Kuantan Flour Mill’s turbulent 2016

PETALING JAYA: Kuantan Flour Mill Bhd (KFM) which was thrown into the limelight by Felcra Bhd’s interest in the company last week, has had a low key existence until this year.

Just prior to the debacle involving Felcra’s interest and later retraction of interest, KFM looks to be prolonging with a formal request of response from Felcra, the company based in Kuantan saw the departure of a long time executive in Lee Chee Kiean.

KFM yesterday said in a filing with Bursa Malaysia that a follow up letter was sent out to Felcra on Dec 21 to seek an official reply.

“The company wishes to announce that as of now, we have not received any official reply from Felcra. The company shall make further announcement as and when there is development in the above matter,” said KFM.

Lee joined KFMB in 1986, just two years after the company’s incorporation as a marketing executive, and moved the ranks to finally hold the position of group executive director/CEO before his resignation on July 30, citing health reasons. Lee hit his 10th year as CEO this year.

A definite game changer for a company which is in its seventh year of losses and a Practice Note 17 entity.

The company’s largest single shareholder Dennis Tow Jun Fye also left its position as non-independent non-executive director on Sept 1, 2016, citing personal work commitments and frequent overseas travels.

Perhaps there is merit in KFM’s request for a formal explanation, despite Felcra’s statement which explained that it had been taken aback by the company’s decision to announce its interest in the company without responding to Felcra first.

The sudden retraction by Felcra within 24 hours did raise eyebrows, having led to huge losses for investors with more than RM10 million in market capitalisation wiped out, for investors which pushed its share price up to 24.5 sen following the announcement. Its share price plunged 61.2% from 24.5 sen to 9.5 sen after the announcement.

The counter was unchanged at 8 sen yesterday on some 4.06 million shares done.

Felcra had explained that its registration of interest in KFM on Dec 9 was purely exploratory and that its retraction of interest in KFM was made to avoid further public misconception.

Low-profile KFM has been in the red since 2009 due to volatility in raw material prices and stiff market competition which significantly affected its gross margin.

It reported a narrowed net loss of RM12.09 million for the financial year ended Sept 30, 2016 against RM16.85 million a year ago, due to impairment losses on property, plant and equipment. The company’s weak financial position was further deteriorated by the declining ringgit against US dollar.

This begs the question of the sustainability of its business going forward.

The business operations are now managed by chairman Kushairi Zaidel with the support of CFO and other management personnel. Attempts to reach KFM management were unsuccessful.

KFM is just days away from its regularisation plan deadline, and even though an extension to Bursa Malaysia has been requested, without Felcra’s interest, a viable plan to turnaround the company seems to be still in the works.