Sunwah International Announces Deconsolidation of Primary Subsidiary and Reports Third Quarter Financial Results
TORONTO, May 15, 2018 /CNW/ - Sunwah International Limited, TSX: SWH (the "Company"), an Asian based financial services firm, today reported its financial results for the period ended March 31, 2018. The Company also announced the deconsolidation of its interest in its principal indirect subsidiary, Sunwah Kingsway Capital Holdings Limited ("SWK"), following Sunwah International's decision to forego participation in SWK's recent open offer. All figures quoted are in U.S. dollars.
Sunwah International's shareholding in SWK was reduced from 43.31% to 34.65% as a result of the Company's non-participation in SWK's open offer to raise $18.23 million; a decision that was made after careful consideration as outlined in a press release dated March 7, 2018. With this dilution, Sunwah International ceased to be the subsidiary's controlling shareholder and in compliance with Accounting Standards deconsolidated its interest in SWK, recording its new shareholding on an equity method basis. The fair value of the retained interest in SWK was recognized as the cost on initial recognition of an investment in an associate. The deconsolidation of the Company's interest in SWK may trigger a delisting review by the TSX based on the Company's financial condition and/or operating results.
As a result of this development, the Company reported a loss attributable to shareholders of $15.8 million for the third quarter, which contrasts with a gain of $0.3 million in last year's comparable period. A loss of $15.5 million was recorded for the year-to-date, compared to a loss of $1.0 million for the first nine months of FY2017.
Previously, the operating/financial results of Sunwah International and its subsidiaries (collectively "the Group") were organized according to SWK's operating segments; however, with the deconsolidation of the Group's interest in SWK, the Group has presented SWK's operating results separately (as Profit/Loss from Discontinued Operations). Its remaining operations have been treated as a whole with no segmented reporting (under Profit/Loss from Continued Operations).
Profit/Loss from Discontinued Operations:
As a result of the Group's interest in SWK now being accounted for as an investment at fair value, the Group reported a loss from discontinued operations for the third quarter of $15.1 million against a gain of $1.5 million in FY2017. This brings the year-to-date net loss to $13.2 million (Nine months of 2017: $0.3 million).
Additional financial highlights include:
- Loss on deemed disposal of a subsidiary of $16.0 million. Excluding the loss, a profit of $0.9 million for the period and $2.8 million for the nine months of 2018 were recorded.
- A solid increase in revenues to $6.2 million and $16.8 million in Q3 and the nine months to date compared to $5.5 million and $12.2 million respectively for the same period last year.
- Total expenses increased to $5.5 million for the quarter and $14.8 million for the year-to-date, compared with $3.9 million and $11.7 million for the same periods last year owing to robust advisory business growth and the recruitment of additional personnel to handle a significantly increased project workload.
"Despite our no longer being SWK's majority shareholder, this group represents a significant investment for Sunwah International and as such we are pleased with its operational performance during the quarter, which included a substantial (115%) increase in fee based income and the more than doubling of revenue from brokerage and corporate finance operations," said Michael Choi, President and CEO of Sunwah International.
Management is now reviewing the Group structure and its operations in order to bring value to shareholders and to meet the continuing obligations of the Toronto Stock Exchange; however, there is no assurance that the Company will be able to meet TSX listing requirements and as a result could potentially be delisted. If a delisting review is triggered and the Company is unable to comply with all TSX requirements for continued listing, Management will evaluate alternatives.
Profit/Loss from Continued Operations:
The Group recorded a loss of $0.2 million and $0.7 million for the period from continuing operations (the Company's remaining, non-segmented operations as a whole) for Q3 and the nine months of FY2018 compared to $0.4 million and $0.9 million respectively last year. Additional financial highlights include:
- Total income of $0.2 million and $0.5 million for Q3 and the year-to-date respectively against $0.2 million and $0.5 million in the comparable periods of FY2017.
- A decrease in general and administrative expenses to $0.3 million for the quarter from $0.4 million in Q3 FY2017, and a reduction to $0.9 million for the nine months to date from $1.2 million last year.
For more information on Sunwah International's third quarter operating results, please see the Management's Discussion and Analysis (MD&A) and complete financial statements, which are filed on SEDAR and also available on the Company's website at www.sunwahinternational.com.
About Sunwah International Limited
Founded in 1990, Sunwah International Limited (TSX: SWH) represents the financial services division of Sunwah Group, one of Asia's most prominent multi-national conglomerates. The Company's primary investment interest, Hong Kong based Sunwah Kingsway Capital Holdings Limited, is listed on the Stock Exchange of Hong Kong under the stock code 00188. Sunwah Kingsway is licensed to provide a range of financial solutions in Hong Kong and abroad that include award-winning brokerage services and innovative corporate finance offerings.
Forward-Looking Statements
This press release announcing the financial results for Sunwah International's period ended March 31, 2018 should be read in conjunction with the audited consolidated financial statements and management's discussion and analysis of Sunwah International Limited (the "Company") and its subsidiaries. This press release contains "forward-looking statements" as defined under applicable Canadian securities laws. These statements include, but are not limited to, statements made concerning the Company's 2018 objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plan" or "continue", or similar expressions suggesting future outcomes or events. Such forward- looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
Except as required by applicable law, management and the board of directors of the Company (the "Board of Directors") undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE Sunwah International Limited
Kristen Humphrey, Sunwah International Limited, (416) 888-2323, [email protected]
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