16/02/2023 (The Edge Markets), Kuala Lumpur - The federal government did not receive dividends from Felcra Bhd from 2019 to 2021, according to the Auditor General’s Report 2021 Series 2. 

The report published on Thursday (Feb 16) said Felcra, which is wholly owned by Ministry of Finance Inc (MOF Inc), had failed to pay out dividends to the government, as it was in the red with net losses before tax of RM75.75 million for 2019 and RM38.63 million for 2020, based on the management’s accounts.

Meanwhile, Felcra recorded a net profit before tax of RM170.32 million for 2021, but still no dividend was paid to the government, as the financial statements were still being audited by the appointed external auditor.

The report noted that Felcra’s financial statements for 2019 and 2020 had also not been finalised by Messrs KPMG PLT. KPMG had informed the auditor general that the delay in the auditing process was due to the difficulty in obtaining documents during the Covid-19 pandemic.

The Auditor General’s Office noted that due to the absence of Felcra’s audited financial statements, an analysis of its financial position was not conducted.

However, the report did state that Felcra’s P&P (consolidation and rehabilitation) programme provided a positive impact over the three years, and successfully enabled dividends to be distributed to participants.

According to the report, Felcra paid out RM478.6 million worth of dividends to participants in 2021, RM184.69 million in 2020, and RM137.76 million in 2019.

It did, however, note that its analysis found that only 49.3% to 79% of participants received dividend distributions in 2019, 2020 and 2021.

“According to Felcra, participants who did not receive dividend distributions were operating non-viable projects,” the report said, adding that as of Dec 11, 2021, there were 322 non-viable P&P projects out of a total of 1,198 projects.

Non-viable projects comprise old rubber or palm oil projects that are over 25 years old and are no longer productive.

Additionally, the audit report found that undistributed dividends to participants as of April 2022 amounted to RM67.14 million, which accumulated due to death of participants, court cases, participants not being able to be traced, or encroachment or disputes over the land or lot in question.

“An audit of the data trail found that these undistributed dividends began accumulating in 2014, and had not been given to the trustees.

“Further audit review of the company’s cash flow found that Felcra is able to pay the undistributed dividends,” it said, adding that based on the accounts as of Dec 31, 2021, Felcra had a cash balance of RM1.191 billion.

The Auditor General’s Office has recommended that stakeholders help participants who have not received dividends to solve problems of operating costs and non-viable projects.

It added that the undistributed dividends amounting to RM67.14 million must be handed over to the participants and trustees as soon as possible.

It also said that subsidiary companies and joint-venture companies must be continuously monitored in terms of business operations and financial performance.

https://www.theedgemarkets.com/node/655494