Saturday, 27 September 2014
FSBM Holdings Bhd, once liked for its strong fundamentals, appears to be a pale shadow of its old self and is seeking a white knight to rescue it from its troubles.
The loss-making technology services and systems provider has to deal with legal issues and could be at a risk of falling into the PN17 category – a category for financially troubled firms – if debts from certain parties it is suing cannot be recovered, sources say.
According to a source familiar with the company’s dealings, FSBM has been approached by a few investors willing to take a look at it as a reverse takeover (RTO) target but no deal has materialised as the parties cannot agree on a selling price for the company which has a market capitalisation of just about RM29mil.
Investors who track the company may recall that together with its subsidiary FSBM CTech Sdn Bhd (CTech), FSBM has commenced legal action against Technitium Sdn Bhd (TSB) and several individuals for the recovery of debts amounting to RM32.4mil and RM8.6mil respectively.
To this end, CTech and FSBM filed a suit in the High Court on April 22 against Azman Awang as first defendant, Haliza Bidin as second defendant, Mariana Ahmad Tahar as third defendant and TSB as fourth defendant.
According to a Sept 18 note to Bursa Malaysia, the third defendant Mariana had filed to strike out the application on the above, but the court consequently dismissed it.
This legal issue arose as early as 2010 and is adding to the pressure of losses that the company is experiencing.
Notably, FSBM in the same year sold off a tract of freehold land together with FSBM Plaza, a five-storey office building in Cyberjaya to AmFirst Real Estate Investment Trust for RM51.5mil to pay off borrowings and for working capital.
Latest data on Bursa Malaysia shows that it now has property, plant and equipment worth RM202,000.
Granted, FSBM is only one of the many tech-related companies which has long been feeling the effects of stiff competition that has emerged in the industry in recent years.
It was listed in the 1990s as Fujitsu and consequently changed its name as it diversified its product offerings to include non-Fujitsu products.
The company has four main components, namely systems and solutions, education and training, multimedia and communications, and smart community.
During its hey days, it used to generate robust earnings for example, in 2006, the company made a net profit of RM14mil, a jump from RM9.4mil from the year before as revenue surged to RM101.7mil from RM72.7mil, the year earlier.
Around that time, the company had also just launched UNOS Voice, a mobile software that aimed to provide its users savings on roaming calls and SMSes. That service was first made available in Malaysia, Singapore, Hong Kong, Britain and Australia and then replicated in other countries.
FSBM at that point was also enjoying healthy orders which ran into hundreds of million ringgit thanks to a strong demand for its products especially from the government sector.
In a nutshell, it was riding high.
Suffice to say, its financials are less rosy these days.
For its financial year ended Dec 31, 2013 (FY13), FSBM announced a net loss of RM10.4mil on revenue of RM3.6mil.
For the six months ended June 30, the company reported a net loss of RM2.1mil on revenue of RM757,000.
While FSBM managing director Datuk Tan Hock San declined comment for this article, chairman Tan Sri Zainul Ariff Hussain in his statement to shareholders in June acknowledges that the historical financial performance of the group has been “less favourable”
This is mainly because of, among others, the problem of recoverabilty of debts due to an altercation with a debtor who was formerly a related party and the stability of revenue stream which is very much dependable on the volatility of the IT sector, he says in the annual report.
He says the company continues to pursue a “major project” which “is necessary to ensure the future viability of the group” as well as “several large-scale government projects” but reiterates that FSBM is still very much involved in the liquidation and legal action against its former business partner for debt recovery.
The company’s shares last traded at 24.5 sen apiece.
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