And Now Silver Birds Sues Its Extrernal Auditors

I am really pleased to see what's happening. The fraud in Silver Bird is simply massive and disgusting ( see The Said 12 Accounting Irregularities Found At Silver Bird! ) and Bursa Malaysia, too should be more active in cracking down all these book cookers! Too see the current board of Silver Bird slapping lawsuits againts its former directors ( see Silver Bird Sues Its Former Directors ) is something other companies should consider if ever another fraud case should happen. File criminal chrages against them crooks and slap them silly with mega lawsuits. Ensure that white collar crimes does not pay!

Today, on SunDaily Business: http://www.thesundaily.my/news/453704

Woah! Yet another lawsuit. Intersting!

• Crowe Horwath denies Silver Bird’s claims
  Posted on 2 August 2012 - 11:20pm
  Last updated on 3 August 2012 - 02:06am
  
  sunbiz@thesundaily.com
  
  PETALING JAYA (Aug 2, 2012): Crowe Horwath has "categorically denied" claims filed in a lawsuit by Silver Bird Group Bhd that it was negligent and had breached a duty of care as the group's external auditor for failure to discover and/or detect the financial irregularities in the group.
  
  Crowe Horwath was the external auditor of Silver Bird when news of the financial irregularities surfaced in February last year. It had then refused to provide a basis for an audit opinion to the bread maker's financial report for the year ended Oct 31, 2011.
  
  "Crowe Horwath categorically denies these allegations and firmly believes that it had discharged its duties and responsibilities as the auditors of Silver Bird Group in accordance with approved auditing standards. According to the engagement partner, Onn Kien Hoe, the financial irregularities were in fact discovered by Crowe Horwath and were immediately reported by us to the audit committee and board of directors of Silver Bird. We have also proactively informed the relevant authorities thereafter," it said in a statement today.
  
  Silver Bird and its subsidiaries, Stanson Marketing Sdn Bhd and Standard Confectionery Sdn Bhd, had on Wednesday filed a suit against Crowe Horwath and nine others alleging, among others, negligence and breach of duty of care.
  
  "We believe that the suit by Silver Bird Group is frivolous in nature and without basis. We strongly believe that we have fully discharged our duties professionally and will vigorously defend our position in court," said Crowe Horwath.

Silver Bird Sues Its Former Directors

Another lawsuit has been filed. This time it is Silver Bird who is suing its former excutive directors.

http://www.thesundaily.my/news/452680

• Silver Bird sues former executives for RM125m fraud Posted on 1 August 2012 - 11:42pm
  Last updated on 2 August 2012 - 02:16am
  
  PETALING JAYA (Aug 1, 2012): Silver Bird Group Bhd and its subsidiaries, Stanson Marketing Sdn Bhd and Standard Confectionery Sdn Bhd, have lodged a lawsuit against its former group managing director, executive director and eight others alleging, among others, breach of fiduciary duties, breach of duty of fidelity and loyalty, abuse of power, conspiracy to commit fraud and for facilitating misappropriation of funds.
  
  The bread maker filed the RM125 million suit in the Kuala Lumpur High Court yesterday, and case management is fixed for Sept 3.
  
  The suit claims Datuk Jackson Tan Han Kook, Ching Siew Cheong and Lai Poh Mei had breached their fiduciary duties as group managing director, executive director and general manager of accounts and finance of the three companies, respectively, and is seeking to collect damages caused by their action to be assessed.
  
  The suit is also seeking a declaration that one of its defendants — Asia Food Link Sdn Bhd — had allegedly made fictitious sales of sweetened creamers amounting to RM44.287 million to Stanson Marketing and as such, it is not entitled to claim the sum of RM44.188 million from it.
  
  A declaration is also sought that the purported purchase of machinery for a new bread line by Lai from Triremis (M) Sdn Bhd and Triremis Asia Sdn Bhd for RM25.8 million is fictitious and non-existent.
  
  Asia Food, Triremis (M), Triremis Asia and Bill Davis & Associates Sdn Bhd are also alleged to have knowingly received payment out of the funds of Silver Bird and its subsidiaries, which were misappropriated by Tan, Ching and Lai in breach of the duties owed to the the three companies, among others.
  
  Apart from the seven defendants, the suit is also seeking a declaration that external auditor Crowe Horwath and internal auditors — Audex Governance Sdn Bhd and Focus Internal Audit Solutions — had conspired to defraud Silver Bird, Stanson Marketing and Standard Confectionery in reckless disregard of the interests and/or to injure the interests of the three companies.
  
  "The company will make the necessary announcements on further developments of the matter as and when necessary," said Silver Bird in a filing with Bursa Malaysia yesterday.
  
  On Tuesday, Ching had taken legal action against Silver Bird and its directors for alleged wrongful termination from the group and is seeking damages for alleged slander against him.
  
  However, in his statement of claim served to Silver Bird, Ching had clearly admitted that he, in his capacity as then executive director, had "dressed up" the financial accounts of Stanson Group from 2003 till 2010, albeit allegedly under the instructions of Tan, who he stated had a gambling addiction.
  In one paragraph, Ching had admitted to inflating the assets of Stanson Group by some RM31 million and by adjusting a combined loss of RM15 million for the period 2002-2004 to a profit of RM16 million.
  
  He further stated that the "dressing up" of the accounts was divided between himself and other senior management staff.
  

This is a good development. Sue them for fraud!

More Silver Bird Drama

Yet more drama.

On Star Biz:

• Wednesday August 1, 2012
  Ex-director sues Silver Bird
  PETALING JAYA: Silver Bird Group Bhd has been served a writ of summons by former executive director Ching Siew Cheong via the Kuala Lumpur High Court. Ching was suspended on April 30 after the company’s AGM.
  
  He was suspended together with managing director Datuk Jackson Tan Han Kook and general manager of accounts and finance Lai Poh Mai to facilitate an internal investigation of accounting irregularities in the company.
  
  Ching is claiming loss of salary amounting to RM90,000 from the date of termination, along with RM600,000 in damages for wrongful termination of employment. He is also claiming RM2mil in losses, which resulted from force-selling Silver Bird shares as a result of what he claimed was mismanagement on the board’s part and the company going into PN17 status.
  
  However, the company said in a filing to Bursa Malaysia that the claims were frivolous and not substantiated in the circumstances surrounding the financial irregularities. Silver Bird’s board said this would not have any financial or operational impact as such claims were envisaged to be restructured pursuant to the pending regularisation plan.
  
  News of the bread and confectionary maker’s financial irregularities came about in February after its independent auditors Crowe Horwath refused to provide a basis for an audit opinion to the group’s financial report for the financial year ended Oct 31, 2012.
  
  The auditors said their stand was based on the poor keeping and inability to verify sales transactions. Since then the company had defaulted on loans to both creditors and banks. Silver Bird’s distribution agreement for prepaid cards with Maxis Bhd, which was one the company’s main sources of revenue, was terminated.
  
  The board formed an inquiry committee, and PKF Advisory Sdn Bhd was appointed to conduct a forensic investigation of the company. The results of the forensic investigation detailed 12 key areas of financial irregularities in the group.
  

Berjaya Corp Book A 44 Million Loss From Its Investment In Silver Bird

Berjaya Corp announced its earnings. Here's the numbers.

Here's the Sun Biz take on Berjaya Corp's earnings. http://www.thesundaily.my/news/420394

• BCorp posts pre-tax profit of RM586m for FY12 Posted on 29 June 2012 - 05:41am
  
  PETALING JAYA (June 29, 2012): Berjaya Corp Bhd (BCorp) reported a pre-tax profit of RM585.9 million for the financial year ended April 30, 2012 (FY12) compared with RM626 million a year ago, due mainly to lower operating profit from its marketing of consumer products and services segment.
  
  Revenue rose marginally to RM7.1 billion from RM7 billion a year ago, mainly contributed by the group's marketing of consumer products and services, betting operations, and hotels and resorts segments.
  
