TH records RM1.6b net profit after zakat for 2018

Lembaga Tabung Haji (TH) has announced a net profit after zakat of RM1.6 billion for the year 2018 after a two-year delay in submitting the annual report and financial statement for the year.

The decrease of RM1.8 billion or 53 percent from the previous year was due to hefty non-operating expenses on impairment, write-off and fair value adjustment and expected credit losses of TH’s assets amounting to RM1.5 billion compared to only RM140 million in 2017.

This is mainly due to recognition of a significant impairment loss on investment in subsidiaries, associates and jointly-controlled entities under the Malaysian Financial Reporting Standards 136 (MFRS 136) and fair value loss on investment properties under the MFRS 140.

“When we consider the variables that were put before us during the review period and tough decisions made to showcase a more resilient TH, the result for this year is relatively encouraging,” it said.

By end-2018, TH had successfully transferred all of its underperforming assets to a special purpose vehicle (SPV) fully owned by the government with the transfer value amounting to RM19.9 billion pursuant to the TH Rehabilitation and Restructuring Plan.

On Dec 27, 2018, TH transferred 106 listed domestic equities, one unlisted plantation equity and 29 properties and lands to the SPV.

“In return for the transfer of these assets, the SPV has issued sukuk totalling RM19.6 billion and the balance sales consideration of RM300 million made via cash payments to TH,” the report said.

The government also showed its commitment by allocating RM500 million in 2020 and subsequently, RM1.73 billion per year until all the sukuk is redeemed.

The report said TH was given the first right of refusal to take over any assets that had been transferred to the SPV, should the SPV intended to sell those assets in the future.

“This is to protect TH’s interest if there is any potential upside from the assets that have been recovered in the future. In return for the acquisition of these assets, the consideration may be made via cash or cash equivalent payments.

“TH will only take over recoverable and viable assets that would generate expected return higher than TH’s target investment return,” it said.

In Auditor-General Nik Azman Nik Abdul Majid’s report that was attached to the TH annual report, he said after the implementation of the recovery plan, TH's asset position as at Dec 31, 2018, amounted to RM76.79 billion and liabilities amounted to RM76.44 billion.

He said TH recorded a surplus of assets amounting to RM357.34 million after taking into account hibah (dividend) payments.

“TH’s profit for the financial year 2018 consists of realised and unrealised profits amounting to RM1.6 billion, including unrealised profit from the transfer of TH’s assets to Urusharta Jamaah Sdn Bhd amounting to RM1.39 billion.

“Of the RM1.6 billion profit, TH has paid hibah to depositors amounting to RM922.96 million for the financial year 2018,” he said.

In a separate statement, TH said the delay in the tabling of the 2018 annual report and financial statement was due to, among others, the complexity of the unprecedented rehabilitation and restructuring plan implemented by the previous government.

It added that this had caused the auditing process conducted by the National Audit Department to take a long time, causing delays in the tabling of the report.

- Bernama