Better returns: Group wants to deliver more value to shareholders by reducing borrowings and interest cost.
MMC Corp Bhd plans to pare down borrowings and subsequently reduce interest cost by half, enabling the group to deliver better value to shareholders.
The reduction in borrowings will be via a combination of refinancing, proceeds from the unlocking of group assets and other debt/equity capital market transactions.
These efforts would help MMC to achieve savings in terms of finance cost and ultimately improve its bottom line going forward, its group managing director Datuk Hasni Harun told Business Times recently.
MMC's interest cost is RM180 million per annum and it plans to reduce that amount by half, which will save it RM90 million per year. Its total borrowings as at April 30 2012 stood at RM21.8 billion, or a net gearing level of 2.4 times. At holding company's level, the borrowing is RM3.3 billion.
Hasni said most of the borrowings were contained at the subsidiary level (such as at Malakoff Corp Bhd), where about 80 per cent of the total borrowings involved project financing and structured as ringfenced.
Malakoff's debts were serviced by cashflow received by concessionbased assets, said Hasni.
"It has sufficient cashflow to comfortably cover its respective debt service requirements. The debts are secured on a nonrecourse basis," he added.
Hasni said MMC was bullish about its prospects in 2012 and that it was well positioned to continue last year's growth trend.
MMC's revenue last year increased by 9.3 per cent to RM9.3 billion from the restated RM8.6 billion recorded in 2010.
This was attributed to higher overall profits on the back of stronger performance by its key businesses.
The improved operational performance in 2011 has also led to an increase of 80 per cent in pretax profit to RM1 billion, compared with the restated RM555.7 million pretax profit in 2010.
Hasni said the improved revenue and profit reflected the better performance by key subsidiaries. Malakoff, for instance, achieved higher turnover of RM5.69 billion, an increase of 10 per cent over the previous year's restated RM5.17 billion.
Gas Malaysia Bhd's revenue grew by 10.7 per cent to RM2 billion in 2011 from RM1.8 billion in the previous year.
Its 70 per cent subsidiary Port of Tanjung Pelepas in Johor handled 7.5 million twentyfoot equivalent units (TEUs), which was 15.4 per cent higher than in the previous year, while Johor Port Bhd's conventional cargo increased by 7.6 per cent.
The overall improvement in throughput volume has also cemented MMC's position as one of the country's leading port operators with a 42 per cent market share.
Hasni said MMC strove to deliver value to shareholders on an annual basis and this was demonstrated by a final dividend for FY2011 of four sen per share, up from 3.5 sen paid in 2010.