New Agency - Network Foods

On 1st November 2020, Harrisons Sabah was appointed by Network Foods (Malaysia) Sdn. Bhd. to distribute Network Foods products, which Crispy, Tango, Tudor Gold and Kandos Chocolate. This is the second time Harrisons Sabah was appointed distributor of Network Foods. The first appointment was back in the year 1992.

We are indeed pleased to rekindle our business partnership with Network Foods (Malaysia) Sdn. Bhd. and have the privilege of becoming the distributor for Network Food products again in Sabah & Labuan effective on 1st November 2020.

Source: Berita Harrisons. Issue No 2-2021-71. Issued on 1 June 2021.

Pan Malaysia acquiring 51% in fast food chain A&W for RM21m

KUALA LUMPUR (Sept 23): Pan Malaysia Corp Bhd (PMC) has entered into a sale and purchase agreement with Inter Mark Resources Sdn Bhd (IMR) to acquire a total of 31.62 million shares, or a 51% stake, in A&W (M) Sdn Bhd (A&W Malaysia).

In an announcement to Bursa Malaysia today, PMC said the proposed acquisition, which is valued at RM21.04 million, will be satisfied through a combination of cash amounting to RM11.57 million and a share transfer of 63.11 million PMC shares at a transfer price of 15 sen per share, amounting to RM9.47 million.

The transfer price of 15 sen per share represents a 25% premium to the five-day weighted average market price up to the LPD of 12 sen.

The completion of the sale is conditional upon IMR obtaining the consent from A Great American Brand International Pte Ltd (AGABI) to terminate the international franchise agreement and development agreement dated July 1, 2019 that was made between the latter and the former.

It is also conditional upon the execution of the new international franchise agreement and development agreement between AGABI and A&W Malaysia as well as IMR managing the business of A&W Malaysia on terms and conditions to be agreed upon between IMR, A&W Malaysia and PMC.

The parties are looking to complete the deal within six months from the date of the sale and purchase agreement or at a date when IMR and PMC may mutually agree in writing.

Upon the completion of the acquisition, PMC will hold a 51% stake in A&W Malaysia while IMR will hold the remaining 49% equity interest in the fast food chain restaurant.

Moreover, A&W Malaysia will be the master developer and exclusive franchisee of the A&W franchise for Malaysia.

Notably, the sales and purchase agreement also comes with a profit guarantee. IMR guarantees that A&W Malaysia’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the financial year ending Dec 31, 2022 (FY22) will not be less than RM13.75 million.

If it falls short, IMR will pay the difference between the guaranteed sum and the actual EBITDA to A&W Malaysia.

The guaranteed sum refers to the guaranteed EBITDA of A&W Malaysia amounting to RM12.38 million for FY22, which is 90% of RM13.75 million. If a lockdown due to the Covid-19 pandemic re-occurs, the guaranteed sum will be equivalent to RM11.69 million, or 85% of RM13.75 million.

Looking at the financial performance of A&W Malaysia, it has suffered net losses for FY19 and FY20 at RM3.03 million and RM2.62 million respectively.

Revenue slid in FY20 to RM82.83 million, down 4.3% to RM86.57 million from the previous year.

Currently, A&W Malaysia operates 62 outlets in Malaysia where more than 50% of the outlets are located in the Klang Valley. It is looking to achieve 100 outlets by 2023 and become one of the top three quick-service restaurant operators in Malaysia.

The fast-food chain operator also intends to leverage technology by capitalizing on platform aggregators and its own channels for delivery while exploring options such as ghost kitchens and kiosk concepts which have lower operating expenditure, it said in the announcement.

PMC believes that the acquisition of A&W Malaysia will give it the opportunity to expand and diversify its revenue and earnings base into the fast-growing quick-service restaurant business.

“Barring any unforeseen circumstances, the proposed A&W acquisition is expected to contribute positively to the long-term future earnings of the PMC group,” it said.

Separately, PMC announced its financial performance for the fourth quarter ended June 30, 2021 which saw it slipping into a wider net loss of RM38.16 million from RM6.25 million in the previous year.

The group attributed the wider net loss to a RM25.1 million impairment on goodwill, a RM2.1 million impairment loss on amount owed by a related company and RM2 million foreign exchange loss on unquoted investment.

Revenue increased marginally to RM8.71 million, up 0.93% from RM8.63 million a year ago.

“The business environment remains challenging. Nevertheless, the management will continue to focus on rebuilding export sales, expanding into new markets and introducing new products in line with consumer demand. At the same time, the group will improve its operational efficiency for better productivity and profitability,” it said.

At the close of Thursday, PMC’s share price remained unchanged at 12 sen apiece, putting market capitalisation at RM60.38 million.

Source: The Edge