Fijian Holdings Ltd profits drop by 75% in 2020

One of Fiji’s biggest investment companies has reported a significant reduction in annual profit, directly blamed on the impact of COVID-19 upon its business activities. 

The publicly listed Fijian Holdings Ltd (FHL) posted a net profit of F$11.8 million (US$5.52m) for its financial year ended June 2020, a 75% drop compared to F$45.4 million (US$21.27m)  last year.   

Describing 2020 as “one of the toughest years in FHL history”, acting CEO Abilash Ram said the unprecedented economic crisis brought about by COVID-19 was both testing as well as opportune for the FHL Group, which includes some of Fiji’s well-known companies.

“The momentous downfall in reported profits was greatly attributed to performance by Basic Group, Pacific Cement Limited and Serendib Investment Limited. Fiji Television Limited, South Sea Cruises Limited and Merchant Finance Limited whilst not reporting losses did suffer a huge drop in its profits largely due to the impact of COVID-19. During the year, FHL Group paid more than $28m to Government as various taxes compared to $32m paid in the previous year,” Ram said in the company’s 2020 Annual Report filed at the South Pacific Stock Exchange (SPX) in Suva, where it is listed. 

“The global COVID-19 pandemic is an unprecedented crisis for humanity, requiring governments and companies to take extraordinary actions to support their citizens and stakeholders. It is testing companies’ abilities to simultaneously serve their employees, clients, shareholders and communities, while grappling with the profound challenges created by the virus. On the other side, this situation gave the Group an important opportunity to differentiate itself from other companies and demonstrate how a strong corporate sustainability framework and strategy can benefit all its employees, shareholders and stakeholders.”

Worldwide travel closure early this year directly knocked out the tourism industry, to which FHL has significant exposure while economic slowdown quickly deflated revenue expectations.

While there was modest reduction in overall expenses – this involved pay cut for senior management and staff lay off in some subsidiaries – and relatively better performance from some subsidiaries, COVID-19’s disruptive impact took its toll on the bottom line with total revenue declining to F$291 million, a decline of 11.98 percent from 2019.

The path forward is still uncertain and like other companies and organisations, FHL will be closely monitoring developments.

“Ongoing COVID-19 scenario is extraordinary and the results upon the group in months to come, together with the extent it will impact the economy, is something uncertain at the current stage. The group will continue to carefully monitor macro and micro financial and non-financial indicators and governmental information to evaluate the ability to penetrate this situation,” said Ram.

“We always think we live in a time of change and today is no different. In our personal lives and in our businesses, we are convinced that the pressures on us are greater than ever before. We continue to strategize and make alternative options to meet situations as they arise. This is certainly the case in the investment world where a large number of pressures have a direct impact on running the business. The strategy is well aligned with our commitment to enhance FHL’s shareholder value, ensuring healthy and sustainable returns for our shareholders’ investments.”

A summary of how FHL Group companies performed in 2020 is set out below:

RB Patel Group: Also listed on SPX, the supermarket chain was the highest contributor to FHL Group revenue.  It recorded a three percent growth in operating revenue as its operations thrived during the pandemic. 

FHL’s Tourism portfolio: was the worst performer due to the halt in the tourism industry.  FHL interests in this sector include South Sea Cruises Pte Limited (SSC), Blue Lagoon Cruises, Awesome Adventures Fiji, Malamala Beach Club, South Sea Sailing and Vinaka Fiji. Major developments during the year included a 52 percent acquisition of Botaira Beach Resort and the acquisition of SABRE, a brand new sailing catamaran and first of its kind in Fiji.

Merchant Finance Pte Ltd (MFL): started the year of a high note but the financial company’s progress to profit was derailed when COVID-19 hit most of its customers, resulting in a growing pile of loan defaults. Loan impairment expense ballooned by 66 percent to $7.48million during the year and was identified as the main reason for MFL’s poor performance. 

Basic Industries Limited (BIL): consists of Standard Concrete Industries, Humes Industries, Basic Homes, Basic Customs, and Basic Construction. These companies are major contributors to FHL’s revenue stream but together reported their first loss in eight years. After eight consecutive years of profits, BIL recorded a loss of F$4.82 million during the 2020 financial year.

FHL Fund Management Pte Limited (FHLFML): manages the portfolio of Fijian Holdings Unit Trust (FHUT). The Fund recorded a marginal increase in its revenue which stood at $2.54m at year end compared to $2.51 in 2019.

Fiji Television Limited (FTV): Prior to COVID-19, the company was already faced with huge challenges from its state-owned and state-funded competitor.  Also listed on SPX, FTV ended the year with just F$210,000 profit compared to F$1.25m the previous year as sporting events – its major source of advertising revenue – were cancelled. 

FHL Properties (FHLP): manages more than 15,000 sqm of rentable office space with 40 tenants and 95% occupancy rate. The company’s revenue, at F$4.22m, was described as “stagnant” and it posted an after tax profit of F$3.08m, a 35 percent reduction compared to 2019.  FHLP also manages the FHL Tower project, which is said to be “progressing well” and completion scheduled for early 2022. 

Life Cinema (LC): recorded a loss of $1.22m from revenue of $3.62m compared to loss of $0.58m from revenue of $5.03m in 2019. Cinema closures due to COVID-19 were behind the losses. 

FHL Stockbrokers (FHLS): An active share market during the year boosted revenue for the stockbroking arm, fully owned by FHL.  It recorded a marginal increase in profit of F$150,000 compared to F$120,000 last year. 

Serendib Investment Limited (SIL): As one of FHL’s very recent acquisitions, SIL is a printing business operating in a highly competitive market and is still running on a loss.  FHL’s outlook for SIL is that it has a promising future.  SIL has lined up a few contracts with major universities and businesses in Fiji and is also expected to launch stationery product lines into the market by the year end.

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