KUALA LUMPUR (May 10): Pharmaniaga Bhd (KL:PHARMA), whose weak financials have just been flagged by its independent auditor for a second consecutive year, assures shareholders that it is committed to financial recovery and has made “strong and steady progress” on it.
This is backed by resilient fundamentals and clear strategies to exit its Practice Note 17 (PN17) status via the regularisation plan it had submmitted to Bursa Malaysia in February this year, the group said in a statement on Friday.
The statement came after PricewaterhouseCoopers PLT (PwC) on Wednesday (Wed 8) raised doubts about the group’s ability to continue as a going concern, as it flagged its continued losses in the financial year ended Dec 31, 2023 (FY2023), its current liabilities that exceeded its current assets, and its capital deficiency.
Pharmaniaga’s current deficit and capital deficiency had also widened from FY2022, when PwC had raised similar concerns after auditing its books.
“The regularisation plan, which is still pending approval from Bursa, outlines a holistic strategy to increase the equity of the group and minimise our accumulated losses, favouring a proactive approach focused on capital reduction of approximately RM180 million issued share capital, fundraising of RM354.6 million via rights issuance for shareholders to strengthen their investments, and RM300 million in private placement for potential investors to participate in the group’s growth plans, moving forward,” said executive director Zulkifli Jafar.
Zulkifli, a “turnaround specialist” that the group hired in February, also said that Pharmaniaga had streamlined all business operations and ceased non-core and underperforming businesses, besides improving operational efficiency and cost optimisation via stringent cost containment and manpower rightsizing.
At the same time, he said the group had tightened its corporate governance and improved its margins by focusing on high-value products and services.
“In addition, Pharmaniaga had also carried out a private placement exercise in July last year to fortify our cash flow,” he said.
Moreoever, the financial situation had also not affected its operational efficiency, particularly its subsidiary Pharmaniaga Logistics Sdn Bhd (PLSB), which holds the logistics and distribution concession with the Ministry of Health (MOH), stressed Zulkifli.
Pharmaniaga has also identified five strategic pillars to strengthening the public sector business by building biopharmaceutical capabilities, reducing costs aggressively, growing the private market, and reinventing its Indonesia business, he said.
“These efforts will propel Pharmaniaga towards rejuvenating its financial standing and successfully exiting the PN17 status according to the schedule. We have the capabilities and resources to overcome the challenges and achieve the targets, especially when the group has the unwavering support from our substantial shareholders, Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings Bhd,” he added.
Pharmaniaga became a PN17-affected issuer last year, after it incurred a loss of RM607.32 million in FY2022, primarily due to a massive RM552.3 million impairment for Covid-19 vaccines.
Shares in Pharmaniaga settled half a sen or 1.64% higher at 31 sen on Friday, giving the group a market capitalisation of RM440.21 million. The counter has fallen 18.42% year-to-date.