SHAH ALAM: Silver Bird Group Bhd hopes to be cashflow positive by mid-next year, but the financially-troubled breadmaker will continue to show a loss in the financial year ended Oct 31 (FY13).
Vincent Chew, who has been tasked with salvaging the Practice Note 17 (PN17) firm, told reporters after an EGM yesterday that while the situation remained dire, its turnaround was starting to show progress.
He said Silver Bird, which had obtained shareholders’ approval to change its name to High-5 Conglomerate Bhd, was still working out its regularisation plan with Bursa Malaysia.
Once the plan is implemented, Silver Bird has to achieve two consecutive quarters of profit in order to be removed from PN17 status.
In the nine months to July, it posted a net loss of RM32.6mil on revenue of RM60.02mil, an improvement over the RM319.85mil net loss of the previous year.
The company expects to secure approvals from the regulators, as well as its shareholders and creditors, for its regularisation by June.
This leaves only a few months in FY14, which means Silver Bird may not be operationally profitable for the full year, according to Chew.
“With the interim funding, our sales have improved from RM5mil to RM7mil. If we can bring this up to RM10mil within six months, then we will be close to breaking even,” he said.
Under the interim funding proposal unveiled in July, Sunsci Holdings Sdn Bhd and Covenant Equity Consulting Sdn Bhd had agreed to inject RM16mil into Silver Bird in exchange for redeemable preference shares (RPS) in a wholly-owned unit of Silver Bird, as well as the option to acquire up to 40% of its enlarged share capital over a three-year period.
Covenant Equity is led by Chew, who was also hired by Silver Bird to carry out a forensic audit when RM297mil went missing from its accounts early last year.
“Our working capital is insufficient. We have no money to advertise. And that’s not even factoring in rising electricity costs. We are trying to make sure our products are more prominent on store shelves,” Chew said.
Silver Bird’s plants are under-utilised at between 40% and 50%. Malaysia’s bread market was worth RM100mil a month, Chew noted.
Silver Bird’s market share stood at some 5%-6%, one-third of what it used to command. It is aiming to raise this to 6%-8%.
The rate of unsold bread that is returned has dwindled to 20% from 30%, Chew said. Silver Bird was targeting to reduce this to 10%.
The ailing confectionery maker was also ramping up its distribution network, which has been halved to 6,000 outlets.
Chew said Silver Bird was still negotiating the terms of its rental with its landlord, AmanahRaya REIT, for the land on which its 15-acre factory sits in Seksyen 21 here.
AmanahRaya had agreed to extend the lease in November by a year to August 2014, but Silver Bird is disputing the fee of RM608,000 a month, citing the market rate of just RM350,000 to RM450,000.
Shares of Silver Bird were unchanged at the close yesterday at 11.5 sen.
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