Fu Yu warns of loss for FY2024 on non-cash impairments of S$4 million
Excluding these, the group expects to post an operating profit and an improvement in financial performance for the fiscal year
MAINBOARD-LISTED plastic parts manufacturer Fu Yu warned on Friday (Feb 14) that it expected to report a net loss for its financial year ended Dec 31, 2024, as a result of two one-off impairments totalling S$3.8 million.
The first relates to S$3.3 million of remaining goodwill in connection with the group’s FY2021 investment in Fu Yu Supply Chain Solutions (FYSCS). This non-cash impairment is due primarily to the cessation of the business unit’s activities in the final quarter of FY2024.
The second non-cash impairment involves some S$0.5 million on the property, plant and equipment of a subsidiary in China, with the recoverable amount falling below the carrying value.
Excluding these one-off impairments, Fu Yu expects to post an operating profit as well as an improvement in financial performance for FY2024.
It intends to release its financial results on or before Feb 28, alongside further details on its performance and forward strategies.
The group also said that an ongoing inquiry into the affairs of FYSCS is “isolated” to that business unit, and does not impact its core manufacturing division.
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FYSCS was found to have made one or more unverifiable arrangements involving a payment of about US$3 million to a third party, which did not appear to have provided any services. There were also potential conflict-of-interest issues in the arrangement.
Separately, on Jan 10, Fu Yu’s largest shareholder Victor Lim called for an extraordinary general meeting (EGM) to remove two directors amid falling shareholder value and what he described as the company’s poor performance.
The same month, Fu Yu declined to convene the EGM, saying it had obtained legal advice stating that the requisition did not meet the legal requirements and was insufficient to invoke Section 176 of the Companies Act. The board also rejected Lim’s earlier bid for a board seat.
On Feb 6, the group received a second letter from Lim with similar demands.
Fu Yu’s shares closed S$0.002 or 1.8 per cent lower at S$0.11 on Friday, before the announcement.
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