SINGAPORE - Kimly Ltd - the Catalist-listed coffeeshop operator being investigated over a controversial purchase of a drinks firm that was later aborted - remains open to acquisitions and strategic alliances, but will look at this point at developing its own brand of coffee and tea, it said on Tuesday (Dec 18).
Kimly has "convened a workgroup" to study the packaging of Kimly's own brand of iced brewed coffee and tea for sale at its drink stalls. The group plans to launch this brand of beverages between January and March 2019, it said in a regulatory filing.
It intends to "push ahead" with strategic initiatives, claiming that the arrests of its two key executives earlier this month "have not affected the group's daily operations".
Executive chairman Lim Hee Liat and executive director Chia Cher Khiang were arrested earlier this month by the Commercial Affairs Department (CAD) on suspicion of involvement in providing false or misleading statements prohibited under the Securities and Futures Act.
The arrests followed a call in November by the Monetary Authority of Singapore and CAD for documents related to the purchase of drinks company Asian Story Corporation (ASC). Kimly later aborted the purchase of ASC, acquired for $16 million in July from a former Pokka Corp employee Wang Chia Ye. Under the deal, Mr Wang was entitled to a hefty earn-out payment that rested on the profitability of ASC.
The deal was called off due to Pokka Corp's notice to Kimly on Nov 22 to end its manufacturing agreement with ASC. The sticky web of relations presented itself as former Pokka International chief executive Ong Eng Sing, also known as Alain Ong, was also Kimly's non-executive director from Feb 15, 2017, to January this year. Mr Ong, who had been alloted 5.14 million shares in Kimly's IPO, is a nephew of Kimly's lead independent director Ter Kim Cheu.
Kimly said as well in its business update that on average, it has been able to acquire between three and five new food outlet locations each year. It expects to operate about 70 coffee shops and foodcourts in Singapore by end of the financial year ending Sept 30, 2019.
It said it expects the Housing Board's new system for evaluating bids for coffee shops to help in its portfolio expansion, as the holistic assessment could boost footfall and discourage exorbitant bids by coffee shop operators.
Kimly also plans to grow through a diversification strategy via the acquisition of Japanese restaurant chain Tonkichi and confectionery business Rive Gauche in July this year. Kimly currently owns and operates three Tonkichi restaurants and 10 Rive Gauche outlets.
"Kimly will continue to explore suitable opportunities to grow its business through acquisitions, joint ventures and form strategic alliances with parties who can help the group strengthen its market position, whilst continuing to deliver sustainable and steady returns to its shareholders," it said in the regulatory filing.
Shares of Kimly closed on Monday at 24 cents, down one cent.