KUCHING: US Nasdaq-listed Founder Group Limited (FGL) has ceased to be a subsidiary and is now an associate of Reservoir Link Energy Bhd (RLEB).
This follows the revocation by major shareholder Lee Seng Chai of his letter (dated December 20, 2023) assigning all voting rights to RLEB for the management control of FGL after its listing on Nasdaq.
Upon completion of the Nasdaq listing, Lee holds voting rights of 26.1 per cent.
“The assignment of the voting rights is effective upon RLEB’s shareholding being diluted to below 51 per cent arising from the issuance of new shares in FGL as part of the listing exercise and shall remain in effect as long as: (a) Thien Chiet Chai and Reservoir Link Holdings Sdn Bhd (collectively) remain the single largest shareholder of RLEB, and (b) the assignment is not revoked or amended by mutual agreement in writing between Lee and RLEB.
“Subsequently, Lee revoked the assignment on February 24. Following the revocation and the dilution of RLEB’s equity ownership in FGL from 51.0 per cent to 45.21 per cent on October 23, 2024 (effective date), RLEB no longer has management control over FGL. Hence, FGL has been reclassified as an associate company of RLEB,” RLEB said in a recent filing with Bursa Malaysia.
FGL, an engineering, procurement, construction, and commissioning (EPCC) solution provider for solar photovoltaic (PV) facilities, was listed on Nasdaq as part of RLEB’s strategic plan to enhance its global presence and capitalise on growth opportunities in international markets, particularly in the renewable energy sector.
“In compliance with regulatory requirements for the accounting treatment of an associate company, FGL’s financial statements will no longer be consolidated with RLEB’s consolidated financial statements from the effective date onward.
“Nonetheless, FGL’s operations remain business as usual, and the leadership remains unchanged. With effect from the effective date, RLEB will only recognise its 45.21 per cent share of FGL’s net profits or losses under the equity method of accounting.
“The impact on RLEB’s reported revenue, net profit, and gearing ratio in the consolidated financial statements will depend on its overall financial performance. Nevertheless, RLEB remains well-positioned to benefit from FGL’s growth by leveraging the increased corporate visibility and financial flexibility brought by the Nasdaq listing,” RLEB added.
Meanwhile, RLEB’s group net profit surged to RM84.62 million in the second quarter ended December 31, 2024 (FY2Q2025), from RM318,000 a year ago — an increase of RM83.1 million — mainly due to a fair value adjustment on its investment in associate FGL amounting to RM84.7 million.
This was despite a drop in RLEB’s group revenue by RM10 million (-22 per cent), falling to RM34.71 million from RM44.66 million during the same period. Earnings per share soared to 25.43 sen from 0.1 sen.
“The decrease in group revenue was primarily due to the RM23 million decline in revenue from the renewable energy EPCC segment, as the group only consolidated FGL from October 1, 2024, until October 23, 2024, upon FGL’s listing, which resulted in a dilution of RLEB’s shareholding in FGL from 51 per cent to 45 per cent.
“However, revenue from the oil and gas segment and the water treatment plant segment increased by RM9.1 million and RM3.6 million, respectively. Profit before tax rose by RM82.3 million this quarter, mainly due to a fair value adjustment on the investment in associate, amounting to RM84.7 million,” RLEB said in a separate filing with the local bourse.
Compared to FY1Q2025, RLEB reported an RM8.2 million drop in group revenue, falling to RM34.7 million from RM42.9 million due to a RM13.3 million decline in sales from the renewable energy EPCC segment. However, revenue from the oil and gas segment increased by RM5.1 million.
For the current financial year to date, RLEB posted a group net profit of RM84.6 million, compared to RM1.54 million a year ago, despite a decline in revenue to RM77.6 million from RM112.4 million.
Commenting on its outlook, RLEB said that it remains committed to pursuing new tenders in both the oil and gas and renewable energy sectors.
“The company is poised to leverage its established expertise in OGSE while expanding into clean energy, reinforcing its resilience in an evolving industry. By cautiously implementing business strategies that align with market trends, the group aims to achieve sustained growth and deliver satisfactory financial performance for the year,” it added.
