QAF H1 profit to show ‘significant improvement’ from last year on policy claims

FOOD company QAF : Q01 0% is expected to report a “significant improvement” in both profit before tax and profit after tax and exceptional items figures for H1 ended June compared to the corresponding period in 2021, the company said in a bourse filing on Wednesday (Jul 20).

This improvement is attributable to the group getting its first interim insurance payment of S$9.6 million under its insurance policy for covering the damage to its property, plant and equipment on the back of the severe flooding at one of its Malaysian factories. 

QAF added that it had received a further S$6.3 million this month as the second interim insurance payment under the same insurance policy. This amount will be reported as an exceptional item in the group’s H2 results. 

The insurers are currently processing the claims submitted under this insurance policy, but QAF estimates that the total claim under the policy will amount to about S$35 million. 

The group, however, warned that the total amount of the claims has not yet been finalised as the purchase orders for components of the damaged property, plant and equipment have not been fully issued. The claims also remain subject to the insurers’ assessment. 

The entire amount recovered under the insurance policy will be used to fund a substantial part of the costs of reinstating the damaged production lines at QAF’s Malaysian factory, said the group. 

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QAF also said that it is making claims under its consequential loss insurance policy. The amount of consequential loss continues to accrue and has yet to be finalised, but there is a policy limit of about S$13 million, it said. 

The amount recovered under the consequential loss policy will be used substantially to pay for the balance of the property reinstatement costs, consultants’ costs and any tax that may arise from these. 

QAF will announce its H1 financial results in August. 

Shares of QAF ended Wednesday at S$0.84, down 0.6 per cent or S$0.005.