  For the fourth quarter (Q4), the group's pre-tax profit came in lower at RM70.3 million from RM182.2 million a year ago, due to lower contribution from its marketing of consumer products and services, betting operations and the share of associate companies' exceptionally high losses, particularly from the investment in Silver Bird Group Bhd, where the group equity accounted for its share of losses amounting to about RM44 million.
  
  In addition, the previous year's corresponding quarter profit included one-off exceptional gains from disposal of investment property and investments.
  
  "The expansion of the retail distribution division into new markets involved high initial expenses in terms of pre-operating, setting up and operating overheads, which had eroded profits during the current expansion phase. The motor distribution business, however, recorded an increase in profit for the quarter under review," BCorp said in a filing with Bursa Malaysia yesterday.
  
  The gaming business recorded a lower pre-tax profit mainly due to higher prize payout in Q4, which offset gains from its property and hotels and resorts businesses.
  
  It also saw lower revenue in Q4 of RM1.8 billion from RM1.9 billion a year ago.
  
  For FY13, BCorp said it will focus on further developing all its business segments, in particular the marketing of consumer products and services.
  
  "The emphasis will be on improving efficiency as well as widening their market presence. Given the cautious economic outlook, the directors are of the view that the group's performance for the current financial year will remain satisfactory," it added.

And as usual, for some business journalists, it's the pre-tax profit that matters!

Fantastic Baby!

Do they really know that taxes do matter???

So Berjaya Corp booked a 44 million loss from its investment in Silver Bird. Ouch! ( The 'sibuk' one of course would be very keen to know how much losses did LTH book for its investment in Silver Bird!)

Here's an old article dated 2007 (sorry link broken) posted on the Edge.

• 5-10-2007: Berjaya ups stake in Silver Bird to 14.15% By Gan Yen Kuan
  
  Berjaya Corporation Bhd (BCorp) has more than doubled its stake in Silver Bird Group Bhd to 14.15% after its subsidiaries acquired a total of 18.71 million shares on Sept 27 and Oct 1.
  
  The acquisitions took place after Lembaga Tabung Haji (LTH) emerged as the single largest shareholder of the bread and confectionery maker, with a 23.72% stake comprising 55.65 million shares as at Sept 26.
  
  Several filings to Bursa Malaysia on Wednesday showed that BCorp's indirect subsidiaries, namely Berjaya Sompo Insurance Bhd, Rantau Embun Sdn Bhd and Selat Makmur Sdn Bhd, acquired nine million Silver Bird shares on Sept 27, and 9.71 million on Oct 1, all from the open market.
  
  The two transactions increased BCorp's total shareholdings in Silver Bird to 33.2 million shares.
  
  Subsequently, BCorp chairman and chief executive officer Tan Sri Vincent Tan Chee Yioun's direct and indirect stake in Silver Bird was raised to 14.36%, given his interest in BCorp. His direct stake in Silver Bird comprises 487,500 shares or 0.21%.
  
  A filing on Wednesday also showed that Silver Bird group managing director Datuk Jackson Tan Han Kook had acquired 500,000 shares, directly and indirectly on Tuesday, raising his stake in the company to 17.29%.
  
  Yesterday, the share price of Silver Bird hit an intra-day high of RM1 before easing off to close at its historic high of 96 sen, up 17.5 sen or 22.29%. There were 14.4 million shares transacted.
  
  Its warrants surged 50% or eight sen to close at a historic high of 24 sen, and was the most actively traded counter with the volume of 89.3 million.
  
  The other major shareholder of Silver Bird is Australian venture capital firm CVC Ltd, which has a 12.81% stake comprising 30.06 million shares. Of the 30.06 million shares, 20 million were acquired through private placement, while 10.06 million were transferred to it from its fund manager Perkasa Normandy Managers Sdn Bhd.
  
  That left Perkasa Normandy with 10 million Silver Bird shares at press time.
  
  CIMB Research said in a research note yesterday that the recent development in Silver Bird appeared like "a race for control" between the major shareholders.
  
  "SBG (Silver Bird Group Bhd) remains a trading-oriented buy as we expect a flurry of buying by the four major shareholders in a possible tussle for control that could trigger a general offer," it said.
  
  As such, the research house raised its target price for Silver Bird to RM1 from 75 sen, as it increased the price to book value (P/BV) target to two times from 1.5 times, given that Silver Bird's share price "could bid up in the fight for control".
  
  "As the two times P/BV is still nowhere near the current six times average for Nestle Malaysia, F&N Holdings and Dutch Lady, and the sector's historical 10-year low of 4.3 times, this suggests further upside to our target price," it added.
  
  LTH has been accumulating Silver Bird shares since early September. The Edge Financial Daily reported last Thursday that the LTH's accumulation of a strategic stake in Silver Bird had led to analysts speculating that the latter could be used as a platform for the pilgrim fund to enter the food industry in a big way.
  
  On that note, CIMB Research said LTH had "made no secret of its intention of going into the food business", riding on the government's efforts to promote Malaysia as the hub for halal food.
  
  "In FY06, LTH made a net profit of RM210 million and had net cash of RM2.5 billion. Based on yesterday's (Oct 3) closing price, LTH will have to pay only RM141 million for the SBG shares it does not already own.
  
  "We view cash-rich LTH's involvement positively as it could be adding value, and more importantly, adding credibility, to SBG, whose halal status came under scrutiny last year," it said.
  
  While LTH was acting on its own, the research house said there was still no information as to whom Perkasa Normandy and CVC were buying the Silver Bird shares for.
  
  acquired nine million Silver Bird shares on Sept 27, and 9.71 million on Oct 1, all from the open market.
  
  The two transactions increased BCorp's total shareholdings in Silver Bird to 33.2 million shares.
  
  Subsequently, BCorp chairman and chief executive officer Tan Sri Vincent Tan Chee Yioun's direct and indirect stake in Silver Bird was raised to 14.36%, given his interest in BCorp. His direct stake in Silver Bird comprises 487,500 shares or 0.21%.
  
  A filing on Wednesday also showed that Silver Bird group managing director Datuk Jackson Tan Han Kook had acquired 500,000 shares, directly and indirectly on Tuesday, raising his stake in the company to 17.29%.
  
  Yesterday, the share price of Silver Bird hit an intra-day high of RM1 before easing off to close at its historic high of 96 sen, up 17.5 sen or 22.29%. There were 14.4 million shares transacted.
  
  Its warrants surged 50% or eight sen to close at a historic high of 24 sen, and was the most actively traded counter with the volume of 89.3 million.
  
  The other major shareholder of Silver Bird is Australian venture capital firm CVC Ltd, which has a 12.81% stake comprising 30.06 million shares. Of the 30.06 million shares, 20 million were acquired through private placement, while 10.06 million were transferred to it from its fund manager Perkasa Normandy Managers Sdn Bhd.
  
  That left Perkasa Normandy with 10 million Silver Bird shares at press time.
  
  CIMB Research said in a research note yesterday that the recent development in Silver Bird appeared like "a race for control" between the major shareholders.
  
  "SBG (Silver Bird Group Bhd) remains a Trading-oriented Buy as we expect a flurry of buying by the four major shareholders in a possible tussle for control that could trigger a general offer," it said.
  
  As such, the research house raised its target price for Silver Bird to RM1 from 75 sen, as it increased the price to book value (P/BV) target to two times from 1.5 times, given that Silver Bird's share price "could bid up in the fight for control".
  
  "As the two times P/BV is still nowhere near the current six times average for Nestle Malaysia, F&N Holdings and Dutch Lady, and the sector's historical 10-year low of 4.3 times, this suggests further upside to our target price," it added.
  
  LTH has been accumulating Silver Bird shares since early September. The Edge Financial Daily reported last Thursday that the LTH's accumulation of a strategic stake in Silver Bird had led to analysts speculating that the latter could be used as a platform for the pilgrim fund to enter the food industry in a big way.
  
  On that note, CIMB Research said LTH had "made no secret of its intention of going into the food business", riding on the government's efforts to promote Malaysia as the hub for halal food.
  
