Wednesday, September 26, 2007

Going Extremely Tropical In Germany!

Tanjong PLC reported its earnings yesterday. I for one was excited for I wanted to know how Tanjong's Tropical Island investment is faring now. ( I had blogged on this issue before Tanjong's Tropical Island Resort Investment , Tanjong's Tropical Island Resort Investment: Part II and Tanjong )

Firstly, I was always extremely amazed from day one to read that Tanjong was planning to invest in a tropical island in Germany. Yes, a tropical island in GERMANY.

And more so when I read the following news article back in 2003.

  • Friday, June 27, 2003
    Tanjong: German park not a significant investment

    TANJONG Plc said a bid for 500ha in Germany to build a holiday park will not require a “significant'' investment, addressing concerns its finances will be strained.

    “The project is not significant in the context of Tanjong,'' chairman Datuk Khoo Eng Choo told reporters after a shareholders' meeting in Kuala Lumpur.

    “Compared with net asset or capitalisation, it's not significant at all,” he said.

Not significant at all, eh?

Anyway, here is Tanjong's earnings link: Quarterly rpt on consolidated results for the financial period ended 31/7/2007

In its earnings notes:

  • The increase in the number of visitors to Tropical Islands led to higher revenue from the Leisure segment to RM42 million from RM35 million in the corresponding period. However higher marketing and advertising expenses incurred in relation to the launching of new attractions in the resort resulted in the operating loss of RM29 million remaining at around that of the corresponding period.

A current net operating loss of rm29 million! And this happen despite higher revenue!

Btw, here is the link to Tanjong previous fiscal year 2006 Q4 earnings. Quarterly rpt on consolidated results for the financial period ended 31/1/2007

  • As anticipated, revenue from the Leisure segment has decreased to RM67 million from RM97 million in the previous year due to the closure of the Tropical Islands resort between 1 November 2006 to 26 December 2006 to facilitate planned capital improvements to widen the demographic appeal of the resort. However, revenues and earnings have benefited from measures taken to improve average visitor spend and reduce overall operating expenses. The preceding measures together with the recognition of RM16 million of government grants have contributed to a lower operating loss of RM59 million as compared to the RM69 million loss in the previous year.

Ahem, a lower operating loss of rm59 mil compared to the rm69 million loss. (Loss would have been greater if not for the rm16 million of government grants).

So total losses till end of last fiscal year was rm59 + rm69 mil = rm128 million. And if you add in yesterday's earnings note which Tanjong said it had operating losses of rm29 mil, this would mean that total operating losses now total rm157 million!

So is an operating loss of rm157 million not significant?

So I do wonder... how difficult is it for Tanjong to acknowledge that a Tropical Island business in Germany simply makes no cow sense!