London Biscuit active, rises 15% after additional shares listed

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KUALA LUMPUR (June 3): Shares of London Biscuits Bhd rose as much as 15% in active trade this morning, following the listing of 10.5 million additional shares. 

At 11.40am, London Biscuits was traded at 33.5 sen — still up 3.5 sen or 11.67% from its last Friday close — for a market capitalisation of RM85.74 million. It gained in an overall negative market breadth, where decliners outstripped gainers at 510 versus 158, while 293 counters were unchanged at the time of writing.

With a total turnover of 10.33 million shares, London Biscuits came in sixteenth on Bursa Malaysia's top active list at the time of writing.

Thus far, 29.30 million placement shares were listed on Bursa Malaysia, or made up about 64.45% of its 45.46 million total private placement it announced on Feb 15.    

The first tranche, which entails of 10 million placement shares with an issue price of 34.5 sen was listed on Bursa Malaysia on April 17. Subsequently, about 8.8 million placement shares under the second tranche were listed on April 29, with an issue price of 32.1 sen.  

The latest, which involved 10.5 million placement shares with an issue price of 3 0sen was listed on Bursa Malaysia on May 10.

To recap, London Biscuits proposed a second private placement in less than one year, which involved the issuance of up to 45.46 million new shares, representing up to 15% of its enlarged issued shares.

The private placement, which received shareholders’ approval on April 1, seeks to raise up to RM22.73 million to further pare down the group’s bank borrowings. 

London Biscuits is proceeding with the placement exercise, despite its auditors expressing on Feb 22, a qualified opinion on the group’s financial statements for the year ended Sept 30, 2018 (FY18).

Messrs Nexia SSY, the external auditors of London Biscuits, said the company was unable to satisfy it by alternative means concerning the group's physical inventories held at Sept 30, 2018, which are stated in the statements of financial position of the group and the company at RM26.89 million and RM20.79 million respectively.

"We noted that there were significant and material transactions between the group and a customer and as explained in Note 29 to the financial statements, the operations were indicative of a related party relationship, despite the absence of a legal nexus. Consequently, the inter-company transactions were adjusted and treated as related party transactions (RPT) to reflect the operational arrangements described in Note 29 to the financial statements," said Nexia SSY on Feb 22 this year.

Another concern identified by the external auditor include the group recognising an impairment of trade receivables of RM1.994 million for FY18, and RM60.39 million were adjusted retrospectively to comply with the impact of the group’s early adoption of MFRS 9.

To address the key audit matters raised by the external auditors, the company has appointed Messrs PKF to conduct an independent assessment on the financial statements of the company for the financial year ended Sept 30, 2018. The assessment is targeted to be completed within 3 months from the date of mobilisation.