  "In FY06, LTH made a net profit of RM210 million and had net cash of RM2.5 billion. Based on Wednesday's closing price, LTH will have to pay only RM141 million for the SBG shares it does not already own.
  
  "We view cash-rich LTH's involvement positively as it could be adding value, and more importantly, adding credibility, to SBG, whose halal status came under scrutiny last year," it said.
  
  While LTH was acting on its own, the research house said there was still no information as to whom Perkasa Normandy and CVC were buying the Silver Bird shares for.

LOL! They used P/BV as a comparion? ( Do you wonder why they did not do a Price Earnings comparison? ) And they actually compared Silver Bird to Nestle and Dutch Lady??

And Silver Bird posted its earnings the other day too: http://www.thesundaily.my/news/417801

• Silver Bird posts bigger Q2 net loss of RM295m Posted on 27 June 2012 - 05:39am
  
  PETALING JAYA (June 27, 2012): Financially-troubled Silver Bird Group Bhd announced a bigger net loss of RM295.3 million in the second quarter ended April 30, 2012 (Q2) against the previous quarter's RM13.6 million, on a dip in revenue from its consumer food and telecommunication businesses.
  
  It posted a net profit of RM1.9 million in the year-ago period. Revenue fell 35% to RM30.8 million for Q2 from RM47.7 million a year ago.
  
  Despite the huge losses, Silver Bird said it will maintain the operations of its consumer food division, which it deems to be profitable, and will start a new business in the distribution of U-Mobile telephone cards.
  
  "The board is in the process of evaluating the prospects of the group in the light of the financial irregularities, removal of its managing director, executive director and general manager of accounts and finance, the Practice Note 17 (PN17) status of the group as well as the termination of the distribution agreement between Maxis Mobile Services Sdn Bhd and Stanson Marketing Sdn Bhd," it said in a filing with Bursa Malaysia yesterday.
  
  Silver Bird entered into PN17 status on Feb 29 after defaulting on payments to creditors amounting to RM5.37 million.
  
  Reviewing its Q2 results, Silver Bird said the consumer food division recorded a revenue of RM31 million, a decline of 34% from the RM47 million a year ago, while revenue from the telecommunication business fell to RM200,000 from RM1 million.
  
  For the six months, Silver Bird posted a net loss of RM308.9 million compared with a net profit of RM2.8 million a year ago, mainly due to the financial irregularities in the consumer food division.
  
  Revenue also declined to RM75.3 million from RM95.7 million.
  
  Silver Bird said the financial irregularities have affected the financial results of the group for Q2.
  
  "These financial irregularities continued into the month of February 2012, when all appropriate adjustments were made to reflect a true and fair financial position of the group. Accordingly, the financial report for the quarter ended April 30, 2012 must be read in the above light," it added.

ps: Do read the earnings note posted on Bursa Malaysia. It's a much better read, especially on how and where the losses were recorded.

The Said 12 Accounting Irregularities Found At Silver Bird!

Silver Bird released its forensic report on its accounting irregularities last night.

See news report on the Sun Daily: http://www.thesundaily.my/news/391012

Here's the 12 accounting irregularities stated on the pdf file aposted on Bursa Malaysia.

http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/CEDDEAB10131D1DA48257A0C003CC1D1/$File/Announcement-General-forensic%20report-28.05.pdf

• Trade Receivables
  The trade receivables of the SBGB Group have been noted to have included incorrect accounting entries that could create a false audit trail, and included the masquerading of inter-bank transfers as payments from the debtors.

( Hmm.... the trade receivables.... )

• Bread and Supplementary Products
  
  Certain sale of bread and supplementary products were found not to be supported by any physical goods or complete documentation, and hence, may be deemed to exist to increase the sales figures and to possibly serve as a channel for funds as required for working capital to be brought back into the SBGB Group.

( Looks like the sales REVENUE boosted by products that does not exist!)

• Sweetened Creamer
  
  Purchases for sweetened creamer included sales that were not supported by any delivery of physical goods to the premises of the SBGB Group, but appear to have been contracted with back to back sales to companies suspected to be associated with the financial irregularities of the SBGB Group. These companies include those that may have served as a front for the transactions without the knowledge of the companies concerned.

( Purchase of goods that were not supported by delivery og physical goods? Yeah.. purchase of goods that did not even exist! )

• Multicom Sales
  
  The irregularities in respect of the Multicom sales are in respect of credit sales when the business was essentially cash based. Further, various credit sales created in the management accounts appear to have been replaced by two other relatively larger debtors for audit purposes.

( Cash sales being recorded as credit sales! )

• BK Fleet Management Sdn Bhd (“BKFM”)
  Certain of the trucks used by SMSB are registered in the name of SMSB and are subject to
  service agreements with BKFM which allow for BKFM to acquire the trucks for a nominal
  sum at the end of the service tenure. Further, there is evidence that some of the trucks
  were paid for by SMSB via hire purchase and upon the expiry of the initial service
  agreement, the service tenure of the agreement for these trucks was renewed for a higher
  net service fee, with the same option for BKFM to purchase the trucks for a nominal sum at
  the end of the agreement tenure.

• Inventories
  
  There is a lack of documentary evidence for certain motor spare parts, plus approximately RM986,500 of spare parts that cannot be verified by documentary and physical evidence.

( What??? A company like Silver Bird ending up with close of a million ringgit worth of motor spare parts? LOL! And now the said spare parts could not be found! )

• Bank Reconciliations
  
  The bank reconciling items are numerous, including those arising from unrecorded receipts and payments.

• Bankers’ Acceptances
  
  Numerous sales transactions have been made, without any physical goods, for what appears to be for the purposes of refinancing and raising of bankers’ acceptances.
  

( Sales transactions recorded just for the purpose of refinancing and raising bankers' acceptances!! )

• Common Party Relationships
  
  Some of the principal activities of the customers and supplier companies with common party relationships would not include the transactions executed with the SBGB Group. Further, the quantum of their transactions with the SBGB Group does not appear to be reasonable when compared with the figures disclosed in the reported financials of the respective companies.
  

• Destruction of Books and Records
  Upon the financial irregularities coming to light, evidence of destroyed documents were uncovered, as were the evidence of computer file deletion and physical damage to the computer hard drive.
  

( Holy cow!!! The destruction of evidence!!!!! What drama!!!! No wonder they call it 'forensic accounting review!!! )

More insights on Silver Bird's Financial Irregularities

Last night, Silver Bird made the following announcement: OTHERS

• The Special Committee of SBGB wishes to announce that consistent with the disclaimers raised by the auditors pertaining to the financial statements of the Company for the financial year ended 31 October 2011 as announced on 29 February 2012, and in the light of the findings of the forensic accountants taken as of to-date on the lack of reliability of the financial statements of the Group, it has undertaken upon itself to establish the financial position of the SBGB Group as at 29 February 2012, which was reconstructed based on information available to the Special Committee up to the date of this announcement. The financial position of the SBGB Group as at 29 February 2012 was approved by the Special Committee on the 22 April 2012. Details of the financial position as at 29 February 2012, is attached as Appendix 1. Based on the information available as at to-date, the Special Committee does not foresee any further material adjustments to the accounts of the SBGB Group. A reconciliation between the financial position as at 29 February 2012 and as at 31 October 2011, together with the underlying explanations as to how the differences occur, is also attached as Appendix 2.
  
  
  As previously announced, the forensic investigation report is expected to be finalized by 29 May 2012.
  
  Based on the financial position of the SBGB Group as at 29 February 2012, the Special Committee of SBGB also wishes to announce that subject to the approval of the relevant authorities, creditors and shareholders, the Group intends to seek the support of its bank lenders, major creditors and major shareholders to undertake a PCDRS. In this connection, the Special Committee of SBGB wishes to announce that Appendix 1 and the PCDRS will be or have been forwarded to the creditors and shareholders of the SBGB Group for discussion purposes. The PCDRS essentially envisages a proposed capital reduction, a proposed rights issue, a proposed debt settlement which incorporates a cash repayment, the terming out of part of the liabilities, debt to equity conversion and waiver of debts that are no longer supported by assets, and the proposed liquidation of subsidiary companies that are no longer essential to the future operations of the SBGB Group.
  
