Absence of fair-value gains drags Blumont into the red for Q3

Singapore

BLUMONT Group has sunk into the red for the third quarter ended Sept 30, 2014, given the absence of the S$40.91 million net unrealised fair value gains on its financial assets seen a year ago.

Instead, it incurred S$1.74 million in net other losses in the third quarter after its portfolio of equity investments in companies listed on the Singapore Exchange and Bursa Malaysia fell in value. As a result, group net loss was S$13.48 million, or 0.52 Singapore cent, compared to a net profit of S$33.73 million, or 1.97 cents, a year ago.

Revenue fell 38 per cent to S$779,000 from S$1.26 million over the same period.

Impairment losses on financial assets available for sale stood at S$8.29 million, versus nil a year ago. Total expenses rose to S$12.24 million from S$2.13 million.

Blumont's board of directors have warned that the group is likely to report a loss position for the full financial year ending Dec 31, 2014.

"The expected loss for FY2014 is attributable to the unrealised losses arising from fair value readjustments of the group's investment in transferable securities (financial assets) as well as the provision to be made for impairment for investments and assets affected by the recent volatility in the financial market," it said.

Late last year, Blumont - together with Asiasons Capital and LionGold Corp Ltd, three firms interlinked by cross shareholdings and common officers - lost a combined market value of about S$8 billion in just three days of trading.

Both the crash and huge run-ups in their share prices earlier in the year left many in the market burnt and mystified, prompting the Monetary Authority of Singapore and the Singapore Exchange to launch an extensive review. These reviews subsequently led to major regulatory changes being proposed in the trading of penny stocks in a bid to achieve a fair, orderly and transparent market.

Singapore's police force and the MAS are investigating suspected trading irregularities in Blumont and the other companies at the centre of the penny-stock crash last year. The central bank is working with the Commercial Affairs Department (CAD), the white collar crime police unit, on possible breaches of the Securities and Futures Act related to trading in the three stocks.

Blumont's subsidiary, G1 Investments, had been contacted by the CAD and asked for all corporate electronic data from January 2011 relating to its former executive chairman, Neo Kim Hock, and former executive director James Hong. Both men have since relinguished their positions.

On Tuesday, Blumont did not make any comment on the ongoing CAD investigation. Rather, it said its investment holdings and the portfolio of quoted financial assets, including the portfolio under the mineral and energy resources are tied to the changes in the financial market and global economy with uncertainty and volatility in the investment outlook. "The mineral and energy resources segment is a highly risky business and requires time, effort, investment and development," it said.

Blumont also said it has completed the merger of Azarga Resources and Powertech Uranium Corp. But still pending is its acquisition of Merlin Diamonds and Genesis Resources Limited. The latter is an Australian-listed mineral exploration company with a portfolio of quality gold, iron, manganese, uranium and base metal (copper-zinc-silver) in northern and central Australia.

Blumont shares closed trading on Tuesday at 2.4 Singapore cents, up 0.1 cent.