Vicom proposes share split; FY19 net profit down by 18.1%

Singapore

MAINBOARD-LISTED vehicle inspection company Vicom, a subsidiary of transport operator ComfortDelGro Corp, announced on Wednesday plans to split every ordinary share in the company into four shares.

The move could improve trading liquidity and broaden the shareholder base, the board said in a filing, noting that the share price would be reduced as the number of shares is increased from 88.6 million to 354.6 million.

The board unveiled the plan alongside results showing a double-digit drop in full-year earnings, on a lack of other income against the year prior.

Net profit fell by 18.1 per cent year-on-year to S$28.4 million for the year to Dec 31, 2019, even as revenue grew by 3.6 per cent to S$103.7 million on higher business volume.

Part of the hit came from the lack of "other income" in 2019, compared with the S$7.7 million that Vicom netted in 2018 from gains on the surrender of a lease in Teban Gardens Crescent. Operating costs were also higher, which was attributed to an increase in staff expenses and a higher allowance for expected credit losses.

Earnings per share slipped to 32.05 Singapore cents from 39.15 cents before, while net asset value was 148.15 Singapore cents, down from 170.16 cents at end-2018.

Vicom said that its vehicle-testing business is expected to remain stable in the year ahead, given how more than 39,000 private cars, which renewed their Certificates of Entitlement in 2019, will be required to go for annual inspections.

"However, the non-vehicle testing business is expected to remain challenging given the economic uncertainties," the company added, citing the global Covid-19 outbreak.

Vicom's non-vehicle testing business includes the provision of inspection, consultancy and training services for sectors such as the aero-space, marine and offshore, petrochemical, construction and electronics manufacturing industries.

The board recommended a final dividend of 24.29 Singapore cents a share. It had paid out 31.79 Singapore cents a share in 2018, including a special dividend of 8.62 Singapore cents.

The books closure date is April 30 and the dividend will be paid on May 11. But the proposed dividend and the share split exercise must both be approved by shareholders at the annual general meeting on April 22.

Vicom's board also told shareholders that there is no guarantee that the share split can achieve or sustain its intended effects. Nor is there any assurance that the shares will trade at S$1.953 or more apiece after the split, which is the theoretical price based on the volume-weighted average of S$7.813 a share on Wednesday.

The counter ended higher on Wednesday by S$0.06, or 0.77 per cent, at S$7.82, before the announcements.