  
  The full particulars of the regularisation plan as required under Practice Note 17 will be announced by a Principal Adviser to be appointed, in due course, after taking into consideration the feedback of the bank lenders, major creditors and major shareholders of the Group on the PCDRS.
  
  This announcement is dated 27 April 2012.

Attached is the balance sheet: SilverBird BS.pdf 

Now, I wanted to see more in detail on what has changed in the balance sheet, ie I wanted to see how unreliable the previous financial statement released by the company.

From the quarterly earnings released on Dec 2011: SBGB_Q4 2011.pdf

Here is the screen shot of the balance sheet.

Here is the screen shot of the balance sheet posted last night by Silver Bird.

The changes were mentioned in detailed in the other pdf file: Silver Brid Financial Position reconciliation.pdf

The value of the property and plant were adjusted down by 98 million!!!! (The notes below mentioned 'assets that cannot be physically identified!!! WTH!!!!!! Did the assets even existed in the first place??!!! )

Cash was adjusted. Where did the Moola go?

Inventory was less. (The notes below state "obsolete inventories and inventories that cannot be physically identified." !!!! Again did these inventories even existed in the first place? )

 Accounts payable increased. And the total borrowings increased!!!!

Holy cow!!!

And the following were the notes stated in that pdf file attached.

Notes:

1. Impairment to fair value, after taking into consideration additional depreciation since 31 October 2011, write down of assets that should have been expensed to profit & loss as opposed to being capitalized, movements in acquisitions and disposals, write-offs of assets that cannot be physically identified, write backs of assets that were not previously taken up, and possibly adjustments to assets that may have been suspected to be capitalized above fair market value arising partly from the preliminary forensic investigation.

2. In view of the net liabilities position of the Group, goodwill is impaired in totality.

3. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, provisions for doubtful debts and suspected financial irregularities arising from the preliminary findings of the forensic investigation

4. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and after reconciling for transactions relating to suspected financial irregularities arising from the preliminary findings of the forensic investigation

5. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and for obsolete inventories and inventories that cannot be physically identified.

6. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and for provisions relating to suspected financial irregularities arising from the preliminary findings of the forensic investigation

7. Increased borrowings can be related to additional net borrowings of the Group between 31 October 2011 and 29 February 2012. Certain facilities, such as bonds, were paid off, whilst  additional borrowings were drawn down, in particular bankers acceptances, during the period

8. Others, relate to the write-off of investment in KPF Quality Foods Sdn Bhd, and increased deferred taxation provisions

The Star Biz had this article: Silver Bird to forward preliminary debt revamp scheme soon

• The bread and confectionary maker’s independent directors formed a special committee to run the daily affairs of the bread and confectionary maker after suspending group managing director-cum-founder Datuk Jackson Tan Han Kook, executive director Ching Siew Cheong and general manager for accounts and finance Lai Poh Mei on Feb 24.

So the MD-cum-founder and ED is suspended. Is that all?

ps: Do read comments posted in Corporate Governance in Malaysia blog by M.A. Wind : Silver Bird hammered by 300 million write-offs

Looking Back At Silver Bird

I do have many old articles on Silver Bird and because of the time issue, some of the links are broken.

But where do I start. Let's start 1st March 2012. I posted: Deep Woes For Silver Bird

• Furthermore, Silver Bird’s major subsidiaries were in default of banking facilities repayments, with the group currently unable to provide a solvency declaration to Bursa.
  
  The three wholly-owned units in default are baked goods manufacturer Standard Confectionery Sdn Bhd, bakery goods and telecommunications products distributor Stanson Marketing Sdn Bhd and bread maker Stanton Bakeries Sdn Bhd.

I do remember that name Stanson.

Now this is a good starting point, which is 21st April 2003.

Posted on Bursa Malaysia website: Silver Bird Group Berhad ("SBGB" or "the Company") · Proposed bonus issue of up to RM21,585,500 comprising up to 43,171,000 new ordinary shares of RM0.50 each to be credited as fully paid-up on the basis of one (1) new ordinary share for every two (2) existing ordinary shares held in SBGB ("Proposed Bonus Issue"); · Proposed acquisition of the entire issued and paid-up ordinary share capital of Stanson Group Sdn Bhd ("SG") comprising 10,080,000 ordinary shares of RM1.00 each and 1,920,000 ‘A’ ordinary shares of RM1.00 each for a total consideration of RM54,000,000 ("Proposed Acquisition"); and · Proposed transfer of the listing of and quotation for the entire enlarged issued and paid-up share capital of SBGB after the Proposed Bonus Issue and if approved, the Proposed Acquisition from the Second Board to the Main Board of the Kuala Lumpur Stock Exchange ("KLSE") ("Proposed Transfer"). (Hereinafter collectively known as the "Proposals")

That was when Silver Bird BOLDLY announced that it wants to buy Stanson Group. Yeah, boldly. It was a 54 million transaction. The sticky (or shall i call it 'sicky') issue was.... the profitability of Stanson.

Here's a screen shot from the word file attached to the above announcement.

How would you interpret the financial track record of Stanson?

Me? Sceptical. My reasoning? Stanson only showed profit the very same year Silver Bird announced it wants to buy! For me, where is the justification????

And if you scroll down to section 9.0 of the word file, you would note that this is a RELATED PARTY TRANSACTION!

Yeah man. A RPT Transaction worth 54 million!!!!

That sum was later revised lower to rm46.6 million. Yeah, sadly, somehow Silver Bird's purchase of Stanson Group was approved. Mentioned on an article on Star Biz: (link broken)

• Thursday January 15, 2004
  
  2004 looks promising for Silver Bird
  
  SILVER Bird Group Bhd looks set for an eventful 2004.
  
  The company expects its proposed one-for-two bonus issue and the subsequent transfer of its listing on the MSEB second board to the main board to be completed in the next 30 days or so.
  
  Its proposed acquisition of bread maker Stanson Group Sdn Bhd should also be completed by the first or second quarter this year.
  
  In addition, its new bakery plant in Shah Alam would soon boost its installed capacity by three-fold.
  
  Yesterday, at Silver Bird's EGM in Kuala Lumpur, shareholders approved the proposed bonus issue. Minority shareholders also voted unanimously to acquire Stanson Group for RM46.6mil, to be satisfied by the issuance of a combination of Silver Bird shares and loan stocks.
  
  Silver Bird group managing director Datuk Jackson Tan and parties related to him, being the vendors of Stanson Group, abstained from voting on the Stanson proposal.
  
  Speaking to the media later, Tan said the new bakery plant, which he described as the biggest in South-East Asia, would allow the company to churn out new products faster than its competitors.
  
  It would also put Silver Bird in an enviable position to take advantage of trade liberalisation under the Asean Free Trade Area and to penetrate regional markets with its range of products, he added.
  
  The company's growth locally looked promising, he said.
  
  Instead of relying on stockists, Silver Bird had its own fleet of vehicles and salesmen who go around ensuring that its products were well stocked at more than 5,000 distribution points, he said.
  
  Over the next two years, the distribution points would be doubled, said Tan, who expects Silver Bird's sales to grow faster than the industry average of some 10% annually.
  
  He declined to be more specific, but said the new bakery plant and a planned advertising campaign of a few million ringgit would make for “exciting sales growth” this year.
  
  For its fiscal year ended Oct 31, 2003, Silver Bird posted a net profit of RM10mil on a turnover of about RM51mil, compared with RM9.2mil and RM45mil, respectively the prior year.

Then came March 2004.

Yet another mind blowing corporate exercise for me.

