CARZO Holdings Bhd has announced the cessation of its core business in the distribution of fresh fruits and fruit products due to ongoing financial difficulties.

The decision follows consecutive net losses and significant cashflow constraints, it told the bourse in a filing today.

The company reported net losses of RM18.89 million for the financial year ended 30 June 2023, and RM6.55 million for the financial year ended 30 June 2024.

The overall negative cashflow position stood at RM0.56 million. Additionally, a capital deficiency of RM12.08 million was recorded as of 30 June 2024.

Carzo said it had taken steps to address its financial position, including scaling down operations in the distribution and retail of fresh fruits, as well as disposing of fixed assets to improve cashflow.

However, despite these efforts, the company noted, “The scaling down of operational activities to a certain extent has helped the group to keep its operating cost at the minimal level, but the limited supplies of fresh fruits to customers as a result of cashflow constraints of the group have led to significant loss in sales of fresh fruits which have impacted the group’s fruit distribution business in the last few months.”

The management’s efforts to turn the business around were ultimately unsuccessful.

The company added, “The management’s effort to turn around the business of the group was not fruitful due to unsustainable revenue generated in the past few months.”

In light of these challenges, its board decided to cease its core business of fresh fruit distribution, “with immediate effect.”

As a listed entity on the LEAP Market of Bursa Malaysia Securities Bhd (BMSB), Carzo is required to maintain a clearly identifiable core business.

Should the company no longer have a core business, it must either acquire a new core business in compliance with Rule 7.07 of the LEAP Market Listing Requirements (LMLR) or apply for the withdrawal of its listing.

The company’s failure to comply with these obligations may result in suspension or delisting.

BMSB may also require a reasonable exit offer to shareholders, particularly if the company remains in a net asset position.

Carzo stated, “BMSB may suspend the trading of Carzo’s securities and delist the company if it fails to comply with any part of its obligations as stated above or if its acquisition of a new core business is rejected by BMSB.”

Looking ahead, Carzo said its board is still in the process of determining the appropriate next steps for the group and its future direction.

“The board is still in the midst of determining the appropriate next course of action and possible options in relation to the future plan of the group.” –TMR