Iris sees ‘tremendous’ potential in acquisition of VCB

by **Cals** Tue 26 Nov 2013, 16:21

Business & Markets 2013

Written by Levina Lim of theedgemalaysia.com

Tuesday, 26 November 2013 10:34

KUALA LUMPUR: Iris Corp Bhd, whose offer to take over Bursa Malaysia-listed Versatile Creative Bhd (VCB) became unconditional yesterday, sees tremendous potential in the acquisition, which will help the group grow its food business, said group managing director Datuk Tan Say Jim.

“Today, we don’t have access to these food processing companies — we want to tie up with food processing companies because we’re growing a big way into food security.

“I see this as a tremendous opportunity for us to grow our food division business,” he said at Iris’ EGM yesterday. Shareholders approved the acquisition of a 75.11% stake in VCB it did not own.

VCB’s clients include food processing companies.

On concerns Iris was buying a loss-making company, Tan said: “The question is, when Iris takes over, are we able to improve the performance of this company? I think that we can.

“There will be incremental business given to this company, which it [VCB] will otherwise not get from us. You’re talking about buying packaging material for 20 farms.”

According to VCB’s financial statements, the company registered losses before tax of RM1.15 million and RM5.85 million in 2010 and 2011 respectively, on revenue of RM57.5 million and RM54.8 million. It returned to the black in 2012 with a profit before tax of RM 1.4 million on RM60.8 million in revenue.

“With this input, we can probably double the turnover to Iris,” Tan said, adding that with the completion of the acquisition of VCB, it will be able to liquidate its assets into cash.

Iris also announced that as at Nov 25, it had received acceptances of 57.5 million VCB shares or a 52.01% stake. As at yesterday, Iris and the joint offerors held 74.89% of VCB. As such, the offer for VCB has become wholly unconditional.

Tan said Iris is already in the farming industry through the Rimbunan Kasih programme, a project which builds affordable homes for rural communities.

Under the memorandum of understanding with the Federal Land Development Authority (Felda) to build 12 Sentuhan Kasih programmes, Iris will be involved in managing not fewer than 20 farms in the next two years.

Tan said there is currently a push to promote the use of integrated building system (IBS) in the country as the government intends to build an additional 100,000.

“Today, we are already a property development company — the difference is our houses are all pre-sold before we build, because buyers are Felda and the government,” Tan told reporters after the EGM.

Aside from its core businesses, he said the group is also looking into education through its acquisition of two subsidiaries of Stamford College Bhd, although the deal has hit a snag and will be decided by the courts.

“We would like to look into a different market — vocational education,” Tan said.

“There is a big segment of the market who may not be able to afford tertiary education and we are providing space for that — to bring back the blue-collar markets and upgrade their skills,” he said.

This article first appeared in The Edge Financial Daily, on November 26, 2013.