UNIVERSITY OF TECHNOLOGY SARAWAK

Semester 1, 2021/2022

MTM3103 Financial Accounting

Prepared By:
Ngiam Li Jie (BTM21090001)
Anastasia Kong Jing Yi (BTM21090002)

Lecturer:
DR. ANDREW SIJA
SECTION A

A) Background

BERJAYA FOOD BERHAD ("BFood") was incorporated in Malaysia on October 21,

2009. It was converted into a public limited company on December 3, 2009, and was

listed on the Main Board of Bursa Securities on March 8, 2011. As part of the listing

plan, Berjaya Roasters (M) Sdn Bhd ("BRoasters") was acquired in January 2011 and

became a wholly-owned subsidiary of BFood.

BRoasters is engaged in the development and operation of Kenny Rogers Roasters

("KRR") restaurant chain in Malaysia. On July 26, 2011, BFood signed a conditional

joint venture agreement with Indonesia PT Mitra Samaya, Indonesia PT Harapan Swasti

Sentosa and Indonesia PT Boga Lestari Sentosa ("PT Boga") to develop and operate a

KRR concession on the island of Java The management rights, as well as Bali,

Indonesia, belong to PT Boga.

On July 19, 2012, BFood completed the acquisition of 11,500,000 ordinary shares of

RM1.00 per share, representing a 50% stake in Berjaya Starbucks Coffee Company

Sdn Bhd (“BStarbucks”), with a cash consideration of RM71.7 million. The remaining

50% of the equity is held by Starbucks Coffee International ("SCI"). On August 9, 2012,

BFood completed the rights issue. The 115,081,760 new shares and 115,081,760

warrants generated from the rights issue were listed on the main board of Bursa

Securities on August 13, 2012. On September 18, 2014, BFood completed the

purchase of ordinary shares of RM1.00 per share, representing the remaining 50%

stake in BStarbucks that BFood does not own. The total cash consideration is
US$88,000,000 which equivalent to approximately RM279.5 million. BStarbucks is now

a 100% owned subsidiary of BFood. On December 7, 2012, BFood acquired 100% of

Singapore’s Jollibean Foods Pte Ltd (“Jollibean Foods”) for a cash consideration of RM

19.02 million.

On October 7, 2013, BFood’s wholly-owned subsidiaries Berjaya Food (International)

Sdn Bhd ("BFI") and Deluxe Daily Food Sdn Bhd ("Deluxe"), used to subscribe for an

80% stake in Berjaya Food Supreme Sdn Bhd, a Brunei Darussalam company, to

operate a chain of "Starbucks Coffee" coffee shops in Brunei Darussalam, with a total

cash consideration of approximately BND2.4 million which about RM6.20 million. The

remaining 20% is subscribed by Deluxe.

On August 19, 2020, BFI signed a subscription and shareholder agreement, and

proposed to subscribe for 50% of the enlarged issued share capital of Ser Vegano Sdn

Bhd ("SER") at a total cash subscription price of RM250,000. SER runs a Latin-style,

Texas-Mexican plant-based vegetarian restaurant called "Sala".

For KRR, Berjaya Group Berhad ("BGroup"), the holding company of BFood,

effectively holds the global KRR franchise after BGroup acquired KRR International

Corp of the United States in April 2008. Currently, there are 75 KRR restaurants in

Malaysia. KRR restaurant uses grilled chicken as its main core product, supplemented

by various hot and cold side dishes and KRR’s famous muffins, vegetable salads,

pasta, soups, desserts, sandwiches and beverages, served in a friendly and

comfortable environment. All KRR restaurants provide customers with a full-service,

casual dining environment and free "Wi-Fi" services to provide customers with a healthy

dining experience.
 For Starbucks, it is operated by BStarbucks in Malaysia. Since opening its first store

in Kuala Lumpur on December 17, 1998, BStarbucks has expanded to Sabah and

Sarawak and celebrated its 18th anniversary of operations in December 2016.

