Bornoil’s Q3 FY2025: Revenue Grows Amidst Significant Non-Operational Losses
Hello, fellow investors and market enthusiasts! Today, we’re diving deep into BORNEO OIL BERHAD’s (Bornoil) latest financial report for the third quarter ended 31 March 2025. This report presents a mixed bag of results, showcasing a notable increase in revenue across several segments, yet overshadowed by a substantial pre-tax loss primarily driven by non-operational factors. Let’s unpack the numbers and understand what’s shaping Bornoil’s journey.
While Bornoil achieved a higher revenue this quarter, the overall financial picture was significantly impacted by fair value adjustments on its investments. However, the underlying operational segments, particularly Resources & Sustainable Energy, showed promising growth and strategic alignment with the company’s long-term vision.
Core Data Highlights: A Closer Look at the Numbers
Bornoil’s financial performance for the third quarter of fiscal year 2025 reveals some interesting trends. Let’s start with the headline figures for the quarter, comparing them to the same period last year:
Q3 FY2025 (1 Jan 2025 to 31 Mar 2025)
Revenue: RM20,657,000
Loss Before Taxation: RM(70,376,000)
Loss for the Period: RM(70,360,000)
Basic Loss per Share: (0.53) sen
Q3 FY2024 (1 Jan 2024 to 31 Mar 2024)
Revenue: RM17,359,000
Loss Before Taxation: RM(29,614,000)
Loss for the Period: RM(29,998,000)
Basic Loss per Share: (0.25) sen
As you can see, revenue increased by approximately 19% from RM17.36 million to RM20.66 million. However, the pre-tax loss widened significantly from RM29.61 million to RM70.38 million, primarily due to a substantial fair value loss on quoted securities. This also led to a higher loss per share.
For the cumulative nine-month period, the trends are similar:
| Financial Metric | 9 Months Ended 31 Mar 2025 (RM’000) | 9 Months Ended 31 Mar 2024 (RM’000) |
|---|---|---|
| Revenue | 59,575 | 56,390 |
| Loss Before Taxation | (209,649) | (94,283) |
| Loss for the Period | (210,202) | (95,189) |
| Basic Loss per Share (sen) | (1.70) | (0.80) |
The cumulative revenue saw a modest increase, but the losses have considerably deepened compared to the previous year, reinforcing the impact of the fair value adjustments mentioned earlier.
Diving Deeper: Segmental Insights
Bornoil operates across various segments, and understanding their individual performance helps paint a clearer picture:
Head Office & Others (HOO)
This segment recorded a significant pre-tax loss of RM68.54 million for the quarter, a sharp increase from RM23.30 million in the same period last year. The primary culprit was a RM64.34 million fair value loss on quoted securities held in Verde Resources, Inc. (VRDR). While this is a temporary valuation decline, the company remains optimistic about VRDR’s long-term potential.
Food and Franchise Operations (FFO)
FFO saw its revenue rise to RM17.05 million, up from RM15.99 million in the corresponding quarter last year. This growth was fueled by the expansion of its outlets from 127 to 141 and improved market conditions. Despite the revenue growth, the segment reported a loss of RM1.74 million, mainly due to an accounting adjustment for RM2.01 million in share-based payment expenses related to the Employee Share Option Scheme (ESOS).
Property Investment & Management (PIM)
PIM experienced lower revenue of RM0.35 million (compared to RM0.55 million last year) and a wider pre-tax loss of RM1.03 million. This weaker performance is attributed to reduced activity levels after the completion of project management services for an Integrated Limestone Processing Plant (ILPP).
Resources & Sustainable Energy (RSE)
This segment was a bright spot, reporting a significant revenue surge to RM3.25 million, a substantial increase from RM0.80 million in the same period last year. This impressive growth was primarily driven by the supply of raw materials to the Integrated Limestone Processing Plant (ILPP), leading to a turnaround from a loss to a profit of RM0.94 million for the quarter.
Quarter-on-Quarter Snapshot: A Recent Comparison
Comparing the current quarter’s performance to the immediate preceding quarter (Q2 FY2025) provides further context:
Q3 FY2025 (31 Mar 2025)
Revenue: RM20,657,000
Profit/(Loss) before taxation: RM(70,376,000)
Q2 FY2025 (31 Dec 2024)
Revenue: RM19,697,000
Profit/(Loss) before taxation: RM17,776,000
Revenue saw a modest 5% increase. However, the most significant shift was from a pre-tax profit of RM17.78 million in the previous quarter to a pre-tax loss of RM70.38 million this quarter. This dramatic change is primarily due to the fair value adjustments on quoted securities, which had provided a gain in the prior quarter but resulted in a loss this period.
