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LIAN Beng Group said it is exploring a possible spin-off of its property development business to be listed on the Catalist Board of the Singapore Exchange.
It has appointed SAC Capital Private Limited as the financial advisor on the proposed spin-off and the sponsor and issue manager for the proposed listing.
The construction contractor-cum-developer said it believes the proposed spin-off and listing will provide a transparent valuation to benchmark the property development business and allow the business be financially independent and raise the funds required for without relying on the group's financing.
This will also allow the senior management personnel of each group to focus their attention on their assigned business segments and deliver the best possible value to the respective shareholders, it added.
Based on a submission made by SAC Capital on behalf of Lian Beng to SGX on Thursday, Lian Beng has been informed that the proposed spin-off is not considered a chain listing under Rule 210(6) of the listing manual.
Under this rule, a subsidiary or parent of an existing listed issuer "will not normally be considered suitable for listing if the assets and operations of the applicant are substantially the same as those of the existing issuer".
"The company is in the process of finalising the terms of the proposed spin-off and proposed listing, and a detailed announcement will be made in this regard at the appropriate time," Lian Beng said.
On Thursday, Lian Beng also reported a 29.4 per cent drop in net profit to S$8.94 million for the fiscal first quarter ended Aug 31, on the back of a 47.5 per cent slump in revenue to S$37.18 million. The decline was due mainly to a decrease in revenue from the construction business segment.
Other operating income jumped to S$10.5 million in the three months to Aug 31 from S$3.4 million in the same period last year mainly due to gain on disposal of the group's investment property at 247 and 249 Collins Street in Melbourne.
"Our investments in property investment have helped us mitigate the cyclical nature of project-based segments such as construction and property development," said Lian Beng's executive chairman, Ong Pang Aik. "The returns from property investment have enabled us to sustain our profit level despite the lower contribution from construction and property development segments."