On Star Biz: (link broken)

• Thursday March 4, 2004
  Silver Bird’s RM100mil bakery to spearhead expansion plans
  BY DANNY YAP
  
  SILVER Bird Group Bhd, which is installing the single largest stand-alone bakery in Asean costing RM100mil, is confident it can double its net profit for the fiscal year ending Oct 31 to RM20mil, from RM10mil last year.
  
  “The plant will not only help Silver Bird lead the industry in Malaysia but also allow the company to expand its business offshore when the time is right,” group managing director Datuk Jackson Tan told reporters in Kuala Lumpur yesterday after the company’s transfer to the MSEB main board.
  
  The state-of-the-art plant, purchased from US-based AMF Bakery Systems, would also provide the leverage for the company to become a leading bread producer, he said.
  
  “Our first production line was completed ahead of time and the facility is already rolling out our High 5 bread,” Tan said, adding that the second line should be operational in a couple of months. .
  
  Silver Bird has about 30% market share of the local bread business and produces 11 products under the High 5 brand. They are distributed through its 7,000 outlets, which the company expects to expand to over 10,000 by next year..
  
  Silver Bird's recent acquisition of Stanson Group Sdn Bhd would enhance earnings besides widening its product range and distribution network.
  
  Tan said the local bakery industry was worth more than RM1bil a year, and growing in excess of 12% per annum.
  He said the transfer of the company to the main board will enhance business reputation; promote greater customer, supplier and employee confidence; and attract financiers and investors.
  
  “It will also enable us to compete with other major brands and, ultimately, improve our market position and market share,” he said.
  
  At the start of trading yesterday, shares of Silver Bird put on 3 sen to RM1.23 with 50,000 shares changing hands. The counter closed the day at RM1.15 on total volume 1,074,000 shares.

100 million for a bread factory????

100 million???

I like one comment posted on this blog the other day. "Lot's of dough for a bread factory!"

Tell me.... are you impressed?

 And then came Nilai Sept 2006. SIlver Bird's Nilai plant was forced to closed for a couple of weeks when it was alleged that the plant was unhygienic.

The following was posted by Star Biz on 16 Sep 2006: Silver Bird plans to fly past storm

And come Dec 2006: Quarterly rpt on consolidated results for the financial period ended 31/10/2006

Silver Bird posts 51.1 million in losses for that quarter!

Their excuse?

• Silver Bird says Q4 loss due to provisions
  
  December 27 2006
  
  SILVER Bird Group Bhd, a bakery firm, plunged into a fourth quarter net loss due to provisions or money set aside to cover potential losses from its cake and frozen products business.
  
  Its fourth quarter loss for the period to October 31 2006, dragged the full-year numbers into the red as well.
  
  “For the financial year ending 2007, given a challenging environment, the group is focused on regaining market share based on an aggressive promotion and expansion campaign,” it said in a statement to Bursa Malaysia.
  
  The company also planned to reduce costs further.
  
  Silver Bird fell into a net loss of RM51 million in the fourth quarter as against a net profit of RM7 million in the same period a year ago.
  
  Quarterly revenue rose 11 per cent to RM150.1 million.
  
  For the full year, Silver Bird made a net loss of RM48.2 million compared with a net profit of RM22.2 million in 2005.
  
  It blamed the fourth quarter losses on a RM28 million impairment loss and a RM7.8 million write off. The impairment losses were from its cake and frozen products business.
  
  “Our sales in cake and frozen products have declined significantly and the trend is foreseeable not to reverse in the near future,” it said.
  
  The directors decided on the provision “as the budgeted net cashflow or operating profits from the cake and frozen products, which were significantly lower than expected.” As for the write off, the amount was due to the assets of its discontinued bakery café business.

Hmmm.... remember Stanson Group? Still remember Silver Bird's purchase of Stanson Group at 46.6 million????

And Here Comes The Forced Selling At Silver Bird

When it rains it pours....

Announced tonight...

Silver Bird: Where Is The Moola??

So we know the 'problem' in Silver Bird is dead serious.

The company has suspended the managing director Datuk Jackson Tan Han Kook, executive director Derek Ching Siew Cheong and general manager of accounts and finance Lai Poh Mei. To make it more serious, Jackson Tan Han Kook owns is a major shareholder as he owns some 44 million shares in the company.

The auditors had made a huge statement by claiming many discrepancies and financial irregularities in the company's accounts. ( See announcement made on Bursa: OTHERS )

And to top if all, Silver Bird has defaulted some 5.368 million of banking facilities repayment. ( see Microsoft Word - Appendix A for PN1 Announcement.pdf )

Now this is where it was puzzling for some.

The following link is Silver Bird's last quarterly announcement made on Dec 2011: Quarterly rpt on consolidated results for the financial period ended 31/10/2011

Open the pdf file attached. : SBGB_Q4 2011.pdf

Page 2, under Silver Bird's current assets, it states

Fixed deposits with licensed banks: 3.704 million
Cash and bank balances: 34.699 million.

( note: the previous year Silver Bird had much more moeny! )

So much money and yet Silver Bird has now defaulted in banking loans repayment of 5.368 million?

What is happening here?

Well, for starters, that link and the pdf represents Silver Bird's un-audited accounts. And we all know that Crowe Horwath has now stated that there's so many financial irregularities. ( Financial irregularities? Isn't that a nice way too say it? )

Do see the audited accounts:  Annual Audited Accounts - 31 October 2011. And if you open the pdf file, Crowe Horwath is saying that the cash balances should be much less!

Which begs the question, where is the Moola???

Did some hungry and angry bird wallop all the moola??

Did the moola went to moola heaven?

With Silver Bird defaulting in its payment, one really wonders how much REAL money is there in Silver Bird's accounts.

See the mess? With such a mess, it's understandable why the MD is suspended. Was it poor management? Or is there something worse? I dunno.

Which begs us to ask about the other financial discrepancies addressed by the auditors. What is real and what isn't?

And finally, this leaves one with Silver Bird's total borrowings of 147 million!!!!

Where and how is Silver Bird gonna fix this massive problem?

And Lembaga Tabung Haji, which is a major shareholder ( you can note that LTH had been a frequent seller of Silver Bird's shares last year), is left with a huge fine mess. Frankly, I have no idea why LTH wanted to be a shareholder in the first place. Why? Was there real justifications to invest in this company? Me thinks? I think they being caught with their pants down on a lousy investment gotten much, much, much worst!

More Shocking Revelations Made About Silver Bird

Things are getting really serious at Silver Bird.

Posted on Star Biz:

• Independent auditors find poor record-keeping, unable to verify sales transactions at Silver Bird
  
  Friday March 2, 2012
  Independent auditors find poor record-keeping, unable to verify sales transactions at Silver Bird
  By FINTAN NG
  
  PETALING JAYA: Poor record-keeping and the inability to verify sales transactions at Silver Bird Group Bhd are the reasons why Crowe Horwath, the independent auditors, has not been able to provide a basis for an audit opinion to the financial report for the financial year ended Oct 31, 2011 (FY11).
  
  “During the course of our audit for FY11, we expressed concerns to the audit committee and the board of directors over the validity and recording of certain transactions for which we were not able to obtain the sufficient and appropriate audit evidence and satisfactory explanations from management,” Crowe Horwath said in the independent auditors' section of the financial report released on Wednesday.
  
  The auditors said they were unable to verify the veracity of payments made amounting to RM7.6mil for the refurbishment of an existing warehouse and factory, as well as not being able to obtain information to verify additions of plant and equipment amounting to RM4.9mil.
  
  Besides that, the auditors were not able to verify transactions undertaken with five customers for the sweetened creamer business with revenue and cost of sales amounting to RM31.9mil and RM31.3mil respectively, while they were not able to verify the veracity of sales transactions undertaken with six customers from the bakery and telecommunications businesses amounting to RM149mil, including RM83.9mil in gross telecommunications sales.
  
  The auditors said the transactions cast a significant doubt on the financial performance and position of the bread and confectionary maker.
  
  They added that the accounting and other records required by the Companies Act 1965 to be kept by the company and its subsidiaries “have not been properly kept in accordance with the provisions of the Act”.
  
