Multi-industry food company QAF has issued a profit guidance for its results in 1HFY2022 ended June. The company expects “a significant improvement” in profit both before and after tax, with the results to be announced in August.
In a Singapore Exchange (SGX) filing on July 20, QAF attributes the “significant improvement” to an insurance payout for flood damage to one of the group’s Malaysian factories.
“[This] is attributable to an exceptional item relating to the receipt of approximately $9.6 million, being the first interim insurance payment under the group’s insurance policy covering damage to its property, plant and equipment in connection with the severe flooding at one of the group’s Malaysian factories,” says QAF.
The group later received a further $6.3 million insurance payout in July. “This amount will be reported as an exceptional item in the group’s 2HFY2022 results.”
According to QAF, the insurers are processing the claims submitted under the above insurance policy covering damage to property, plant and equipment and the group currently estimates that, in aggregate, its total claim under such policy will amount to approximately $35 million, which includes the first and second interim insurance payments.
The total amount of the claims has not been finalised as the purchase orders for components of the damaged property, plant and equipment have been issued for “most but not all of them”, says QAF.
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The claims also remain subject to the insurers’ assessment.
According to QAF, 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 the group’s Malaysian factory.
The group is also making claims under its consequential loss insurance policy. The amount of consequential loss continues to accrue (subject to a policy limit of approximately $13 million) and is yet to be finalised, says QAF.
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The sums 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, they add.
Shares in QAF closed 0.5 cents lower, or 0.59% down, at 84 cents.
