AHB says it will exit PN1 status by September

by **Cals** Fri 18 Jul 2014, 01:04

Business & Markets 2014

Written by Supriya Surendran of theedgemalaysia.com

Thursday, 17 July 2014 09:44

KUALA LUMPUR: AHB Holdings Bhd will be submitting its application to Bursa Malaysia to regularise its Practice Note 1 (PN1) status in September after its shareholders approved a proposed rights issue at an extraordinary general meeting (EGM) yesterday to raise funds for its working capital requirements.

After the EGM, AHB managing director Yong Yoke Keong said the proposed rights issue is expected to bring in proceeds ranging from RM15 million to RM21 million, depending on its reception.

“With the approval of our shareholders, we are going to implement our rights issue and fully repay the banks, and depending on the outcome of the [rights issue] subscription we will have a net cash of RM3 million to RM9 million, which we will use for working capital requirements,” he said after the EGM yesterday.

The premium office furniture manufacturer slipped into PN1 status when it defaulted on the repayments of its bank borrowings amounting to RM4.83 million.

Yong said that the company, which had been making a loss in its financial year ended June 30, 2013 (FY13), is on the road to recovery and a healthier financial performance can be expected for FY14.

“We are expecting debt levels, with regard to bank debts, to be less than RM5 million in FY14, and a better balance sheet compared with FY13, as we have seen very good improvements in our business in the last quarter. We hope this [will] reflect in our financials.”

For its third quarter ended March 31, 2014 (3QFY14), the company recorded a profit of RM605,000 on the back of RM11.15 million in revenue, a vast improvement from its RM30,000 net profit recorded in FY13 on the back of revenue of RM11.36 million.

More than 85% of the company’s revenue is generated from export sales to Southeast Asia, the Middle East, the Americas and India.

“We will try to improve our revenue stream from the Malaysian market, but the reason we have focused on the export market is due to cash flow constraints and the fact that the export markets value our high-quality furniture better,” said Yong.

Locally, the company has secured contracts to provide furniture to several well-known companies like Public Bank Bhd, Petronas Carigali Sdn Bhd, as well as the Malaysian operations of multinational BASF Global.

Yong said the company is now planning to go upstream in India by setting up a manufacturing facility there next year.

“India is a good place for us to go upstream as it is a very cohesive market. In a smaller country, we would find it difficult to get traction,” he said, adding that the company has already engaged a consultant in India to facilitate the process.

This article first appeared in The Edge Financial Daily, on July 17, 2014.