This report provides an analysis and evaluation of the current and prospective profitability, liquidity and financial stability of KFB. This report contains information and analysis of the company for last five years.  Methods of analysis include Liquidity ratio, Asset management ratio, Leverage ratios,Profitability ratios and Market value ratios, The result of financial analysis ratios indicate a negative financial position of KFB, The recommendation suggested to looking for alternative suppliers, expand into new market and increase inventory turnover,

1. Financial Analysis
Kuantan Flour Mills Berhad.
BWFM 5013 CORPORATE FINANCE
Presenter :
Besten Mohamed El Amine, 818357
Belhimer Messaoud, 816228
Boukerika Abdelhak, 817803

2. Executive Summary
◉ This report provides an analysis and evaluation of the current and prospective profitability,
liquidity and financial stability of KFB.
◉ This report contains information and analysis of the company for last five years.
◉ Methods of analysis include Liquidity ratio, Asset management ratio, Leverage
ratios,Profitability ratios and Market value ratios,
◉ The result of financial analysis ratios indicate a negative financial position of KFB,
◉ The recommendation suggested to looking for alternative suppliers, expand into new market
and increase inventory turnover,

3. Overview of the Industry
The Malaysian domestic flour market demand was stable but competitions within the industry remain intense
during the financial year.
The KFMB faced a difficult and challenging in operation conditions during the financial year of 2014, due to its
medium size of operation, intense flour market competition, higher raw material cost and unfavorable foreign
exchange rate.
During the financial year (2014), the KFMB started implementing drastic efficiency measures to effectively
manage the cost structure and liquidity position. The way forward is to increase the production level and compete
for bigger market shares

4. Kuantan Flour Mills Berhad
Kuantan Flour Mills Berhad is engaged in flour milling and trading of its related
products. The Company was founded on May 12, 1984 and is based in Kuantan,
Malaysia. It is a public limited liability company, incorporated and domiciled in
Malaysia, KFMB is listed on the Bursa Malaysia Securities Berhad. It is the only Flour
Mills in East Coast Region. The firm operates through the following geographical
segments: Malaysia, Singapore, and Philippines. Its products include wheat flour, pre-
mix flour, dry yeast, and bread improver. In addition, it offers transportation and
technical services.

5. KFMB’s Vision & Goals
KFMB’s Vision
The KFBM's vision is to be a reputable and reliable company with continuous
business growth in flour milling across the region.
KFMB’s Goals
KFMB aims to manufacture the highest quality of flour products and to provide
services with exceptional values to its customers. KFM will also provide a
pleasant, nurturing, and growth-oriented environment to encourage its employees
to improve and to be highly productive.

6. Financial Review
The Group incurred a lower loss position of RM 2.19 million during the financial year ended 31 March 2015
as compared to the previous financial year’s loss of RM 5.21 million. The lower loss recorded was mainly
due to improved operational efficiency, gain on disposal of assets, written back of liabilities no longer
required, forfeiture of deposits and waiver of directors’ fees. The Group achieved lower revenue of RM
41.66 million as compared to the previous financial year’s revenue of RM 48.81 million.
The sales volume and the average selling price of KFMB flour experienced decline in certain sectors of the
flour market due to stiff market competition that significantly affected our gross margin.

7. Prospects for The financial Year
As for the outlook of the industry, KFMB managers expect the demand for flour to remain good
but competitive. In the coming financial year, KFMB shall expect to transform KFMB into a lean
business vehicle enabled by effective and cost efficient measures with the objective to improve both the
sales and profit margins. The Group had embarked appropriate corporate exercise to generate some
funding. It will continue to do so to enhance its existence and presence.
In conclusion, they have made minor progress during the financial year ended 2015.
Barring any other unforeseen adverse economic circumstances and given better liquid resources, they are
in a very strong position to significantly improve their financial performance and position.

8. Ratios ( Liquidity ratios )
0.89
1.07
0.85 0.85
0.4
0.5
0.63 0.66 0.68
0.21
0
0.2
0.4
0.6
0.8
1
1.2
2011 2012 2013 2014 2015
Liquidity ratios
Current Ratio Quick ratio

9. Ratios (Asset management ratio)
7.29 6.73
15.36 17.02
3.49
51.26
55.16
66.43
57.65
11.46
0.165 -0.056 0.014 -0.069 -0.439
-10
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015
Asset management ratio
Inventory turnover ratio Days sales outstanding Fixed assets turnover ratio

10. Ratios (Leverage ratios)
0.51 0.12 0.46 0.45 0.94
6.56
-2.94
0.9
-2.32
-15.21
-20
-15
-10
-5
0
5
10
2011 2012 2013 2014 2015
Leverage ratios
Debt ratio Série 2

11. Ratios (Profitability ratios )
4.3
2.5
3.5
4.5
2.4
4.4
1.8
2.8
2 2
3
5
0
1
2
3
4
5
6
2011 2012 2013 2014 2015
Profitability ratios
Net profit margin Série 2 Série 3

12. Ratios (Market value ratios)
-1
-0.5
0
0.5
1
1.5
2
2.5
2011 2012 2013 2014 2015
Market value ratios
Share price Price per earnings ratio Market/book ratio

13. PN17
PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia; relating to companies that are in financial
distress. Companies that fall within the definition of PN17 will need to submit their proposal to the Approving
Authority to restructure and revive the company in order to maintain the listing status.
General criteria for a listed company to be classified as a PN17 company are as follows:
1- Shareholders’ fund is equal or less than 25% of the total issued and paid up capital of the listed company; or
2- Receivers and/or managers have been appointed to take control of at least 50% of the total assets emplyed
3- Winding up of a subsidiary or associate company which makes up at least 50% of the total assets emplyed
4- The listed company has suspended or ceased all or a major part of its operations.

14. PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia; relating to companies that are in financial
distress. Companies that fall within the definition of PN17 will need to submit their proposal to the Approving
Authority to restructure and revive the company in order to maintain the listing status.
General criteria for a listed company to be classified as a PN17 company are as follows:
1- Shareholders’ fund is equal or less than 25% of the total issued and paid up capital of the listed company; or
2- Receivers and/or managers have been appointed to take control of at least 50% of the total assets emplyed
3- Winding up of a subsidiary or associate company which makes up at least 50% of the total assets emplyed
4- The listed company has suspended or ceased all or a major part of its operations.
Genearl factors leading to pn17 status

15. Four factors leading to KFMB pn17 status
With the same objective, Author conducted numerical experiments in determining the main factors that leading to
the company’s PN17 status such as (Ng Kim-Soon, 2013) and result has found that current ration, cash ratio,
quick ratio and Altman z score model 1968 determine the situation of the company whether is listed in NP17 or
not, the table below illustrate criteria of classification company.
From the ratios calculated we understood way KUANTAN FLOUR MILLS BERHAD is listed in PN 17

16.  Expand into new market into new market to increase profitability
 Investigate alternative suppliers (account payable) to lower cost of stock.
 Investing in higher returning products.
 Target customers more effectively and focus more on their marketing and promotion activities to
increase their customers’ base.
 Focus more on the products, which have less market competition.
 The distribution expenses must be decreased and some of their product lines must be scrutinized
for improvement.
 Increasing inventory turnover by offering more promotion on products to customers.
Recommandations

17. Overall, the position of KFB is not good with increased liquidity problem management
of working capital, which may cause investors to go elsewhere if the profitability remain
decreasing, the group could face real cash flow problem in the future unless it starts
generating more revenue and runs more efficiently.
Conclusion

18. Thank You!