Sime Darby proposes dividend reinvestment

by **Cals** Fri 30 Aug 2013, 23:03

Sime Darby proposes dividend reinvestment
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Friday, 30 August 2013 19:58

KUALA LUMPUR (Aug 30): Sime Darby Berhad has proposed a dividend reinvestment plan (DRP) that will grant shareholders the option to reinvest their dividends in new shares in lieu of receiving cash.

Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said the retained cash could be used to fund existing operations and future expansion of the conglomerate.

Mohd Bakke said the DRP is also expected to improve the stock's liquidity given more shares will be available for trading.

"The scheme has clear benefits for both the shareholders and the group.
The DRP allows shareholders the choice between cash and/or shares for dividends while for Sime Darby, it allows funds to be retained to grow our business and strengthen our capital base.

“We will seek approval from our shareholders at an EGM (extraordinary general meeting) in November this year for the implementation of the DRP,” Bakke said at a media briefing today. This is in conjuction with the announcement of its results for the fourth quarter ended June 30, 2013.

Sime Darby, the businesses of which, include PLANTATION [] and real estate, has announced a final dividend of 27 sen a share during the quarter in review, bringing full-year dividends to 34 sen.

Meanwhile, group chief financial officer Tong Poh Keow had also addressed questions on crude palm oil (CPO) prices.

Tong said : “I think the current price is trending at RM2,300-RM2,400 per tonne. What is important to us is the stability of the CPO prices”.

She hypothesized if CPO price was at RM2,500 per tonne, the group would still benefit from reasonable margins based on its cost of production.

“Based on trends, CPO price looks better by year end and we will see demand coming in from some of our major consumers.

“I can’t say what is the indication now, but currently we are looking at around RM2,400 per tonne and it should be able to stabilise a little higher than where we are now. We would be happy with a stable CPO price.”

Sime Darby's rubber plantation ventures will be closely watched. Tong said Sime Darby has been making forays into other plantation ventures such as rubber besides oil palm.

She said currently, the group has 8,000 hectares of rubber plantation and is considering such ventures in its Liberian concession. Sime Darby had also recently concluded an acquisition of 10,000 hectares in Indonesia earmarked for rubber plantation.

“So, rubber will play a bigger role in the group but details will come later,” said Tong.