In a Malaysiakini article dated Nov 11 quoting Petaling Jaya MP Tony Pua, it was reported:
"Perhaps the only reason why Tadmax hasn’t already forfeited the deposit because 1MDB agreed to pay well above market price for the piece of land at RM23.50 per square feet (psf) despite being valued at only RM9.93 psf in August 2011," he said
Tadmax wishes to state that RM9.93 psf is the value of the said Pulau Indah Land (valued at RM164 million) appearing in Tadmax's Annual Report.
However Tadmax wishes to point out that the value of RM164 million is stated at historical cost. The said property is classified under 'current assets' under the category of 'inventory' with sub-classification as ‘Land and Development Expenditure'; for the financial year ended Dec 31, 2012.
Under such category and classification, based on approved accounting standard (MFRS), the said land has to be stated at the lower of historical cost and net realisable value. This is clearly explained in Tadmax’s audited accounts, appearing under ‘Significant Accounting Policies’.
However, revaluation at regular interval needs to be undertaken in assessing the net realisable value of the land and in the event the revaluation is below cost/carrying value, an impairment will need to be made, otherwise no adjustment shall be made should the revaluation is above the carrying value. For this purpose the last valuation was undertaken in August 2011.
In evaluating the sale price of RM23.50 psf, one would need to take cognisance of the following:
1. The announcement to Bursa Malaysia (regarding the sale of Tadmax Power Sdn Bhd, which owns the said Land, a wholly-owned subsidiary of Tadmax to Ivory Merge Sdn Bhd, a wholly owned subsidiary of 1Malaysia Development Bhd) on Feb 20, 2014, wherein the disposal consideration of RM317,334,600 or approximately RM23.50 per square foot (psf) was arrived at on a willing-buyer willing-seller basis between the company and the purchaser after taking into consideration the market value of the subject land as appraised by Azmi & Co (Shah Alam) Sdn Bhd, a firm of independent valuers registered with the Board of Valuers, Appraisers & Estates Agents Malaysia vide its valuation report on the subject land dated Jan 25, 2014 (‘valuation report’), as follows:
- RM270,000,000 in its existing category of land use, or representing RM20.00 psf (‘as is where is value’); and
The valuation report had adopted the comparison method of valuation.
2. The valuation report was subjected to review by the Valuation Department of the Securities Commission who had after review with the valuer, revised the converted value from RM25 psf to RM23.50 psf.
This revised converted value was reflected in the valuation certificate that forms part of the circular to shareholders of Tadmax dated April 2, 2014 seeking shareholders approval on the disposal of Tadmax Power Sdn Bhd.
A copy of the said shareholder circular is available on Bursa Malaysia’s website under the Tadmax announcements page.
3. It may also be pertinent to note that the subject property is presently classified under ‘building’ and would need to be reclassified to ‘industrial’ as part of the conditions subsequent to the Share Sale Agreement between Tadmax and Ivory Merge Sdn Bhd.
The conversion premium to be paid to the Selangor state authority is estimated at RM37.6 million.
Both Tadmax and Ivory Merge have each agreed to meet 50 percent of the cost of conversion. This effectively values Tadmax’s net sale price to Ivory Merge at RM22.11 psf.
4. A review of land transactions in Pulau Indah is below with the latest being Boustead Holdings Berhad purchase of industrial land and buildings in Pulau Indah on July 23, 2014.
5. Also included in are market asking prices for the Pulau Indah area.
Most recently transacted price of industrial land in Pulau Indah
On July 23, 2014, Boustead Holdings Berhad had announced the purchase of 69.88 acres of industrial land in Pulau Indah together with a terminal jetty for RM310 million.
This acquisition includes the purchase of vacant industrial leasehold land measuring 51.86 acres for a total price of RM134.9 million as summarised below which is equivalent to RM59.72 per sq ft on average vis-à-vis the valuation of the lands by CH Williams averaging RM37.58 per sq ft.
Recently Transacted Price
Market Asking Price
It was also reported:
“Tadmax Resources, infamous for its subsidiary Kuala Dimensi Sdn Bhd which was the main contractor in the PKFZ scandal, is probably still hoping for a bumper payday from 1MDB,” he added.
We wish to confirm that Kuala Dimensi Sdn Bhd has never at any point in time been a subsidiary or associated company of Tadmax (formerly known as Wijaya Baru Global Berhad). A review of the Audited Accounts of Tadmax (of any financial year) would confirm this fact.
Based on our knowledge, Kuala Dimensi Sdn Bhd is a privately owned company of Tiong King Sing and continues to be so until to date.
The only connection with Tadmax was that up until December 2011, Tiong was the major shareholder of Wijaya Baru Global Berhad (now known as Tadmax). In December 2011, Tiong disposed his controlling stake (ordinary shares only) to Mejar (R) Anuar Adam but continues to hold a 4.5 percent equity interests in Tadmax at present.
