First Sponsor posts 39% increase in 1Q earnings to $23.8 mil; to launch rights issue of perps

SINGAPORE (Apr 25): First Sponsor Group announced that its 1Q19 earnings increased 39% to $23.8 million, compared to $17.1 million in 1Q18.

Revenue for the period declined by 5.2% to $45.3 million from $47.8 million in the previous year, due to the decrease in revenue from sale of properties and rental income from investment properties. The decrease was partially offset by the increase in revenue from property financing and hotel operations.

Since cost of sales saw a larger decline of 24.3% y-o-y to $13.0 million, gross profit was 5.6% higher at $32.4 million from $30.7 million last year.

Administrative expenses increased by 55.3% y-o-y to $9.4 million, due mainly to the higher staff costs and professional fees (including estimated acquisition costs of $1.6 million in relation to the acquisition of the Westin Bellevue Dresden Hotel).

Other income increased significantly to $2.9 million from just $0.4 million a year ago.

During the quarter, the group recorded other gains of $3.1 million, which was absent in the same period last year.

The group also recorded profits from share of results of associates and joint ventures of $5.0 million, compared to a loss of $3.4 million in the previous year, attributable mainly to the group’s 30% share of the first time profit recognised from the handover of two residential blocks of the Star of East River project in Dongguan. The completion of the disposal of three hotels by the 31.4%-owned Queens Bilderberg (Nederland) BV in Jan 2019 also further boosted 1Q19 results.

Meanwhile, the group will be undertaking a 1-for-7 rights issue of 3.98% perpetual convertible capital securities with free detachable warrants and a 1-for-10 bonus issue of warrants.

Each capital security shall be in the denomination of $1.30 and shall be convertible into one ordinary share in the company, and each warrant issued pursuant to the rights issue or the bonus issue shall be exercisable for one share at the exercise price of $1.30.

With this, the group intends to raise about $147.9 million in gross cash proceeds and expects to redeem all the outstanding Series-1 PCCS on a date falling after the completion of the rights issue and bonus issue. The exercise of the warrants may raise gross proceeds of about $251.4 million.

The rights issue will close in June 2019.

Shares in First Sponsor last traded at $1.28 on Wednesday.