S i2i swings into the black in Q4, plans 72.9 Singapore cents a share distribution

BARELY half a year since the return of its founder last September, S i2i has returned to the black and is planning a cash distribution of about S$10 million, or 72.9 Singapore cents a share, to shareholders via a capital reduction exercise.

The telecom and IT service provider - which has been on the Singapore Exchange (SGX) watch-list since March 2015 following three years of losses - said the capital reduction would not result in any cancellation of shares or a change in the number of shares held by the shareholders. The proposed cash distribution would be paid out of its cash balances. As at end-2015, it had S$32.8 million in cash and cash equivalents.

S i2i's non-executive chairman, Bhupendra Kumar Modi, or more popularly known as BK Modi, said: "I am heartened that in the months following my return, the board and the management has made progress with the divestment of 3 non-core businesses, continuous cost control and hence return to profitability."

Dr Modi, who holds a combined deemed interest of about 26.5 per cent in S i2i with his children, resigned from the board in November 2013. He handed the chairmanship of the company to his son, Dilip Modi, as part of the company's succession planning. But Mr Dilip Modi resigned from the board in March 2015, citing tax purposes. Senior Modi returned in September 2015.

Late on Monday, S i2i reported a net profit of S$3.2 million for the fourth quarter ended Dec 31, 2015, compared to the staggering net loss of S$47.1 million a year ago. The company restated its 2014 earnings which were previously reported in US dollar.

Turnover, however, fell 30.5 per cent to S$83.4 million in Q4. Certain subsidiaries had been disposed and correspondingly gain on disposal has been recognised in the quarter. Full-year net profit was S$960,000 versus a net loss of S$55.8 million in 2014. Turnover slipped 8.3 per cent to S$411.9 million.

Looking ahead, Dr Modi said he would be working closely with the board and management "towards the shared goal of creating greater value for shareholders". The board members and senior management executives will continually monitor and evaluate the group's turnaround progress, with a view to maintaining profitability and to exit the SGX-administered watch-list.

The turnaround committee is working on a time-bound plan to cut down all loss-making business units, and the divestment of voice business and I Gate entities is the first result this team has produced. The company has also cut down and curtailed/managed cost to keep the cash intact as far as possible.

The capital reduction is subject to approval by shareholders at an extraordinary general meeting to be convened.