  “The audits of the subsidiaries have commenced but have not been completed as at the date of this report.
  
  “As a result of the delay in the completion of the audit of the subsidiaries, we have not been able to consider the financial statements and the audit reports of the subsidiaries,” the auditors said.
  
  Silver Bird issued a number of announcements to Bursa Malaysia on Wednesday, including notification of the suspension of group managing director Datuk Jackson Tan, executive director Ching Siew Cheong and general manager for accounts and finance Lai Poh Mei from Feb 24 to facilitate an internal inquiry into allegations of, among others, irregularities in the accounts.
  
  The board also said in separate announcements that three of the subsidiaries were in default of payment to Bank Islam Malaysia Bhd, Malayan Banking Bhd and CIMB Bank Bhd amounting to RM5.37mil, and that the company had triggered the Practice Note 17 criteria after not being able to provide a solvency declaration.
  
  In response to an inquiry from StarBiz on the solvency declaration, the directors said the company was “working on getting the solvency statement out as soon as possible”.
  
  Meanwhile, Lembaga Tabung Haji (LTH) and Berjaya Corp Bhd, major shareholders of the company, declined to comment while Koperasi Permodalan Felda did not reply to inquiries.
  
  “We'll leave it to the Silver Bird directors to issue any statements,” an LTH official said.
  
  Silver Bird's share price fell 20 sen to 20.5 sen at close when trading resumed yesterday following a request by the company to suspend trading on Monday after its directors said the company was unable to comply with stock exchange requirements to issue the annual audited financial statements within four months from the end of the financial year.

This is about as serious as it can get.

The auditors cannot verify sales transactions, they cannot verify payments made ( so where did the money go???!!!! ) ... and the MD and ED are both suspended (go figure the implications ) .... and then ... there is default of payment!!!!!

Deep Woes For Silver Bird

From the EdgeMalaysia.

• Silver Bird’s woes come to light
  Written by Chua Sue-Ann
  Thursday, 01 March 2012 10:43
  
  KUALA LUMPUR: Bread and confectionery maker Silver Bird Group Bhd yesterday confirmed the suspension of three key executives with effect from Feb 24.
  
  They are managing director Datuk Jackson Tan Han Kook, executive director Derek Ching Siew Cheong and general manager of accounts and finance Lai Poh Mei.
  
  Silver Bird said the suspension of the trio was to facilitate an internal probe into allegations of irregularities in the company’s accounts.
  
  The announcement confirms The Edge Financial Daily’s report yesterday that Silver Bird’s board had suspended Tan and two other managers to facilitate the internal investigation.
  
  Silver Bird’s board said it is currently unable to ascertain the extent of the financial and operational impact of the alleged irregularities but estimates the maximum exposure to be approximately RM111.5 million.
  
  Additionally, Silver Bird’s board has lodged a police report in relation to the alleged financial irregularities and reported the matter to the regulatory authorities.
  
  Adding to its woes is the classification of the company as a PN1 and PN17 counter. In a filing with Bursa Malaysia yesterday, Silver Bird said it had triggered the PN17 criteria given that its auditors Crowe Horwath had expressed a disclaimer opinion on the group’s latest audited accounts for its FY11 ended Oct 31.
  
  Furthermore, Silver Bird’s major subsidiaries were in default of banking facilities repayments, with the group currently unable to provide a solvency declaration to Bursa.
  
  The three wholly-owned units in default are baked goods manufacturer Standard Confectionery Sdn Bhd, bakery goods and telecommunications products distributor Stanson Marketing Sdn Bhd and bread maker Stanton Bakeries Sdn Bhd.
  
  The three units were in default of a total of RM5.36 million in bankers acceptance facilities from three lenders, Bank Islam Malaysia Bhd, Malayan Banking Bhd and CIMB Bank Bhd.
  
  The bulk of the amount in default was incurred by Stanson Marketing, which owes RM4.42 million to its lenders.
  
  Ironically, Silver Bird’s substantial shareholders include pilgrim fund Lembaga Tabung Haji with a 22.19% stake, tycoon Tan Sri Vincent Tan Chee Yioun’s Berjaya Corp Bhd (20.53%), Koperasi Permodalan Felda Malaysia Bhd (12.7%) and venture capital fund CVC Ltd (9.07%).
  
  Tan is Silver Bird’s fourth largest shareholder with his 10.84% direct equity interest and has been at the helm of the group for over 10 years.
  
  Silver Bird explained that the issues were brought to the board’s attention when the auditors expressed concerns over the validity and recording of certain transactions.
  
  According to Silver Bird, its auditors had expressed concern on eight main issues including a RM10.6 million contract to refurbish an existing warehouse and factory, payments of RM69 million made to an equipment supplier and the common parties relationships between the group’s customers and suppliers.
  
  Silver Bird added that its auditors also raised issues with the group’s new sweetened creamers trading business segment, the audit trail of all sales transactions and revenue recognition in the telecommunications segment.
  
  Its auditors had also pointed out that the credit period for trade receivables appeared to be unusually high and that the cash collected and payment made were cleared by the banks after more than seven days from the balance sheet date, Silver Bird said.
  
  What’s next for Silver Bird?
  Now that Silver Bird is an affected listed issuer, it will have to submit a regularisation plan to the authorities, failing which its shares and warrants will be suspended from trading and subsequently delisted.
  
  Nevertheless, Silver Bird said it intends to formulate a regularisation plan to address its PN17 status.
  
  On the operations front, Silver Bird’s board had formed a special committee comprising its five non-executive directors to oversee the group’s operations in the interim.
  
  Silver Bird also announced that it had appointed PKF Advisory Sdn Bhd to conduct a forensic review into the company’s affairs.
  
  It also appointed Messrs Wong Kian Kheong as legal advisors and intends to form an inquiry committee to look into the investigation of Silver Bird’s group accounts.
  
  The forensic accountants and inquiry committee have three months from Feb 29 to complete their investigations.
  
  Silver Bird’s cash dwindles
  In a separate announcement yesterday, Silver Bird’s board said that it had reversed its earlier decision to change its financial year end, opting to maintain it at Oct 31.
  
  The group yesterday also issued its annual audited accounts for its FY11 ended Oct 31, 2011 in which its auditors expressed a disclaimer opinion.
  
  In its FY11, Silver Bird’s net profit grew 35.12% to RM4.93 million from RM3.65 million a year ago, while revenue rose 22.13% to RM232.06 million from RM190.01 million.
  
  As at Oct 31, 2011, Silver Bird’s cash and cash equivalents had plunged to RM3.55 million from RM21.32 million.
  
  In its audited annual accounts, Silver Bird’s board warned that there may be bad debts and additional allowances that may need to be made for impairment losses on receivables.
  
  Silver Bird’s shares and warrants will resume trading today after it was suspended from Feb 24 at the group’s request.
  
  Prior to its suspension, Silver Bird’s shares took its steepest plunge in over two months, falling 5.81% to 40.5 sen on Feb 24 from 43 sen a day earlier.
  
  
  This article appeared in The Edge Financial Daily, March 1, 2012.

I had posted on Silver Bird many times before. You can read them here:  Silver Bird

And Silver Bird's Net Profit Soars... err... err... err...

Here's another great article...

Silver Bird Group 4Q net profit up 36.6% at RM835,000

Up 36.6%.... wow ... wow .... wow ... wow....

But ... it's ONLY at 835,000.

• Silver Bird Group 4Q net profit up 36.6% at RM835,000
  Written by Surin Murugiah at theedgemalaysia.com
  Thursday, 30 December 2010 19:31
  
  KUALA LUMPUR: SILVER BIRD GROUP BHD’s net profit for the fourth quarter ended Oct 31, 2010 rose 36.66% to RM835,000 from RM611,000 a year ago mainly due to the sales growth in its core business of consumer food division.
  
  Its revenue for the quarter rose 6.75% to RM153.92 million from RM144.19 million in 2009. Earnings per share were 0.22 sen while net assets per share was 53 sen.
  
