IT firm caps turnaround with $10m payout proposal

S i2i founder B.K. Modi.
S i2i founder B.K. Modi.PHOTO: ZAOBAO FILE

Once ailing telecom and IT service provider S i2i has not only swung its business back to profitability but is also proposing now to distribute cash to shareholders.

The double dose of good news sent its share price surging 14.7 per cent or 14 cents to $1.09 yesterday.

The turnaround comes just months after its founder B.K. Modi returned to the firm as its non-executive chairman.

In a statement released late on Monday, the firm said it is proposing a cash payout of about $10 million to shareholders in a capital reduction exercise. This works out to 72.9 cents per share, and the amount will be paid out of its cash balances, it added. The firm had $32.8 million in cash and cash equivalents as at the end of last year.

The capital reduction will not result in any cancellation of shares or a change in the number of shares held by shareholders, S i2i added.

The firm has been on the Singapore Exchange's watch-list since last March after three straight years of losses, but it returned to the black for the year ended Dec 31.

Net profit for the fourth quarter came in at $3.2 million, reversing a $47.1 million loss in the corresponding period a year ago.

The firm had restated its 2014 financial numbers in Singapore dollars from United States dollars.

However, turnover fell 30.5 per cent to $83.4 million for the three months to Dec 31. The decline was partly due to lower contributions from its distribution of operator products and services, as well as its mobile device distribution and retail businesses.

Dr Modi said in the statement: "I am heartened that in the months following my return, the board and the management have made progress with the divestment of three non-core businesses, continuous cost control and hence return to profitability."

Earnings per share was 23.48 cents for the fourth quarter, compared with a restated loss per share of 343.76 cents a year ago.

For the full 2015 financial year, the firm recorded a net profit of $960,000, compared with the $55.8 million loss in 2014.

Revenue for 2015 was $411.9 million, a decline of 8.3 per cent from the year before.

Dr Modi returned to the firm he had founded as non-executive director and chairman last September.

S i2i said its board members and senior management will "continually monitor and evaluate the group's turnaround progress, with a view towards maintaining profitability and to exit the SGX-administered watch-list".

A version of this article appeared in the print edition of The Straits Times on March 02, 2016, with the headline 'IT firm caps turnaround with $10m payout proposal'. Print Edition | Subscribe