JHB chairman Tan Sri Tan Kay Hock said this divestment is a major milestone in JHB’s strategic plan to rid these last loss-making subsidiaries and reinvest its resources and management’s efforts into an RM624.10 million investment in the manufacture of examination and surgical gloves.
DCS, a Singapore-incorporated company that provides charge and credit card services, had contributed substantially to JHB’s revenue under the hospitality and card business segment.
However, it had been recording substantial losses over the past five financial years, which was worsened by the Covid-19 pandemic.
JHB’s disposal of DCS and DPPL is a major milestone in the company’s plan to exit these loss-making subsidiaries.
The company plans to reinvest and refocus its resources on new businesses, which will provide JHB with a stream of recurring profit.
Further, the company said this exit is timely as it had recently obtained shareholders’ approval to venture into the manufacture, sale and distribution of gloves via its 60 per cent-owned subsidiary, Dynacare Sdn Bhd (Dynacare).
JHB shareholders had approved an investment of approximately RM624.10 million to develop Dynacare’s glove manufacturing plant on a 17-acre piece of industrial land in Lumut, Perak.
Dynacare’s plant will have a total of 42 double-former glove-dipping lines with a production capacity of approximately 12 billion pieces of examination and surgical gloves per annum.
Subject to the continuing lockdown due to Covid-19, commercial production is expected to commence in August 2021, with a total of six production lines to be fully operational by December 2021.
The remaining 36 production lines will be commissioned and operationalised in stages in 2022 and mid-2023.
This large production capacity will provide economies of scale, thus ensuring competitiveness in the marketplace, JHB in a statement said.
The production capacity of 12 billion gloves will place JHB as one of the top seven glove manufacturers in the country.
The shareholders had also approved the rights issue of 389.34 million new ordinary shares based on one rights share for every two existing JHB shares.
The right issue comes together with 389.34 million free detachable warrants based on one warrant for every one rights share subscribed for, at an issue price of 10 sen per rights share.This rights issue will be completed on 28 July 2021.
“In anticipation of this divestment, JHB had earlier obtained shareholders’ approval on 31 May 2021 to diversify into the glove business and was able to jumpstart the development of Dynacare’s glove manufacturing plant.
“With this head start, I am excited about the commencement of the commercial production of the gloves as early as next month in August, subject to the continuing lockdown due to Covid-19.
“Further with the disposal, our balance sheet is strong with virtually no debt. Upon completing the rights issue later this month, the financial position of JHB will be further strengthened. This will provide a sound platform in the future,” Tan said.
He said JHB would continue to look for opportunities to complement the glove business in the healthcare industry either organically or through acquisitions.
“We are also continuing our search for other opportunities to diversify our income base further,” Tan said.
