Digilife Tech to sell 90% stake in loss-making EV firm for S$2.5m
DIGILIFE Technologies has proposed to divest its 90 per cent stake in loss-making Singapore Electric Vehicles, amid adverse business conditions caused by the ongoing travel restrictions.
The sale shares will be sold for around S$2.5 million to SEV Holding, which is in the business of retail sale of motor vehicles and renting and leasing of private cars.
In a bourse filing on Friday (Dec 3), Digilife said the proposed divestment will enable the group to "re-strategise" its financial and capital resources.
As it is, the electric vehicle (EV) fleet business was adversely affected in 2020 due to the travel restrictions. Despite the limited opening of activities and transport in Singapore, the group said it experienced a fluctuating revenue pattern from FY2020 to 2021.
Business has yet to fully return to pre-Covid levels, as seen from the rising number of Covid-19 cases in Singapore, it noted.
As at end-June this year, Singapore Electric Vehicles had run up a net loss of S$324,595. Its annual revenue for FY2020 came in at S$880,000, accounting for just 0.33 per cent of Digilife's total revenue.
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On a pro forma basis as at end-September 2021, the proposed divestment would result in a larger loss per share of 0.43 Singapore cents for Digilife, compared to 0.3 cent before.
The group said the deal prevents cash depletion and will positively impact its overall results in future.
It is also an opportunity to monetise underperforming assets, which will enable the group to streamline its existing businesses and to focus more on core operations.
Digilife intends to utilise the net proceeds from the divestment for general working capital purposes, repayment of borrowings and working capital loans, and to fund future business expansions, investments and acquisitions when suitable opportunities arise.
Digilife shares last traded at S$1.33 on Nov 30.
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