GS Holdings flags 'significantly higher' H1 profit from receipt of China service fees

SINGAPORE - GS Holdings expects to report a "significantly higher" net profit for the first half ended June 30, 2019, as compared to the same period a year ago, based on a preliminary review of its unaudited financial results, the Catalist-listed dishware washing firm said in a filing on Thursday (July 18) after the market closed.

The higher consolidated net profit for H1 2019 was mainly due to the receipt of service fees from 14 branding, operation and procurement (BOP) service agreements entered into by the company's subsidiary, Wish Hospitality Holdings, in China. The 14 agreements have a total contract sum of 50 million yuan ($9.86 million).

GS Holdings had announced on April 29 that Wish Hospitality had entered into eight of the BOP service agreements with eight outlets of Henan Jufeel Technology Group in China with a total quarterly service fee of 30 million yuan. On July 11, GS Holdings said the entirety of this service fee has been remitted to Wish, and the net amount received after payment of local China taxes was about 25.7 million yuan. Each BOP service agreement is valid for one year.

The other six agreements were subsequently entered into during the remaining period of H1 2019.

For fiscal 2018, GS Holdings narrowed its full-year net loss even as revenue fell, thanks to lower cost of sales and administrative expenses, as well as additional government grants. Net loss for FY2018 shrank by 8 per cent to $3.55 million from $3.85 million a year ago.

GS Holdings had formed Wish Hospitality as a joint venture with individual Zhang Li Ying in January, to expand into the food and beverage (F&B) business.

The company said on Thursday that it is still in the course of finalising its unaudited financial results for H1 2019. Further details of the financial performance for the period will be released on or before Aug 14.

GS Holdings reminded shareholders and potential investors to exercise caution when dealing in its shares.

The company provides cleaning services for Singapore's F&B industry, offering on-site cleaning and stewarding, centralised dishware washing services, and consultancy services.

The counter closed at $0.35 on Thursday, up two cents or 6.06 per cent.