MAIN Market-listed food & beverage (F&B) player Dolphin International Bhd has rolled out several strategic initiatives aimed at bolstering its position within the F&B sector.
These initiatives include a proposed variation to its sale and purchase agreement (SSA), a proposed private placement and a proposed change of the company’s name to Oasis Harvest Corp Bhd.
Dolphin through its wholly-owned subsidiary Asia Poly Food and Beverage Sdn Bhd has entered into a proposed variation to its SSA with Datuk Yeo Boon Leong, Yeo Boon Thai, Yeo Boon Ho and Yeo Soon Bee (collectively, the vendors).
This variation pertains to the acquisition of the entire equity interest in High Reserve F&B Sdn Bhd for RM36.0 mil where certain payment terms will be varied or waived.
Due to the financial underperformance of High Reserve Group during the financial years ending June 30, 2023 and June 30, 2024, the proposed variation will enable Asia Poly Food and Beverage Sdn Bhd not to pay the remaining RM9.55 mil but will instead receive RM4.85 mil as compensation for the losses incurred.
High Reserve Group faced a significant decline in revenue, dropping from RM9.19 mil in its FYE June 30, 2022 to RM8.41 mil in FYE June 30, 2023 and eventually RM7.61 mil in FYE June 30, 2024 due to declining customer traffic in its Uncle Don’s outlets, particularly in Rawang and Ipoh.
The loss after tax (LAT) of High Reserve Group also rose from RM560,000 in FYE June 30, 2022 to RM4.61 mil during the FYE June 30, 2023 primarily due to the recognition of impairment losses on investments in subsidiary companies amounting to RM3.95 mil.
“The rationale behind entering the proposed variation to the SSA is to mitigate the financial impact of High Reserve Group’s underperformance and to better align our financial commitments with our strategic goals,” commented Dolphin’s executive director Ch’ng Eu Vern.
“This adjustment allows us to focus on more profitable ventures while maintaining a healthy balance sheet.”
Private placement
Additionally, Dolphin proposes a private placement that is expected to raise gross proceeds of up to RM2.44 mil at an illustrative issue price of 18.2 sen per placement share. The funds will primarily support the working capital for the group’s F&B business and trading segment.
In line with its strategic focus and to better reflect the group’s updated corporate identity and purpose, Dolphin has further proposed a name change to “Oasis Harvest Corp Bhd”. This re-branding exercise aligns with the company’s core business and values while aiming to enhance public confidence and stakeholder engagement.
Moving forward, Ch’ng remains upbeat about Dolphin’s prospects in the F&B sector with the group focused on expanding this area further. Future plans include actively pursuing mergers and acquisitions (M&A) with other F&B outlets that synergise with Dolphin’s current operations.
The group is also implementing a customer relationship management system to enhance customer retention and satisfaction across all restaurant outlets with a focus on targeted marketing strategies to cater to changing customer preferences.
On this note, Malaysia’s F&B sector is projected to grow significantly, driven by increased tourism and consumer spending.
The sector is anticipated to grow by 10.4% in 2023 with continued growth expected in 2024. In this regard, Dolphin is well-positioned to capitalise on these trends and drive sustainable growth and shareholder value.
UOB KayHian is the principal adviser for the proposals with SCS Global Advisory (M) Sdn Bhd appointed as the independent adviser to advise the non-interested directors and non-interested shareholders of the company in relation to the proposed variation.
At today’s close of trading, Dolphin was unchanged at 19.5 sen with 258,600 shares traded, thus valuing the company at RM26 mil. – July 9, 2024
