KUALA LUMPUR: Tien Wah Press Holdings Bhd (TWPH) will cease its remaining printing business in Australia, which is represented by 51% owned subsidiary Anzpac Services (Australia) Pty Ltd.
In a filing with Bursa Malaysia, the cigarette carton and consumer goods packaging printer said the proposed cessation would hit its consolidated earnings by RM15.75mil, which translated into an 11 sen reduction in earnings per share.
The exercise will involve stopping all its printing business activities, disposing assets except the freehold land and office/factory building, computer equipment and furniture fittings, and settling the liabilities of Anzpac.
TWPH said that based on preliminary review, the exercise would cost Anzpac A$9.56mil (RM31.02mil), comprising employees redundancy and related costs and asset impairment costs.
The assets to be disposed of are valued at A$4.6mil (RM14.91mil).
Anzpac will retain its freehold land and building in New South Wales, which had a net book value of A$13.76mil (RM44.6mil) as at March 31, in order to generate rental income. However, these may be disposed of at a later date when the price is right.
TWPH noted that the group had begun the transfer of production volume of gravure printing since September 2014 from Anzpac to its existing wholly-owned operation in Vietnam, Alliance Print Technologies Co Ltd (APT).
“The above was with a view to improve the group’s strategic position to service the customers and reduce the group’s operating cost over the longer term.
“After the transfer of the production volume to APT, and despite Anzpac management’s efforts to reorganise Anzpac’s remaining lithography printing business in its non-tobacco customers, the board is of the view that Anzpac’s business is no longer viable or sustainable,” it said.
The TWPH group’s performance is highly correlated to the tobacco industry as the key customers and majority of sales are tobacco-related printed cartons.
Anzpac, in which TWPH acquired a stake in October 2008, incurred losses in the last two financial years. For the financial year ended Dec 31, 2016, Anzpac posted an after-tax loss of A$7.24mil (RM23.44mil).
TWPH said the proposed cessation, expected to be completed in the third quarter of this year, would affect the group for the current financial year ending Dec 31, 2017, as a result of the one-off redundancy cost and impairment loss on plant and machineries to be incurred.
“The impact to consolidated earnings, earnings per share and net assets per share are a cost of RM15.75mil, reduction of 11 sen per share and reduction of 11 sen per share respectively,” it said.
Read more at http://www.thestar.com.my/business/business-news/2017/06/16/twph-to-cease-remaining-printing-ops-in-australia/#vSMikDkDbxPZxcUg.99