KUALA LUMPUR (Nov 11): Loss-making group Carzo Holdings Bhd (KL:CARZO) has announced the immediate cessation of its core business of distributing fresh fruits and fruit products amid consecutive net losses and a negative cash flow position.
The decision comes after several months of cost-saving measures such as scaled-down operational activities aimed at improving its financial position, the LEAP Market company said in a bourse filing on Monday.
Carzo said that since July, the company had been focusing on cost saving measures to reduce its operational expenses such as scaling down the business of distribution and retailing of a variety of fresh fruits, and disposing of some fixed assets.
"But the limited supplies of fresh fruits to customers as a result of cash flow constraints of the group have led to significant loss in sales of fresh fruits which have impacted the group’s fruit distribution business in the last few months.
"Hence, the board further noted that the management’s effort to turn around the business of the group was not fruitful due to unsustainable revenue generated in the past few months," it added.
Carzo incurred net losses of RM18.89 million for the financial year ended June 30, 2023 (FY2023), and RM6.55 million for FY2024.
The group reported a negative cash flow of about RM560,000 and a capital deficiency of RM12.08 million as at end-June 2024.
Nine-month window to announce new core business
Carzo noted the company must maintain a clearly identified core business under Rule 6.06 of the LEAP Market Listing Requirements.
Carzo now has a nine-month window to acquire a new core business or face delisting from the LEAP Market.
The company said Bursa Malaysia Securities may suspend the trading of its shares and delist the company if its acquisition of a new core business is rejected by the bourse operator.
“Bursa Malaysia may require a reasonable exit-offer to be made to its shareholders, where circumstances warrant it, including where the company is in a net asset position, before delisting the company,” it added.
Carzo’s shares were not traded on Monday. The counter was last traded at 30 sen on Sept 24.