BStarbucks has more than 290 stores nationwide and is recognized as a leading

specialty coffee company and industry benchmark in Malaysia. BStarbucks also opened

its first drive-thru concept store in Johor Bahru in December 2009. As of June 30, 2019,

there are 46 drive-through concept stores in Malaysia. In 2012, it opened its first

suburban store in Sri Manjung, Perak. In 2015, BStarbucks opened its first Reserve

concept store to introduce premium and premium coffee to the Malaysian market. On

February 16, 2014, BStarbucks opened its first store in Mabohai Shopping Mall in

Brunei Darussalam. The store has a traditional coffee bar, also known as the "slow bar",

allowing customers to use the "dumping" brewing method to taste coffee. On

September 7, 2014, BStarbucks opened its first drive-thru concept store in Berribee. As

of June 30, 2019, Brunei has a total of 4 Starbucks stores.

For Jollibean, it was incorporated in November 1993. There are currently 22

"Jollibean" stores and 9 "Sushi Deli" stores in Singapore, all based on the concept of

fast service, and 1 "Kopi Alley" store. Jollibean’s signature product is its freshly made

"Jollibean" soy milk drink, which uses Class A, non-GMO, and identity-preserved

Canadian soybeans to ensure its quality. It also launched traditional snacks, such as

street pancake'Mee Chiang Kueh' to complement its soy milk drink. "Sushi Deli" serves

a range of "selected" sushi, assorted sashimi set meals, sushi and sushi set meals,

Japanese salads, bento set meals, party platter and tofu cheesecake and other
Japanese desserts. "Kopi Alley" is a traditional cafe concept that provides traditional

food and beverages such as coffee, tea, toast and nasi lemak.

Industry

Berjaya Food Berhad is an investment holding company based in Malaysia. The

company, through its subsidiaries, is engaged in the development and operation of

catering and coffee chains and retail stores in Malaysia and other Southeast Asian

countries. The company’s subsidiaries include Berjaya Starbucks Coffee Company Sdn

Bhd, which is engaged in the development and operation of Starbucks coffee chains

and retail stores in Malaysia, and Berjaya Roasters (M) Sdn Bhd, which is engaged in

the development and operation of the Kenny Rogers Roasters restaurant chain in

Malaysia, and Berjaya Food Trading Sdn Bhd, which is engaged in the sale and

distribution of food and beverages, and Berjaya Food (International) Sdn Bhd (Berjaya

Food), an investment holding company. Berjaya Food’s subsidiaries include PT Boga

Lestari Sentosa, Jollibean Foods Pte Ltd, Berjaya Food Supreme Sdn Bhd and Berjaya

Roasters (Cambodia) Ltd.

Achievements

On August 15, 2019, Berjaya Corporation Berhad once again demonstrated its

outstanding performance in human resource strategy and talent management,

effectively using marketing communications to attract, retain and cultivate talents, and

was awarded the "Top 100 Best Employer Brands in Asia in 2019" The 10th Best

Employer Brand Award in Asia in 2019. Grace Chan Hwee, Senior General Manager of

the Group's Human Resources and Administration Department, and Laurence Yap,
Assistant General Manager of the Learning and Organization Development Department,

respectively received their own awards as "HR leaders with CSR initiatives" Employers”

because they have been recognized for their outstanding contributions and

achievements as professional human resource leaders and practitioners, not only within

the Berjaya Group, but also in the corporate world. The Best Employer Brand Award in

Asia is awarded by the Employer Brand Association, the World The Human Resource

Development Conference and the annual event hosted by the Industry Star Group aim

to recognize some of the best organizations and human resource leaders or

practitioners in multiple geographic regions in Asia and for their contribution to the

"talent management, talent development and Awarded for the great contribution made

by "Talent Innovation". In 2021, BStarbucks also won 3 awards which is CXP Best

Customer Experience 2020, Sustainable Brand Award 2020, and AMCHAM Cares

Recognition Achievement Award 2020.

B) Current and future plans of Berjaya Food Berhad

BERJAYA Food Bhd (BFood) operates Starbucks Coffee and KRR coffee shop

and restaurant chains in Malaysia. It is expected that with the relaxation of Covid-19

restrictions, its financial performance will be in the current financial year ending June 30,

2022 which is FY 2022. Some improvement, which will lead to a higher level of

economic activity. Although the government’s strict movement control since June has

had some impact on the food and beverage (F&B) retailer’s performance in the first

quarter of fiscal year 2022, BFood CEO Sydney Lawrence Quays hopes that the recent

relaxation of dining restrictions will have help ease and ease the time. Since August
20th, in the states in the first phase of the national recovery plan, fully vaccinated

individuals have been allowed to eat in restaurants.

