The proposal for further share capital reduction is subject to shareholders' approval at a forthcoming AGM.
PETALING JAYA: Eco World International Bhd
had announced an interim dividend of RM792mil and a final dividend of RM144mil for August and December 2023, respectively, bringing the total dividend declared to RM936mil, or a respective 33 sen and six sen per share.
The dividends were declared following the company’s issued share capital reduction of RM1.6mil for the financial year ended Oct 31, 2023; while it further proposed yesterday to reduce its share capital by an additional RM500mil.
EcoWorld International said the dividends declared so far are the result of its attempts to monetise its completed stocks in hand, with a focus on cash preservation and generation and at the same time, surpassing its targeted distribution amount of RM900mil, announced in December 2022.
In a statement yesterday, the company rationalised that the proposal for further share capital reduction would be to facilitate its target of distributing dividends of up to RM504mil in 2024 and 2025, after setting aside funds for its estimated working capital and funding requirements, subject to the group meeting its sales targets and fulfilling the relevant regulatory requirements.
“On top of that, the proposal is also aimed to provide additional headroom for further declaration of dividends by the company in the future in excess of the targeted distribution amount,” it said.
EcoWorld International estimates its resultant pro forma retained earnings after the proposal to be RM886mil, based on calculations as at Oct 31, 2023.
The company revealed that should the proposed capital reduction be completed, it intends to declare a first tranche of dividend amounting to at least RM144mil out of the targeted distribution amount.
The proposal for further share capital reduction is subject to the approval of the shareholders of the company at its impending AGM and is expected to be completed by the first half of 2024.
President and chief executive of EcoWorld International, Datuk Teow Leong Seng, remarked that in the absence of any immediate plans to undertake new launches or acquisitions in the near term, the current working capital requirements of the group are expected to be lower than those in previous years.
“After taking into consideration our reduced working capital and funding requirements and given the limited development opportunities on the horizon, the group will continue to focus on monetising our completed stocks for cash generation.
“As such, we believe it is in the best interest of shareholders to return the excess cash generated,” he said.
Teow added that an internal sales target of approximately RM850mil for the fiscal year ending Oct 31, 2024, is the key driver for the group to generate the excess cash for further distributions to shareholders this year and the next.
