China Everbright stages strong comeback
China Everbright Ltd, the State Council-controlled red chip, has staged a strong turnaround back into profit in the nine months to December, earning an attributable result of $53.56 million.
The turnaround, from a net loss of $202.24 million in the previous 12 months to the end of March last year, was engineered with the help of contributions from associate companies and exceptional gains from the disposal of its retail businesses.
The conglomerate, which during the year focused on broadening its base to include finance, banking, insurance, property and telecoms interests, also announced a bonus warrant issue on a one-for-10 basis.
The warrants will entitle holders to subscribe for shares at $5.55 between July 3, 1998 and January 5, 2000.
In a period which it described as 'challenging and fruitful', the company said earnings were principally bolstered by its associates, which generated a pre-tax profit of $153.64 million.
This mainly included a nine-month contribution of $60.6 million from its 20 per cent stake in Hong Kong-listed International Bank of Asia.
Everbright Bank, in which the company bought a stake in September, generated an after-tax profit of $45.3 million.
National Mutual Asia, where it owns a 5 per cent stake, provided an after-tax profit of $26.6 million, but its contribution only reflected six months to September.
The results also included exceptional gains of $71.3 million arising from the sale of retail businesses in Singapore and Hong Kong.
In August, the group sold its 56 per cent interest in the Wescorp Group which holds 99 per cent of the retail operation in Singapore, to Theme International Holdings for $336 million.
At the same time, it used proceeds and internal cash of $51.5 million to buy a 19.93 per cent interest in Theme.
It also sold its entire interest in the retail operation and a warehouse in Hong Kong to Frankie Dominion in September.
Overall turnover for the nine-month period plunged to $571.6 million compared with $1.53 billion for the year to March.
The company attributed the decline to the sale of retail interests and a change in its year-end date to December.
Losses of ordinary activities, which included the continued and discontinued operations, were $59.87 million.
This compared with losses of $243.07 million during the 12-month period in the preceding year.
Earnings per share were 5.07 cents compared with a loss per share of 29 cents.
Directors did not declare a final dividend.
The company said it would continue to explore possible equity and debt financing to fund ongoing or possible future investments to enhance shareholder value.
In October, China Everbright bought a 1.5 per cent interest in China Telecom for $2.05 billion.
The investment was funded by internal resources and a bridging loan which was repaid in January.