MKH Annual Report 2019

026 A N N U A L R E P O R T 2 0 1 9 HOTEL For FY2019, the plantation division recorded a decrease in revenue by 12.7% to RM229.8 million (FY2018: RM263.2 million) mainly attributable to lower average CPO price of RM1,856 per metric ton (MT) in FY2019 as compared to RM2,163 per MT in FY2018. This division’s PBT was lower by 50.4% to RM5.9 million (FY2018: RM12.0 million) mainly due to lower average CPO price and couple with higher average production cost incurred as a result of lower production of fresh fruit bunches of 459,000 MT in FY2019 (FY2018: 465,000 MT) due to dry weather. This division recorded unrealised foreign exchange gains of RM14.0 million in FY2019 (FY2018: unrealised foreign exchange losses of RM36.4 million) following the strengthening of Indonesian Rupiah against its borrowings in US Dollar. Excluding the unrealised foreign exchange gains or losses, this division recorded loss before tax of RM8.1 million as compared to PBT of RM48.4 million in FY2018 due to the above mentioned factors. As at 30 September 2019, the total area planted for this division was about 16,408 hectares (FY2018: 16,408 hectares) with 15,623 hectares (FY2018: 15,623 hectares) have reached the mature age for harvest. Presently, PT Maju Kalimantan Hadapan is planted with 14,877 hectares of oil palm trees aged between 8 and 11 years old, while PT Sawit Prima Sakti is planted with 1,531 hectares of oil palm trees aged 2 to 8 years old. Hotel and Property Investment For FY2019, this division recorded a lower revenue and PBT of RM31.2 million (FY2018: RM33.0 million) and RM1.8 million (FY2018: RM11.8 million) respectively due to inclusion of loss on changes in fair value of investment properties totalling RM6.2 million in FY2019 (FY2018: RM317,000), absence of gain on disposal of an associate in FY2019 (FY2018: RM2.0 million), reduction in average rental rates for tenants to sustain the occupancy rates and the newly refurbished 3-star hotel namely RHR Hotel @ Kajang has yet to achieve its breakeven occupancy rates. PROSPECTS The Board is optimistic and expecting to achieve satisfactory results for the financial year ending 30 September 2020 (“FY 2020”) mainly from the following principal business segments: - MANAGEMENT DISCUSSION AND ANALYSIS REPORT Group Executive Chairman, Tan Sri Dato’ Chen Kooi Chiew (second from right) and team inspecting the oil palm plantation.