KUALA LUMPUR (Nov 29): London Biscuit Bhd, which is facing a winding-up petition, is writing off RM363.16 million of receivables in the fourth quarter ended Sept 30, 2019 (4QFY19).

On top of that, the company also booked in impairment of RM31.04 million on investment loss in 4QFY19, according to its filing with Bursa Malaysia.

The massive impairment of RM394.2 million for the quarter under review was indeed slightly more than the confectionery maker’s annual revenue of RM391.73 million for the financial year ended Sept 30, 2019 (FY19) compared with RM326.36 million in FY18.

London Biscuits’ trade receivables have ballooned over the years. From when it was at RM78.17 million in FY13, it grew to RM100.55 million in FY14, and further expanded to RM177.13 million in FY15. By end-FY18, it was at RM212.82 million. As at June 30, 2019, its trade receivables, and other receivables, reached RM295.97 million. 

Consequently, London Biscuits was dragged into a net loss of RM443.19 million for 4QFY19 — the biggest ever quarterly losses. It posted a net profit of RM6.66 million in the previous corresponding quarter.   

Revenue, however, grew by 8.47% to RM106.65 million from RM98.31 million last year.

For its full-year ended Sept 30 (FY19), the company recorded a net loss of RM452.31 million against a net profit of RM13.9 million last year. Revenue grew 20% to RM391.73 million from RM326.36 million.

On prospects, the Practice Note 17 (PN17) company expects a challenging time over the next six months following its encounter with significant challenges in its operations in FY19 arising from the financial issues and defaults of its banking obligations.

“Although the prospects of the confectionery, potato, snacks and candies segment remain good with stable order book, the management has been unable to capitalise on these opportunities due to operational cash flow constraints.

“As such, it is streamlining its operations to reduce its operating costs, reducing headcount and other cost control measures to reduce itd monthly operating expenditure and to preserve cashflow for core manufacturing activities,” it added.

Despite the challenges, the company said it will attempt to ensure that normal commercial operations continue to operate on its best endeavour basis.  

London Biscuits' defaults rose to RM111.71 million.  Lim San Peen of PricewaterhouseCoopers Advisory Services Sdn Bhd has been appointed the interim liquidator.

London Biscuits' share price closed at 8.5 sen, half a sen or 5.56% down after 1.35 million shares crossed, bringing it a market capitalisation of RM24.72 million.

Read also https://www.theedgemarkets.com/article/london-biscuits-defaults-rise-rm11171-mil-it-fails-pay-rhb-bank

https://www.theedgemarkets.com/article/surprise-new-shareholder-troubled-london-biscuits