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Sime Darby on track to list plantation, property businesses by year-end

[KUALA LUMPUR] Malaysia's Sime Darby Bhd, the world's largest oil palm planter by land size, on Friday said it was on track to spin-off and list its plantations and property businesses by year-end, after restructuring that would create three standalone units.

Restructuring would involve reorganising borrowings and transferring assets within the group, Sime Darby said in a statement.

Sime Darby Bhd (SDB) also plans to settle inter-company loans by issuing new shares for spun-off entities, Sime Darby Plantation and Sime Darby Property.

Sime Darby Plantation's loans owed to Sime Darby Bhd will be capitalised via an issuance of new Sime Darby Plantation shares amounting to 500 million ringgit (S$159 million), while Sime Darby Property will issue new shares for 4.4 billion ringgit.

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"As a next course of action upon completion of the above measures, Sime Darby Plantation and Sime Darby Property will seek admission into Bursa Malaysia. The new and more focused SDB will remain listed on Bursa Malaysia," the conglomerate said.

Sime Darby announced its restructuring plan earlier this year. Its trading and logistics businesses would remain with the parent company that would retain its listed status.

Sime Darby's plantations and property businesses accounted for nearly 70 per cent of profit during the 2016 business year.

The company on Friday also said net profit for the fourth quarter ended June more than halved from a year earlier to 571 million ringgit on weak performance at its industrial and logistics businesses. Revenue grew 6.5 per cent to 8.2 billion ringgit.

At a news conference, Chief Executive Mohd Bakke Salleh forecast Malaysia's fresh fruit bunch (FFB) production for July-October to rise versus the corresponding period last year, before declining in the first quarter of 2018.

He said he expects Sime Darby's FFB production to rise five per cent on year for its fiscal year 2018.

"The group's fresh fruit bunch production is expected to be stronger in the second half of 2017 compared to 2016, due to improved weather conditions," Sime Darby said.

It said it expected crude palm oil prices of 2,500 ringgit to 2,700 ringgit per tonne and that improved production bodes well for the performance of the plantation division.

Benchmark palm oil prices were down 1 per cent at Friday's closing trade at 2,750 ringgit a tonne.