Financial Health Check: Balance Sheet & Cash Flow
Let’s briefly look at Bornoil’s financial position and cash movements:
| Balance Sheet Item | As at 31 Mar 2025 (RM’000) | As at 30 Jun 2024 (RM’000) |
|---|---|---|
| Total Assets | 855,362 | 1,030,450 |
| Total Equity | 734,772 | 929,401 |
| Net Assets per Share (RM) | 0.05 | 0.08 |
| Total Liabilities | 120,590 | 101,049 |
| Total Borrowings | 72,113 | 47,454 |
The company’s total assets and equity have decreased since June 2024, while total liabilities and borrowings have increased. This indicates a shift in the company’s financial structure, with a lower net asset value per share.
Regarding cash flow for the nine-month period:
| Cash Flow Type | 9 Months Ended 31 Mar 2025 (RM’000) | 9 Months Ended 31 Mar 2024 (RM’000) |
|---|---|---|
| Net Operating Cash Flows | (24,697) | 28,016 |
| Net Investing Cash Flows | (6,190) | (52,669) |
| Net Financing Cash Flows | 34,733 | 20,342 |
| Net Change in Cash and Cash Equivalents | 3,846 | (4,311) |
Bornoil experienced a shift to negative operating cash flows for the nine-month period, indicating that its core operations are not generating enough cash to cover expenses. However, net financing activities provided a significant positive inflow, leading to an overall positive change in cash and cash equivalents for the period, a notable improvement from the negative change in the prior year.
Navigating the Future: Risks and Prospects
Bornoil’s report also touches upon its outlook and the strategies it plans to adopt in the current economic climate.
Prospects
The company acknowledges Malaysia’s economic resilience, with Bank Negara Malaysia forecasting a 4.5%-5.5% GDP growth for 2025. This growth is expected to be supported by strong private consumption, recovering exports (especially in E&E and commodities), and accelerating investment momentum, particularly in renewable energy and tech-related foreign direct investment. Bornoil aims to capitalize on these favorable conditions by focusing on cost optimization, targeted expansion in growth sectors, and adopting technology to enhance efficiency and drive sustainable shareholder value.
Key Challenges and Risks
Despite the positive economic outlook, Bornoil faces specific challenges. The significant fair value loss on quoted securities highlights the impact of market volatility on its investment portfolio. Accounting adjustments, such as the ESOS expenses affecting the FFO segment, also impacted profitability. Furthermore, the shift to negative operating cash flow suggests a need for closer monitoring of operational efficiency and working capital management. The increase in total borrowings and the presence of RM83.94 million in corporate guarantees to subsidiaries also represent financial commitments that need to be managed carefully.
Summary and
Bornoil’s third-quarter report for FY2025 presents a nuanced picture. While the company demonstrated revenue growth, particularly in its Food and Franchise Operations and the impressive surge in Resources & Sustainable Energy, the overall profitability was significantly impacted by non-operational fair value losses on investments. This underscores the volatility associated with certain asset holdings and accounting treatments, which can mask the underlying operational performance of various segments.
Key takeaways from this report include:
- Revenue Growth: Bornoil saw an increase in top-line revenue for both the quarter and the cumulative nine months, indicating business expansion and stronger market conditions in some areas.
- Impact of Fair Value Adjustments: The substantial pre-tax loss was largely due to a fair value loss on quoted securities, a non-cash item reflecting market valuation changes rather than operational weaknesses.
- Segmental Strengths: The Resources & Sustainable Energy segment showed remarkable growth and a return to profitability, driven by its contribution to the Integrated Limestone Processing Plant. The Food and Franchise Operations also expanded its footprint and revenue.
- Financial Position: The balance sheet indicates a decrease in total assets and equity, alongside an increase in liabilities and borrowings, reflecting changes in the company’s financial structure.
- Cash Flow Dynamics: While operating cash flow turned negative, the company managed a positive net change in cash and cash equivalents due to strong financing activities.
- Strategic Focus: Bornoil is strategically aligning with Malaysia’s economic growth drivers, focusing on cost optimization, targeted expansion, and technology adoption to enhance long-term value.
It’s important for investors to consider these factors when evaluating Bornoil’s performance. The company’s underlying operational fundamentals in key segments appear to be strengthening, despite the significant impact of non-operational accounting entries. The positive outlook on Malaysia’s economy and Bornoil’s strategic initiatives could pave the way for future recovery and growth. Please note that this analysis is for informational purposes only and does not constitute any investment recommendation.
Final Thoughts and What’s Next?
From a professional blogger’s perspective, Bornoil’s Q3 FY2025 report highlights the importance of looking beyond the headline numbers. The significant loss is primarily an accounting adjustment related to investment valuation, rather than a deterioration of core business operations. In fact, segments like Resources & Sustainable Energy are showing very encouraging signs of growth and strategic alignment.
The challenge for Bornoil will be to continue its operational improvements and manage the volatility of its investment portfolio. Their focus on cost optimization and targeted expansion in growth sectors is a sound strategy in the current economic environment.
What are your thoughts on Bornoil’s latest performance? Do you believe the company can maintain the growth momentum in its key operational segments and overcome the impact of market fluctuations on its investments in the coming quarters? Share your insights in the comments below!
