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OTHERS REX INDUSTRY BERHAD - DECOMMISSIONING OF BUKIT MINYAK PRODUCTION FACILITY

REX INDUSTRY BERHAD

Type Announcement
Subject OTHERS
Description
REX INDUSTRY BERHAD - DECOMMISSIONING OF BUKIT MINYAK PRODUCTION FACILITY
The board of directors of Rex Industry Berhad ("Company") ("Board") wishes to announce that in conjunction with its business rationalization plan, the Company is undertaking certain measures to reduce its overall business operating cost as well as improve its financial position moving forward.

In view of the above, the Company will be decommissioning its production facility in Bukit Minyak Industrial Park, Seberang Perai Tengah, Pulau Pinang ("Bukit Minyak Production Facility"). For information purposes, the Bukit Minyak Production Facility has a total land area of approximately 7.7 acres, in which the Company operates the facility for the manufacturing of canned food and drinks. The Company estimates the decommissioning exercise to commence in end July 2023 and is expected to be completed by first quarter of financial year ending 30 June 2024. For the avoidance of doubt, the decommissioning exercise only applies to the factory whereas the warehouse located within the said production facility will be maintained for inventory storage purposes.

In addition to the Bukit Minyak Production Facility, the Company also operates 2 other production facilities to carry out its business of manufacturing canned food and drinks  (i.e. its production facilities in (i) Jawa Timur, Indonesia; and (ii) Batu Pahat, Johor). The Company's production facility in Jawa Timur, Indonesia has a total land area of approximately 9.5 acres , in which the said production facility mainly focuses on the manufacturing of canned food for export to international customers (i.e. United States of America, Europe and Asia), for the Indonesia domestic market and also for the Malaysia market. While the other local production facilities located in Batu Pahat, Johor has a total land area of approximately 5.70 acres and the said production facility mainly serves the local market.

Accordingly, as part of its business rationalization plan, the Board has decided to downsize and reallocate the Company's resources from its Bukit Minyak Production Facility to its 2 other production facilities to continue serving the Company's customers moving forward. Specifically, the Company will reallocate certain identified machineries to the production facility in Jawa Timur, Indonesia and the identified machineries and manpower to the production facility in Batu Pahat, Johor.

The Board takes cognisance of the above and opines that reallocating the Company's resources from its Bukit Minyak Production Facility to the abovementioned facilities will allow the Company to utilise its resources more efficiently and reduce its operating costs through the consolidation of two local production facilities into one location. Additionally, by allocating more resources to its production facility in Jawa Timur, Indonesia, the Company may potentially enhance the production capacity of its exported canned food to international customers, which may strengthen the Company's revenue contribution from exports (which have contributed more than 50% of the Company's revenue for the recent financial years). The Board will also consider outsourcing certain production to third parties to maintain the minimum headcount in its production facilities.

Following the decommissioning of the Bukit Minyak Production Facility, the Company expects to recognise a provision for retrenchment costs amounting to approximately RM2.0 million and other decommissioning expenses which can only determined at a later stage (excluding any possible impairment arising from the decommissioning of the Bukit Minyak Production Facility).

This announcement is dated 2 June 2023.





Announcement Info

Company Name REX INDUSTRY BERHAD
Stock Name REX
Date Announced 02 Jun 2023
Category General Announcement for PLC
Reference Number GA1-01062023-00013