31, 2015 (FY15).
REDtone recommended the dividend after taking into consideration its capital and operational expenditure needs in the new financial year and beyond.
“This is the first time we see a lot of interest wanting to know about the business,” said Wei.
REDtone is an integrated telecommunications solutions provider, offering telecommunications services, managed telecommunications network services, managed value-added services and mobile services. Currently 80% to 90% of its revenue and profit is from telecommunications and managed telecommunications network services.
Moving forward, Wei said managed value-added services will be able to contribute significantly in the next three years. He foresees a balanced contribution from the four pillars in five years’ time.
REDtone is tendering for RM1 billion worth of jobs and has experienced a 10% success rate. It has an order book of RM100 million in telecommunications services and managed telecommunications network services that will last a year.
With the emergence of Berjaya Corp Bhd (BCorp) as REDtone’s holding company and Sultan Ibrahim of Johor as its largest individual shareholder, BCorp has enormous resources that it can leverage on to support its future growth.
It believes that both BCorp and Sultan Johor will undoubtedly strengthen REDtone’s position in the telco industry.
Wei said with BCorp, there are synergies under the telecommunications services.
“There are so many companies within BCorp group that we can serve. We can also leverage on the greater financial resources when we’re pursuing bigger projects,” said Wei.
However, he denied talks of a merger with U Mobile, emphasising that there is no overlap in both telcos.
REDtone’s sixth largest shareholder Tan Sri Robert Phang Miow Sin, who is former Malaysian Anti-Corruption Commission panelist and ex-KPMG adviser, concurred with the opinion that the telco should reserve its funds for expansion.
Phang commended REDtone’s future with BCorp, and pointed out that REDtone’s share price should be hovering around the 80 sen level, which is the fair value determined in its last general offer. “If it does not reach 80 sen, the directors of REDtone must wake up and work harder,” he said.
REDtone shares closed at 68.5 sen yesterday, down 0.5 sen.
Source: The Sun