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Raffles Infrastructure back in the black with 32.6m yuan FY2019 profit

RAFFLES Infrastructure Holdings, formerly known as China Fibretech, has swung back in the black with a net profit of 32.6 million yuan (S$6.3 million) for FY2019, versus a net loss of 3.1 million yuan as at end December 2017. 

The watch-listed company had in February this year announced the change of its financial year from Dec 31 to June 30. Therefore, it latest financial statements covered a period of 18 months from Jan 1, 2018 to June 30, 2019. 

Earnings per share came in at 0.61 yuan, versus a loss per share of 0.35 yuan previously. 

Revenue also surged to 208.9 million yuan, from 27 million yuan for the period to December 2017. This was mainly due to contributions from its infrastructure segment, from the Xingwen County rural road infrastructure project worth some 550 million yuan, the company said. 

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No dividend has been declared for the year ended June 30 as the group believes that it is more beneficial to reinvest the profits for the rapid growth of business, it said. 

In August this year, Raffles Infrastructure announced that KPMG has completed its special audit on the company and submitted its findings to SGX and the audit committee pertaining to the alleged compensation claims made by three customers in 2017. The company said it is seeking legal advice and will consult with the SGX regulatory department on the remedial actions.

BT reported earlier this month that irregularities at Raffles Infrastructure and potential breaches in listing rules were highlighted in an interim independent review report published by KPMG Forensic. There were, however, limitations to the special auditor's findings, as "a considerable number of documents that were requested as part of the supporting documents have not been available to the review team", KPMG said.

Commenting on the group's results, Eric Choo, chief executive officer of Raffles Infrastructure, said: "It has been an eventful year for the group, as we began the next chapter of our growth. Following the business and management restructuring since 2017, we have successfully diversified into the infrastructure industry, which has contributed to our strong earnings turnaround in FY2019. Looking ahead, we will continue to tap on the numerous infrastructure development opportunities in Asia together with our strategic partners, to maximise shareholders return."

With its profit turnaround in FY2019, the group intends to apply to SGX to exit the bourse's watch list under the financial exit criteria, subject to approval from the regulators. 

Raffles Infrastructure was placed on the SGX watch list on June 6, 2019, and has 36 months to cure this status or risk being delisted. According to the listing rules, a company may apply for removal from the watch list if it records a consolidated pre-tax profit for the most recently completed financial year, and has an average daily market cap of S$40 million or more, over the last six months. 

The company's fifth-quarter unaudited financial results published in May (following the change in its financial year) showed that the group recorded a profit before tax of 49.3 million yuan. As at Aug 30, 2019, the company has a market cap of about S$31.6 million. 

In a regulatory filing late on Thursday night, Raffles Infrastructure said it expects to be able to meet the financial entry criteria as far as pre-tax profits benchmarks are concerned. 

As for the market cap criterion, the company is "hopeful" that when more infrastructure developed by the firm and its partners in China is transferred over to the relevant Chinese authority, and its investor relations programme begins, the firm's shares may gain more traction in the market, and eventually be in a position to meet the benchmark of S$40 million at the next review period conducted by the SGX, the company said. 

Raffles Infrastructure shares last traded at 44 Singapore cents on Aug 23, down 4.4 per cent, or two cents.