Dolphin unveils initiatives to strengthen position in F&B sector

KUALA LUMPUR: Bursa Malaysia-listed food and beverage company Dolphin International Bhd yesterday announced several strategic initiatives to strengthen its position in the foodservice sector.

These initiatives include a proposed amendment to the Sale and Purchase Agreement (SSA), a proposed private placement of shares and a proposed change of the company’s name to Oasis Harvest Corporation Bhd.

Dolphin, through its wholly owned subsidiary Asia Poly Food and Beverage Sdn Bhd, has entered into a proposed amendment to the SSA with Datuk Yeo Boon Leong, Yeo Boon Thai, Yeo Boon Ho and Yeo Soon Bee (collectively, the Vendors). The amendment relates to the acquisition of the entire equity interest in High Reserve F&B Sdn Bhd for RM36 million, where certain payment terms will be amended or waived.

Due to the weak financial condition of High Reserve Group for the financial years ending 30 June 2023 and 30 June 2024, the proposed amendment will allow Asia Poly Food and Beverage Sdn Bhd to not pay the remaining RM9.55 million and receive RM4.85 million as compensation for losses incurred.

High Reserve Group recorded a significant decline in revenue, falling from RM9.19 million in FY30 June 2022 to RM8.41 million in FY30 June 2023 and RM7.61 million in FY30 June 2024, respectively, due to a decline in customer traffic at Uncle Don’s outlets, particularly in Rawang and Ipoh. High Reserve Group’s loss after tax also widened from RM0.56 million in FY30 June 2022 to RM4.61 million in FY30 June 2023, mainly due to the recognition of impairment losses on investments in subsidiaries of RM3.95 million.

Dolphin Chief Executive Ch’ng Eu Vern said: “The rationale behind the proposed amendment to the SSA is to mitigate the financial impact of the weak performance of the High Reserve Group and better align our financial commitments with our strategic objectives. This adjustment allows us to focus on more profitable businesses while maintaining a healthy balance sheet.”

In addition, Dolphin is proposing a private placement which is expected to raise gross proceeds of up to RM2.44 million at an indicative issue price of RM0.182 per offer share. The proceeds will primarily support working capital for the company’s F&B and Trading segments.

In line with its strategic purpose and to better reflect its updated corporate identity and purpose, Dolphin proposes to change its name to Oasis Harvest Corporation Bhd. This rebranding is aligned with the company’s core business and values, with the aim of increasing public trust and stakeholder engagement.

Ch’ng remains optimistic about its prospects in the F&B sector, and Dolphin is focused on further expanding in this area. Future plans include actively pursuing mergers and acquisitions with other F&B outlets that will work with Dolphin’s current operations.

The company is also implementing a customer relationship management system to increase customer retention and satisfaction across all of its foodservice locations. It focuses on targeted marketing strategies that aim to meet changing customer preferences.

The F&B sector in Malaysia is expected to grow significantly, driven by growth in tourism and consumer spending. The sector is expected to grow by 10.4% in 2023, with further growth expected in 2024. Dolphin is well-positioned to capitalize on these trends and drive sustainable growth and shareholder value.

UOB KayHian is the lead advisor on the proposals and SCS Global Advisory (M) Sdn Bhd has been appointed as the independent advisor.