Blumont Group and Its New & Ultimate Horizon

Blumont Group’s profit guidance for 2Q2017 – 10 Aug 2017

Blumont Group issued profit warning  for its 2017Q2 ended 30 June 2017 on 10 Aug 2017 (Thursday) after market closed.

In the announcement, it mentioned –

The expected losses in 2Q2017 and 1H2017 primarily arose from the following:

(a) grant of 4,120,000 share awards at S$0.001 per share under the Blumont Performance Share Plan on 13 June 2017, which was subsequently allotted and issued on 19 June 2017; and

(b) loss incurred on strike-off of a dormant subsidiary of the Company, Blumont Copper Pte. Ltd. as announced on 20 June 2017.

Further details will be disclosed when the Group announces its 2Q2017 and 1H2017 financial statements, which will be released on or before 14 August 2017.

 

On the 1st glance, reason quoted was quite ‘usual’  from the perspective of a layman investor, who always assume ‘Awarding of Performance Share’ is meant to reward the employees for the good performance of the company, and never expect giving such rewards would overturn the ‘good performance’ and resulted losses. Weird.

On the 2nd glance, 4,120,000 shares at S$0.001 per share = S$4120. A SGX mainboard listed company incurred losses for the quarter because of $4120? Weird x 2.

Nevertheless, SGX.Observer didn’t bother to dig the details and basis of ‘Performance Share Plan’ introduced by Blumont.

 

Blumont Group’s 2Q2017 Financial Statements – 11 Aug 2017

Blumont Group issued its 2Q2017 financial statement the next day (11 Aug 2017, Friday) after market closed.

Blumont 2017Q2 Financial Statement
Blumont 2017Q2 Financial Statement
  • Expenses on ‘Employee Benefits’ costs as much as $4.5mil in the 3 months. (It’s $4.5mil not $4120!)
  • Striking off a ‘dormant’ subsidiary caused another $1.8mil of losses. (‘Dormant’ but $1.8mil? Why dormant?? and/or Why strike off???)

Blumont subsequently issued a replacement of profit guidance announcement statement to correct the number of shares issued. Instead of 4,120,000 share awards, it should be 4,120,000,000 share awards. The statement (with 3 more zeros) dated 11 Aug 2017 was published via SGXNET 3 days later, on 14 Aug after market closed.

 

Blumont Group’s Employee Performance Share Plan

Interestingly, this was the 2nd ‘attempt’ of issuing the ‘Performance Shares’.

The 1st attempt of grant was announced on 27 Apr 2017, while Blumont Group’s share price was S$0.003. However, within 24 hours, another announcement was made on 28 Apr 2017 by the Executive Director – the Director who supposed to grab the biggest pie of performance shares among the 5 ‘awardees’ :

The Board wishes to announce that the directors of the Company to whom the share awards were granted under the PSP as announced in the Earlier Announcement have informed the Company that upon due consideration, they do not wish to accept the grant of the share awards. The Company has consequently on 28 April 2017 rescinded and terminated the aforementioned grants of share awards under the PSP in their entirety.

If the grant was accepted then, the losses for 2017Q2 due to ‘Employee Benefits’ could be as much as S$13mil!

 

The 2nd attempt of grant was announced 1.5 month later, on 13 Jun 2017. Total number of shares granted remains the same 4,120,000,000. However, as Blumont Group’s share price was S$0.001 then (instead of S$0.003), the Board had ‘successfully reduced the losses’ incurred!

The pie was redistributed – the 3 Independent Directors’ pie shrink, the Non-Independent Director grabbed slight bigger one, while the biggest piece for Executive Director getting bigger (67% of the total shares granted, more than 10x more than any of the other 4 directors).

 

Blumont Group PSP Apr17 vs June17
Blumont Group PSP Apr17 vs June17

 

Blumont Copper Pte. Ltd – The dormant subsidiary.

Not sure what’s the reason causing a S$1.8mil worth of subsidiary being ‘dormant’, and then ‘stuck-off’ without a single cent left behind.

On 20 June 2017, in the announcement made by Blumont Group:

The Board of Directors of Blumont Group Ltd. (the “Company”) wishes to announce that Blumont Copper Pte. Ltd. (“Blumont Copper”), a dormant wholly-owned subsidiary of the Company, has submitted an application for striking-off pursuant to Section 344A of the Companies Act, Chapter 50 to the Accounting and Corporate Regulatory Authority on 20 June 2017. The striking-off of Blumont Copper is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.

Probably the expectation was different then, or the recognition of ‘material impact’ is different from layman investors. Nevertheless, the impact is indeed relatively small compare to the impact of ’employee benefits’.

 

A new Ultimate Horizon

On 24 Aug 2017, 22,011,537,185 Shares (69.56%) of Blumont Group was sold at an aggregate consideration of S$4,000,000 (or approximately S$0.00018172 per Share)

The Edge Singapore reported as (https://www.theedgesingapore.com/penny-stock-saga%E2%80%99s-blumont-receives-takeover-offer-massive-discount):

Penny stock saga’s Blumont receives takeover offer at massive discount

An entity called Ultimate Horizon has made a 0.0182 cent per share offer to take over Blumont Group.

The takeover deal values Blumont at $5.8 million, which is more than 80% off its market value of $31.65 million based on its last traded share of 0.1 cent.

 

The Edge Singapore may be conservative.

According to Blumont Group’s 2017Q2 financial statement, Blumont Group’s Net Assets Value per ordinary share is S$0.02. If we derive the ‘value’ of Blumont Group according to NAV, the take over deal is more than 90% off of Blumont Group’s assets value. Of course, this is with the assumption of no more subsidiaries to be struck off.

 

Blumont Group Net Asset Value Per Share
Blumont Group Net Asset Value Per Share

Strangely, in the announcement filed by company at SGXNET, only the buyer’s identify was revealed for the married deal of selling Blumont Group’s share (NAV  $0.002/share) at $0.00018172. Identity of sellers (who could have counted the number of zeros after decimal wrongly?) was never mentioned.

It is just like marriage certificate with only name of the groom while the name of the bride(s) left blank being issued and endorsed by SGX as the Registry of Marriages. Weird.

 

Layman investors such as SGX.Observer will never understand the dramatic magic behind the scene.

 

 

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