Sunwah International Announces FY2019 Results

TORONTO, Sept. 30, 2019 /CNW/ - Sunwah International Limited, TSX: SWH ("Sunwah International" or the "Company"), a Hong Kong based investment firm and member of major Asian conglomerate, Sunwah Group, today announced its financial results for the year ended June 30, 2019, reporting a net loss of US$3.61 million for the period.  All figures quoted are in U.S. dollars.

FY2019 Overview:

• Strong revenues from its new restaurant operations totaling $2.0 million for the year
• A slight increase in interest income year-over-year to $39,000 from $36,000 in Fiscal 2018
• A loss attributable to shareholders of the Company from continuing operations amounting to $3.35 million for FY2019 compared with a loss $1.26 million in FY2018
• A loss before tax from continuing operations of $3.56 million for the period against a loss before tax of $1.26 million last year
• A loss from discontinued operations¹ attributable to the owners of the Company of $37,000 which was derived from the operations of Pop and Daceasy. This compares with a loss of $14.14 million in FY2018, which was derived from the loss on the deemed disposal of Sunwah International's former principal operating subsidiary, Sunwah Kingsway Capital Holdings Limited (SWK), of $15.35 million.
• A year-over-year increase in selling, general and administrative expenses to $2.87 million from $0.87 million in Fiscal 2018. The increase was the result of expenses related to its new restaurant operation business as well as staff secondments and management fee expenses payable to SWK in its continued capacity as management services provider to Sunwah International.
• A substantial decrease in finance costs following the Company's previously announced debt settlement to $18,000 for the year from $472,000 in FY2018.

"Fiscal 2019 was a year of considerable transition for Sunwah International as we executed on several initiatives designed to help us expand and diversify our business.  Core elements of this strategy involved lessening and divesting our interests in various long-held subsidiaries in order to pursue new areas of investment," said Michael Choi, CEO of Sunwah International.  "While we continue to target a variety of industries, we are particularly focused on the longer-term prospects associated with our new restaurant operations given our ability to leverage the extensive knowledge and connections of Sunwah Group, our majority shareholder, one of the biggest players in this space in Hong Kong."

During the current fiscal year, Sunwah International acquired HFL Limited, which operates a premium seafood restaurant in Hong Kong.  The acquisition marked the first investment under Sunwah International's recently adopted new business plan, which includes a focus on the food and beverage industry in line with the strengths of Sunwah Group, a major Asian conglomerate and one of the biggest importers and exporters of seafood in Hong Kong. 

Further demonstrating the Company's commitment to efficiently executing its new strategic plan, during the fourth quarter of FY2019 Sunwah International divested itself of its 70% position in two non-core technology assets, Pop Electronics and DacEasy, enabling the Company to continue to target new areas of focus and diversify its operations.

In accordance with the Company's refocused operations, Sunwah International now presents its results according to three main segments as described below.  

1. Financial Services Division – This division comprises the results from Sunwah International's remaining (27.90%) interest in Sunwah Kingsway Capital Holdings Limited.  FY2019 highlights:
   
• A gain of $83,000 on the partial disposal of an associate was recorded during the current fiscal year in relation to the completion of a debt settlement arrangement in Fiscal 2018.
• A loss on the deemed partial disposal of an associate (SWK) amounting to $117,000 in relation to a scrip dividend arrangement wherein the Company elected to receive a cash dividend, which resulted in the further dilution of its interest in SWK from 28.36% to 27.90%
• After the deemed disposal of SWK in March 2018, SWK's performance was presented as share of results of an associate in the consolidated financial statements. A share of loss of $1,008,000 was recorded for FY2019 while a profit of $156,000 was recorded for FY2018, mainly the result of a trading loss recorded by SWK during the FY2019 on the financial assets at fair value through profit or loss and decrease in commission and fee income.
  
  
2. Restaurant Operations – This division encompasses Sunwah International's activities in a restaurant in accordance with its new business focus following the recent acquisition of HFL Limited, an Asian food and beverage company operating a premium Chinese seafood restaurant in Hong Kong.  FY2019 highlights:
• Revenues for the year of $2.00 million
• Cost of sales of $0.58 million
• Depreciation and amortization for FY2019 amounted to $214,000 while property rental and related management expenses totaled $348,000 and staff costs was $974,000
• A loss of $743,000 for the year after an impairment loss on goodwill and intangible asset of $341,000 was recorded
  
  
3. Strategic Investments and other activities – This division includes strategic investments, proprietary investments and other activities of the Group.  FY2019 highlights:
• A net loss on financial assets at fair value through profit or loss of $0.63 million was recorded, which compares with a loss of $50,000 in FY2018. The loss mainly represents the change in fair value of the Company's investment in TCA following some of the slowest GDP growth in China in 27 years. As an operator of auto dealerships catering to the premium market in China, TCA was impacted by the ongoing trade dispute with the U.S. In order to offset the aforementioned negative pressures, the People's Republic of China has recently instituted a series of economic initiatives to help revitalize affected markets.
• An increase in selling, general and administrative expenses from $0.87 million in FY2018 to $1.04 million in FY2019
• Net loss of $1.78 million for the year against a net loss of $1.42 million in FY2018
  

For more information on Sunwah International's Fiscal 2019 operating results, please see the Management's Discussion and Analysis (MD&A) and the audited consolidated financial statements, which are filed on SEDAR and also available on the Company's website at www.sunwahinternational.com.

About Sunwah International Limited

Sunwah International Limited is an investment firm and a member of Sunwah Group, one of Hong Kong's most prominent multi-national conglomerates. The Company's current 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.

Leveraging the expansive relationship network and strategic strengths of Sunwah Group, the company is now also focused on the food and beverage industry following the recent acquisition of HFL Limited, which operates a premium Chinese seafood restaurant in Hong Kong.

Forward-Looking Statements

This press release announcing the financial results for Sunwah International's fiscal year ended June 30^th, 2019 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 certain statements that reflect management's expectations and objectives for the Company's future performance, opportunities and growth, which statements constitute "forward‑looking information" and "forward-looking statements" (collectively "forward-looking information") under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgments and uncertainties.  These statements may be identified by the use of forward‑looking terminology such as "may", "will", "should", "anticipate", "expect", "believe", "predict", "estimate", "continue", "intend", "plan" and variations of these words or other similar expressions. Specifically, this press release includes forward-looking information in respect of Sunwah International's 2019 objectives, including its focus on a variety of industries as an investment holding company and its initiative to expand and diversify, and its strategies to achieve those objectives. 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.

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¹ Towards the end of FY2018, Sunwah International diluted its interest in former primary operating subsidiary, Sunwah Kingsway Capital Holdings Limited (SWK), from 43.3% to 34.7% (now 27.9%) and as a result SWK ceased to be a subsidiary and instead became an associate under the equity method of accounting in the consolidated financial statements.  Accordingly, the operations of SWK as a subsidiary are presented as discontinued operations for FY2018 alongside the operations of Pop and Daceasy for both FY2018 and FY2019, two technology investments the Company recently divested itself of as announced in a press release dated May 31, 2019.

SOURCE Sunwah International Limited

Kristen Humphrey, Sunwah International Limited, [phone], [email protected].