"We expect that the performance in fiscal year 2022 will be improved through

continued business resilience, even during intermittent business interruptions caused by

the lockdown. In addition, the number of vaccinations now increases and more

departments are allowed to operate. This means that our store is expected to have

more foot traffic," he said in an email reply to The Edge. Quays added: "With dine-in

now allowed and potential cross-border travel sometime in the near future, we believe

that as the economy adapts to the new normal, business momentum will resume and

become stronger in FY2022," No Give any specific numbers. He said the downside risks

in this regard are uncertain market conditions and intermittent Covid-19 control

measures.

"We expect that the performance in fiscal year 2022 will be improved through

continued business resilience, even during intermittent business interruptions caused by

the lockdown. In addition, the number of vaccinations now increases and more

departments are allowed to operate. This means that our store is expected to have

more foot traffic," he said in an email reply to The Edge. Quays added: "With dine-in

now allowed and potential cross-border travel sometime in the near future, we believe

that as the economy adapts to the new normal, business momentum will resume and

become stronger in FY2022," No Give any specific numbers. He said the downside risks

in this regard are uncertain market conditions and intermittent Covid-19 control

measures.
 For the expansion plans continue with Starbucks. As far as BFood is concerned, it

has adopted a variety of strategies to further supplement the recovery situation. Quays

said that on the one hand, the group is accelerating the expansion of its store concept,

such as opening more direct stores and new stores in small towns, communities and

communities, which are more convenient and easier for customers to reach. In a report

on September 13, RHB Research revealed that BFood management’s goal is to expand

its existing Starbucks network by 35 to 40 stores in fiscal year 2022, 45% of which are

drive-through stores. The group opened 11 Starbucks stores in fiscal 2021, bringing its

total number of stores to 327. According to Quays, the group is allocating approximately

RM65 million in capital expenditures for this expansion.

Quays said that in addition to the expansion plan, BFood will continue to carry out

cost optimization work to maintain the profitability growth of each business. He said that

we have also adopted key marketing and promotional strategies to create excitement

for our customers and increase customer visits. We are also focusing on strengthening

our digital loyalty program to enhance our customer base and experience.

In the past few years, the loss-making KRR business has been the main drag on

BFood's profitability. The group has been closing unprofitable stores to substantially

reduce its losses. BFood plans to close at least 3 KRR stores in fiscal year 2022. Quays

pointed out that KRR has successfully achieved profitability in 1HFY2021. However,

after the implementation of the second Movement Control Order (MCO 2.0) in the third

quarter of FY2021, it returned to a loss-making state after the dining restriction was

implemented again. KRR stores rely more on dine-in customers. As of the end of June,

there were 71 KRR stores nationwide. However, Quay pointed out that due to dine-in
restrictions, about half of them underperformed. With the recent allowable dine-in, the

group expects KRR to return to profitability in the next few months. However, he stated

that BFood is a leading catering organization with a diversified portfolio of well-known

brands, which will increase profitability and sustainable growth as well as stakeholder

returns. If there is a brand that can add value to our shareholders, BFood will consider

every available opportunity.

Reference

Thomson Reuters. (n.d.). BJFO.KL - Berjaya Food Bhd Profile. Reuters. Retrieved December
15, 2021, from https://www.reuters.com/companies/BJFO.KL

Digital, N. (n.d.). Berjaya Corporation Berhad. Retrieved December 15, 2021, from
https://www.berjaya.com/bcorp-latest-win.php

Kang Siew Li/The Edge MalaysiaSeptember 29, 2021 15:00 pm +08. (2021, September 29).
Berjaya food sees improved performance in FY2022 as covid-19 curbs ease. The Edge
Markets. Retrieved December 15, 2021, from
https://www.theedgemarkets.com/article/berjaya-food-sees-improved-performance-
fy2022-covid19-curbs-ease

Digital, N. (n.d.). Berjaya Food Berhad. Retrieved December 15, 2021, from
https://www.berjaya.com/berjaya-food/corporate-profile.php