KUALA LUMPUR (May 3): Johan Holdings Bhd (JHB)’s 70%-owned Lumut Marine Resort Bhd (LMRB) has ceased its Lumut International Yacht Club (LIYC) membership scheme due to dwindling membership that resulted in high monthly operating cost and negative cash flow.

In a filing with Bursa Malaysia today, JHB said it sold a total of 239 membership schemes, comprising 227 individual and 12 corporate members, since its launch in December 1995, but has decreased to 65 members now.

However, the membership fell due to high attrition of members who voluntarily resigned over the years and despite efforts made by the resort to promote and market the scheme, it failed to acquire new members.

This was because facilities in the club were limited and catered only to yachting/boating enthusiasts.

“Based on the register of members as at April 30, 2016, LIYC only has a total membership of 65 members. Since inception, the low membership base had resulted in the LIYC incurring monthly operating losses and negative cash flow.

“The situation had resulted in LIYC [being] no longer commercially viable to continue with its operation,” JHB said, adding that LMRB owned and operated LIYC.

JHB pointed out that the board unanimously approved an extraordinary resolution for the winding up of the LIYC membership scheme, pursuant to Section 95(5) of the Companies Act 1965.

“Included in the extraordinary resolution is a proposal by LMRB to refund a portion of membership fees to a total of 65 eligible members for early termination of their membership, based on a refund formula which takes into account the unexpired membership of each eligible member from the date of first registration as member up to April 29, 2093, the expiry date of membership.

“Also included is the proposal for the trustee for members of LIYC to distribute the membership fees, based on the refund formula to eligible members and also distribute the remaining balance (if any) in the sinking fund, pro-rata to the eligible members,” it said.

In accordance with Section 95(5) of the Companies Act 1965, a court order confirming the extraordinary resolution and an order for the effective winding up of the LIYC membership scheme will be required to be obtained.

JHB said the winding up of the membership scheme will not have any effect on its issued and paid-up share capital and substantial shareholders’ shareholdings.

“There will be no material effect on the earnings, net assets or gearing of JHB for the financial year ending Jan 31, 2017,” it said.

JHB is involved in ceramic walls and tiles manufacturing, distribution and retailing of health foods and supplements, travel and tours, property development, resorts and hotels, and Diners Club charge and credit cards.

It closed unchanged at 12 sen today, for a market capitalisation of RM74.75 million.