iFast Corporation has reported a net loss of $2.69 million for 2QFY2022 ended June, owing to a one-off impairment.
iFast India Holdings, an associate company, has decided to exit its onshore platform service business in India and pivot to focus on providing global fintech solutions. “With this restructuring, iFast Corp has provided a one-time estimated impairment allowance of $5.2 million. As a result, the group reported a net loss of $2.69 million in 2Q2022,” reads a July 23 press release.
The company’s 41.5%-owned associated company, iFast India Holdings, is an investment holding company which owns iFast India Investments Pte Ltd, a Singapore incorporated company, which in turn owns a majority stake of iFast Financial India (IFI), an India-incorporated company engaged in the distribution of investment products including mutual funds in India.
The Securities and Exchange Board of India has announced the discontinuation of the usage of pool account for mutual fund transactions with effect from July 1. “IFI has assessed that this new regulation has fundamentally undermined the ability of IFI to provide efficient online platform services to its clients, advisers and business partners in India, and has decided to exit its onshore platform service business,” notes iFast in a July 23 Singapore Exchange filing.
This extends a decline for the wealth management platform company; net profit had declined 34.9% y-o-y to $5.74 million in 1QFY2022.
On a half-year basis, iFast reported net profit of $3.04 million in 1HFY2022, though this was still down 80.8% y-o-y.
See also: CGS-CIMB, DBS cut iFast's TP after 1HFY2022 results, following Citi's lead
For the second interim dividend for 2Q2022, iFast has declared a dividend of 1.10 cents per ordinary share, unchanged from this time last year.
The net loss translates to a loss per share of 92 cents in 2QFY2022, down from earnings of 2.45 cents per share the year prior on a fully-diluted basis. For 1HFY2022, earnings per share declined to 1.01 cents from 5.53 in 1HFY2021.
The group’s net revenue grew 13.3% y-o-y to $29.86 million in 2QFY2022. For 1HFY2022, iFast’s group net revenue was $58.41 million, up 6.1% y-o-y. “[This was] contributed by higher interest revenue over the period and the new UK-based banking operation acquired at the end of March.”
See also: 'Weak start to the year' as iFast 1QFY2022 net profit falls 34.9% y-o-y
At end of March, iFast completed its acquisition of and investment in the UK-based iFast Global Bank Limited (formerly known as BFC Bank Limited) through subscription of 1,700,000 new ordinary shares in the capital of Eagles Peak Holdings Limited (EPHL).
The new ordinary shares constituted 85.0% shareholding in the enlarged total share capital of EPHL, for a total investment amount of £40,000,000 ($72,054,900) in cash.
The group’s assets under administration (AUA) declined 5.1% q-o-q to $17.68 billion as at June 30. iFast maintains that on a y-o-y basis, AUA rose 0.8%. “A broad decline in the value of investment products has offset positive net inflows of $0.59 billion and $1.26 billion in 2QFY2022 and 1HFY2022 respectively,” says the company.
The group’s cash and cash equivalents and investments in financial assets increased to $110.83 million as at June 30, 2022 from $59.29 million as at Dec 31, 2021. This was due mainly to net cash generated from operating activities in 1HFY2022, proceeds of $103.33 million from share placement conducted in January 2022 and net cash of $49.53 million from acquisition of subsidiaries (based in UK) recorded in March 2022, partially offset by treasury share purchase, dividend payments to shareholders, additions of plant and equipment and intangible assets and office lease payments in the period.
Current assets increased to $348.11 million as at June 30, 2022 from $154.64 million as at Dec 31, 2021. This was due mainly to increases in receivables from uncompleted contracts on securities dealing at end of the quarter, increases in cash and cash equivalents over the period and additional current assets acquired from the acquisition of subsidiaries (based in UK) in March 2022.
Non-current assets increased to $112.27 million as at June 30, 2022 from $70.21 million as at Dec 31, 2021. This was due mainly to some additional project setup costs incurred for the Hong Kong pension project contract in the quarter and goodwill of approximately $37 million arising from the acquisition of subsidiaries (based in UK) recognised in March 2022, partially offset by an impairment of carrying amount of investment in an associate recognised at June 30, 2022.
Total liabilities increased to $225.90 million as at June 30, 2022 from $97.22 million as at Dec 31, 2021. This was due mainly to increases in payables from uncompleted contracts on securities dealing at the end of the quarter and additional liabilities assumed from the acquisition of subsidiaries (based in UK) in March 2022.
See also: Citi expects earnings downgrade after iFast's 2QFY2022 results this week, lowers TP
According to iFast, it will see overall revenue continue to grow in 2022, but net profit will see a substantial decline. “This happens as the Group incurs an impairment charge for the India business, initial operating losses for [UK digital bank] iFast Global Bank and an increase in its overall operating expenses, which grew 22.3% y-o-y (excluding the bank) to $22.33 million.”
The group’s operating expenses are increasing as it prepares for the Hong Kong ePension business, which will become operational from 2023, says iFast.
“The group expects to see a robust ramp up in its profitability between 2023 to 2025 as its new ePension division in Hong Kong becomes a strong contributor. Beyond 2022, the group expects its business to see accelerated growth momentum from 2023 onwards, and expects revenues and profitability to grow to new highs in 2023 as the ePension division starts to contribute more significantly from 3QFY2023 onwards,” writes iFast.
Shares in iFast closed 1 cent lower, or 0.25% down, at $3.99 on July 22.