  Reviewing its performance in 4Q, Silver Bird said on Thursday, Dec 30 that its consumer food division’s revenue rose by 4% year-on-year from RM46.2 million to RM48.2 million due to sales channel expansion.
  
  Meanwhile, its telecommunication business recorded an increase in revenue as well by 8% from RM98.0 million to RM105.7 million, it said.
  
  For the financial year ended Oct 31, Silver Bird’s net profit surged to RM3.65 million from RM1.44 million a year earlier on the back of revenue RM593.51 million.
  
  On its prospects, the company said it would continue to improve the revenue of its core business of consumer food whilst containing its costs in order to further improve its bottomline.
  
  
  

LOL!

With such news reporting... all is certainly well!

Happy New YEAR!


And oh.... last blogged Silver Bird on July 2010: Silver Bird Wants To Raise More Capital

Silver Bird Wants To Raise More Capital

On Business Times: Silver Bird hopes to raise working capital

1. Silver Bird hopes to raise working capital
   
   Published: 2010/07/21
   
   BAKERY and confectionery manufacturer Silver Bird Group Bhd hopes to raise up to RM13.65 million from a private placement exercise for working capital.
   
   The firm told Bursa Malaysia yesterday that it is undertaking a private placement of up to 19.5 million new shares of 50 sen each at an issue price of 70 sen.
   
   The shares will be placed out to third party investors to be identified at a later stage, it added.

More working capital????

Now I seriously applaud this company for being able to continuously raise working capital despite its lack of earnings.

Here are some recent capital raising exercises completed by Silver Group:

Jan 2010: SILVER BIRD GROUP BERHAD (“SILVERBIRD” OR “THE COMPANY”) - PRIVATE PLACEMENT OF UP TO TEN PERCENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL OF SILVERBIRD (“PRIVATE PLACEMENT”)

• On behalf of the Board, OSK wishes to announce that the Private Placement has been completed following the listing of 14,060,000 new ordinary shares of RM0.50 each in SilverBird, representing the third and final tranche of the total placement shares comprising 31,376,000 placement shares on the Main Market of Bursa Malaysia Securities Berhad on 19 January 2010.

LOL! OSK Investment Bank!

Have a look at Silver Bird's recent Q4 earnings.

Dec 2009: Quarterly rpt on consolidated results for the financial period ended 31/10/2009 - Made profit of 1.439 million.

Dec 2008: Quarterly rpt on consolidated results for the financial period ended 31/10/2008 - Net loss 21.188 million

Dec 2007: Quarterly rpt on consolidated results for the financial period ended 31/10/2007 - Net loss 18.011 million

Dec 2006: Quarterly rpt on consolidated results for the financial period ended 31/10/2006 - Net loss 48.227 million

Now back in Dec 2009, I posted That Silver Birdie Once More!. In that posting, despite the apparent lack of earnings.

• As you can see an EPS estimate of 1.6 million equates only an eps of 0.5 sen.
  Yeah, an eps of 0.5 sen.
  So how does OSK then value the stock?
  LOL! They use PBV of 1.2x!

LOL!

OSK handles the placement and since there is the lack of earnings, OSK Research uses PBV for the valuation for Silver Bird.

OK. :D

Anyway Silver Bird had a rights issue/warrants completed in 2008 too!

Now the sum raised can be seen in the following quarterly announcement on March 2008: Quarterly rpt on consolidated results for the financial period ended 30/4/2008

Silver Bird managed to raise some 51.8 million back in 2008. Had a couple of share placements and now it still wants to raise more via placements?

Here's Silver Bird last reported earnings: Quarterly rpt on consolidated results for the financial period ended 30/4/2010 (Ooo.. no more losing money. LOL! )

More On That SIlver Birdie

How should one value a company which has no profitability?

Got the following comments on the posting That Silver Birdie Once More!

• solomon said...
  If the valuation is based on profitability, I think it is not worth that much at all.
  
  I think the current share price is attributed to tight control of shares (60-65% shares controlled by 2 major shareholders via various firms). Possible of MGO in near term??

Yes, if based on profitability, this company certainly isn't much at all. The earnings performance for this company over the past few years certainly has been rather dismal and it clearly shows that the management clearly isn't able to perform. (Some would be quick to point out the issue against the quality of Silver Bird's bread and would also point out the health issue against its factory in Nilai back in 2006 (Ah.. some links can still be found on the net. Here's one roti terkenal diarah tutup - High5 tak boleh makan )

And would I value it against its book value?

At 1.2x as suggested by OSK?

Well there's one reason why I would be sceptical. Now if not mistaken Silver Bird so called state-of-the-art factory in Shah Alam cost the company a staggering 100 million.

Yes, a 100 million factory plant just to make bread!!!

And just when can one see the return of investment? And judging from recent years performance from Silver Bird, there's no indication that the return of investment has so far been so rather poor.

Now if Silver Bird spend so much for a plant that has so far shown no return of investment that justified the investment, how would one want to value this plant? Say for example, if Silver Bird does decide to dispose the plant, how much money could it even possibly fetch for the plant? If Silver Bird is lucky enough to find a buyer (not too many bread makers in the country would contemplate spending even 20 million on a new factory plant, let alone an 'old' one!), surely it would have to sell at a much bigger discount.

Oh, perhaps the factory land is worth money. No doubt. But surely not for 100 million.

And to even complicate things further, if I am not mistaken, I do believe that there was a sale and leaseback of the plant! (LOL! That's how financially weak this company was!)

Ah, the two big shareholders.

But some would point out that this is rather old news. Back in 2007, BizWeek - Tussle for control of Silver Bird stirs interest

Some comments of note in that article.

• Says a senior dealer with a stockbroking firm: “Silver Bird's share price has been depressed for a long time because of its poor financial performance in the past. Some people may view the third-quarter results as an indication that the company may finally turn around soon.”
  However, under scrutiny, the latest figures are not exactly a solid source of optimism. As the company acknowledged in the notes to the results, the improvement in profit was partly due to a RM12.2mil writeback of asset impairment taken up in last year's accounts.

Yes, it's financial performance is still poor today!

• An analyst points out: “Operationally, the company is not out of the woods yet. Its margins continue to be under pressure and there's much to be done to increase sales and profitability.”

It's now fy 2009 for Silver Bird. It lost money for fy 2007 and fy 2008. Doesn't it appear that the company has NOT done much at all to increase sales and profitability?

So we have two big shareholders.

How would we judge their investment in Silver Bird?

A good investment? Or a rather poor one?

Or should be judge the investment by REPUTATION of these two shareholders?

Of course major shareholders in a tightly control shares situation could do 'miracles' in the stock market (this not a shocker, yes? not in stock markets, yes?)(oh, I am merely acknowledging that this is a possibility. Not saying it will happen for sure. So do not assume too. :P)

How?

Have a look at this chart and see how Silver Bird had performed since.

That Star article was published on Saturday September 29, 2007. Silver Bird closed the previous day at 0.645. And thanks to the marvel of our financial press and also our market movers, Silver Bird the stock, soared. :P

That Silver Birdie Once More!

Silver Bird was one stock that I wrote a lot on before. If you follow my postings on Silver Bird, you can clearly see that I am not a fan.

Today, I noticed that OSK had a report on Silver Bird (naturally I was interested to read what it wrote since it's a really slow day! :p )

Back in 2006, I did mumbled on OSK earnings estimates for Silver Bird in the posting That Silver Birdie... Back then OSK earnings estimates were an incredible 32 million (despite the current earnings back then, suggested it was near impossible to reach those numbers).

Now what's incredible is that since Silver Bird was losing money the past couple of years, OSK earnings estimates for Silver Bird is rather low. (Speak volume on the quality of this company!)

Only 1.6 million for fy 2009 and 5.6 million for fy 2010.

Now get this, back in March 2006, Silver Bird was trading around 65 sen. Today it's trading around 76 sen. (As mentioned in that posting, "And in Dec 2005, Silver Bird announced its 2005 Q4 quarterly earnings. Silver Bird made only a net earnings of 19.4 million for its fy 2005! And its Q1 earnings was some 1.1 million.

