News

The Board of Directors of QL Resources Berhad (hereinafter referred to as “QL”) is pleased to announce that its wholly owned subsidiary namely Maxincome Resources Sdn. Bhd. (hereinafter referred to as “Franchisee”) had on 11 April 2016 entered into an Area Franchise Agreement (hereinafter referred to as "AFA") with FamilyMart Co., Ltd. for the development and operation of FamilyMart convenience stores in Malaysia.

FamilyMart Co., Ltd., a listed company on the Tokyo Stock Exchange, was incorporated on 1 September 1981 (hereinafter referred to as “Franchisor”). Its head office is at Sunshine 60 Building 17th Floor, 3-1-1 Higashi-Ikebukuro, Toshima-ku 170-6017, Tokyo, Japan.

FamilyMart Co., Ltd. founded and owns the FamilyMart brand of convenience stores which has 17,540 stores in 7 countries worldwide as at 31 March 2016. It is ranked as the second largest convenience store chain in the world. As a worldwide leader in convenience store business, the FamilyMart brand of convenience stores focuses on retailing convenience products, with emphasis on ready-to-eat food and beverages, and providing convenience to consumers.

The salient points of the AFA are as follows:-

1. 20 years - Renewable for subsequent periods of 20 years each at Franchisee’s option;
2. Agreement is conditional upon successful franchisee registration of Maxincome with Ministry of Domestic Trade, Co-operatives and Consumerism.

The expansion into the convenience store chain business with the established FamilyMart brand will not only open up bigger growth opportunities, but it is also a strategic downstream expansion of QL’s existing food manufacturing and distribution businesses that creates synergistic effect for the group. 

The risk factors in relation to the AFA include but are not limited to:

1. Business risk – As with any other businesses, the business is subjected to the macro-economic environment which affects consumer spending and business performance. Furthermore, the convenience store business is a competitive industry as the barrier to entry is relatively low.
2. Execution risk – There are risks in establishing a new venture as it depends on management’s ability to secure optimal locations for the convenience stores, identify and satisfy consumer products and service needs, implement efficient and reliable delivery and information system to support business.      

The AFA is not expected to have a significant impact on the financial performance of QL for the current financial year ending 31 March 2017. The business is expected to have long-gestation period and contribute positively to shareholders’ value in the medium and long-term.

None of the Directors of QL, its substantial shareholders or persons connected with them have any interest in the AFA. A copy of the press release is attached.

This announcement is dated 11 April 2016.