REDtone’s planned dividend payout turned down

20 Nov REDtone’s planned dividend payout turned down

ACE Market-listed REDtone International Bhd’s shareholders viewed a proposed 0.2 sen dividend for the group’s financial year ended May 31, 2015 as too low and voted down the proposed RM1.4 million payout at the group’s annual general meeting (AGM) yesterday.

REDtone managing director Datuk Wei Chuan Beng told reporters during the AGM’s lunch break that the amount would now be reinvested into the company to grow its business.

“Shareholders think the dividend is small and wish the company not to declare dividends for FY15,” he said, adding that the company will use the money for business expansion.

The recommended 0.2 sen net per share dividend translates into 13% of the profit for FY15, according to the group’s latest annual report.

REDtone posted a net profit of RM11.66 million in FY15, up about 64% from RM7.13 million in FY14.

A minority shareholder, who declined to be named, told The Edge Financial Daily that he rejected the proposed payout after taking into consideration the costs incurred for the dividend payment, which he termed “not really worth it for such a small payout”.

Meanwhile, Wei said the company currently has a tenderbook of about RM1 billion. Based on previous experiences, he said the success rate is about 10%. Its order book now stands at RM100 million, which Wei said should last the company for one year.

“Most of the projects [secured] are telecommunications services and managed telecommunications services projects,” he added. These two segments currently make up 80% to 90% of its revenue and earnings.

Wei said he expects the company’s third segment of managed value-added services, which include, among others, the Internet of Things (IoT), data centre, teleradiology, healthcare solutions and managed security services, to contribute more in the next three years.

On whether there was any truth to a rumoured possible merger between REDtone with U Mobile Sdn Bhd, Wei said he was not aware of such speculation, adding that the focused areas for U Mobile and REDtone are quite different.

Late last year, when Tan Sri Vincent Tan’s Berjaya Corp Bhd (BCorp) accumulated shares in REDtone to a level nearing the mandatory general offer level, it sparked speculation of a possible merger between REDtone and U Mobile. BCorp is now REDtone’s controlling shareholder with a 51.34% stake as at Sept 30, 2015.

With BCorp as REDtone’s holding company now, Wei said REDtone will be able to leverage the parent’s greater financial resources to pursue larger projects.

 

Source: The Edge

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