Silver Birdie of today? Let's look at recent news.

30th April 2009, on Business Times.

• Silver Bird confident of profit turnaround
  
  By Sharen Kaur Published: 2009/04/30
  
  BREAD maker Silver Bird Group Bhd (7136) said it is optimistic of returning to the black this year, driven by government subsidy for white bread, lower operating cost and wider distribution channels.
  
  The main board company, famed for its High5 high-fibre bread, reported losses in the last three consecutive years.
  
  For fiscal year ended October 31 2008, it posted a net loss of RM21.2 million on revenue of RM638.6 million, mainly due to the writeback of impairment loss in 2007.
  
  Group managing director Datuk Jackson Tan said 2009 will be a much better year for Silver Bird, thanks to the government subsiding 7.9 sen for every 100 grammes of white sandwich bread, lower wheat price, and new products it has in the market.
  
  The company expects business to grow by more than 20 per cent this year, outperforming the fresh bakery industry growth of 10 per cent annually, he said after a shareholders meeting in Shah Alam yesterday.
  
  "The industry is resilient. In this doom and gloom, we have an operating environment which favours us. Wheat prices have stabled while other food commodities such as rice have gone up by almost 30 per cent, making bread an alternative source. So the group is flying high in this turmoil," he said.
  
  Tan said a further downtrend in wheat prices may happen this year if the next harvest continues to be good.
  
  The next strategy for Silver Bird is to continue growing despite the economic downturn, Tan said.
  
  Silver Bird is investing a few million ringgit this year to expand its distribution network from 18,000 point-of-sale outlets throughout Peninsular Malaysia, to over 20,000 by December.
  
  It will also spend between RM3 million and RM5 million on advertising and promotion to strengthen its brand and products, and research and development.
  
  Silver Bird has 25 types of products in its consumer food segment and aims to launch new products every quarterly, Tan said.

26th June 2009. Silver Bird announced fy 2009 Q2 Earnings. It made some 393 thousand.

Aug 5th 2009.

• Silver Bird targets bigger slice of market
  
  By Hamisah Hamid Published: 2009/08/05
  
  BREAD maker Silver Bird Group Bhd (7136), which is on its way to record a full-year profit after three consecutive years of losses, is confident the newly-launched High5 Sure Value 500 bread will contribute significantly to its business.
  
  Silver Bird is aiming to sell about 40,000 loaves a day in the next couple of months and the number is set to increase in subsequent months.
  
  Group managing director Datuk Jackson Tan said the new variant to High5 sandwich bread is already in the market and has been receiving encouraging response.
  
  "We want to increase our market share and sales, especially with our largest stand-alone bakery plant in Southeast Asia. More than one million consumers enjoy our products daily," he told a news conference after the official launch of Sure Value 500 bread loaf in Shah Alam yesterday.
  
  At the ceremony, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob was represented by the ministry's deputy secretary-general Daud Tahir. Also present was High5 brand ambassador celebrity Chef Ismail Ahmad.
  
  Tan said High5 bread controls over 20 per cent share of domestic sandwich bread market.
  
  He said Sure Value 500 bread will help the firm achieve a significant share in the sandwich bread segment.
  
  Silver Bird's flagship products are High5 white bread and wholemeal bread, which together account for almost 30 per cent of domestic market.
  
  Within the group, High5 sandwich bread contributes 60 per cent to the consumer products division.
  
  Tan said the new 22-sliced Sure Value 500 bread loaf is retailed at RM2.25 compared with the existing 19-sliced Nutri-White bread loaf which sells forRM2.10.
  
  He said the value-for-money sandwich loaf, which is introduced in conjunction with High5's 10th anniversary, is affordably priced for consumers, considering the current economic downturn.
  
  More than 300 million High5 bread loaves were sold in the domestic market in the last decade.
  
  For the first half of its financial year ended April 30, Silver Bird reported a net profit of RM497,000 on the back of RM305.2 million revenue compared with a net loss of RM16.9 million and RM315 million revenue in the previous corresponding period.
  
  For fiscal year ended October 31 2008, it posted a net loss of RM21.2 million on revenue of RM638.6 million, mainly due to the writeback of impairment loss in 2007

18th Sep 2009. Silver Bird announced its fy 2009 Q3 Earnings. It made some 331 thousand. (Not a lot eh?)

However, I was kind of amused with the following article published the next day.

• Saturday September 19, 2009
  
  Silver Bird Q3 profit up on lower costs
  
  KUALA LUMPUR: Silver Bird Group Bhd registered a pre-tax profit of RM330,000 for the third quarter ended July 31, compared with a pre-tax loss of RM5.56mil in the previous corresponding period.
  
  In an announcement on Bursa Malaysia, Silver Bird said the improved result was due to strong sales by its consumer food division and lower costs.
  
  It said pre-tax profit, however, declined 16% compared with the preceding quarter’s RM392,000 due to the promotional activities.
  
  Revenue fell to RM139.5mil from RM159.4mil mainly due to the 20% fall in revenue of multicom division (telecommunications business) from RM121mil to RM97mil on slowdown in the economy.
  
  The consumer food division’s revenue rose to RM42.9mil in the third quarter from RM38.6mil in the previous corresponding period due to strong market demand, it said.
  
  For the nine-month period, Silver Bird posted a pre-tax profit of RM825,000 compared with a pre-tax loss of RM22.56mil previously. Its revenue declined to RM444.7mil from RM476.3mil. — Bernama

As can be seen, Silver Bird does not have much earnings for OSK to play with. Hence I guess the much 'lowish earnings estimate' from OSK.

As you can see an EPS estimate of 1.6 million equates only an eps of 0.5 sen.

Yeah, an eps of 0.5 sen.

So how does OSK then value the stock?

LOL! They use PBV of 1.2x!

Justifiable?

:P2

Silver Bird Again

Saw the following set of comments made by CIMB on Silve rBird.

• No greenlight from the SC. The Securities Commission (SC) has rejected Silver Bird Group’s (SBG) proposal for a two-call rights issue with warrants. The SC's decision was based on the second call at RM0.15/share which the company proposed to capitalise from the share premium reserve of RM18m, resulting in an issue of securities that are not backed by assets. The SC rejected the proposal as SBG’s share premium reserve of RM23.4m is exhausted by the group’s accumulated losses of RM46m as at 30 Apr 07. SBG is relooking at the proposal with a view to making changes.
  
  • More potential earnings dilution. This proposal which would raise RM27m-43m proceeds came less than eight months after completion of another fundraising exercise. In Oct 06, SBG completed the sale-and-leaseback of its Shah Alam premises, which include a factory and an office building, for RM92m. Previous fundraising exercises included: 1) issuance of ICULS and RCULS to finance the RM47m acquisition of Stanson in FY10/04, 2) placement of 19m new shares at RM0.96/share in FY05, and 3) issuance of 105.3m warrants in FY05. These exercises have expanded SBC’s fully enlarged share base to 323.7m vs. a basic share base of 210.6m. The proposal rights issue with warrants would expand the fully diluted share base further to 493.7m (Figure 2).
  
  • SELL reiterated. We maintain our forecasts and target price of RM0.17, pegged to an unchanged forward P/E of 8x and based on the current fully diluted share base of 323.7m. SBG remains a SELL. For exposure to F&B, we recommend Dutch Lady (DLM MK, Buy), which is both a growth and dividend play.

Past postings on Silver Bird:

• Silver Bird
• Silver Bird: Part II
• Silver Bird: Part III
• Silver Bird: Part IV
• Silver Bird: Part V
• Silver Bird: Part VI
• Silver Bird: Part VII
• That Silver Birdie..
• Silver Bird: Part VIII
• Shocking Silver Bird?
• Regarding Silver Bird Yet Again
• Silver Bird?
• That 'Roti' Man
• Silver Bird says confident of turning around