road king: sold equity of a property company for £12 million; real estate development business continues to face challenges
2024-09-04
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road king (01098.hk) is selling assets again.
on the evening of september 3, road king issued an announcement to sell 40% of the shares of uk predaptive od limited held by the company's wholly-owned subsidiary equal creation limited for 12 million pounds.
the target company, together with its wholly-owned subsidiary holovis international limited, is principally engaged in the design and installation of comprehensive immersive and interactive multi-sensory transformation solutions, experience projects and attractions (the target business).
the announcement shows that in 2018, ecl invested in the target company with the aim of supporting potential cooperation between road king and the target group to incorporate entertainment facilities into road king's commercial property portfolio. although the group initially cooperated with the target group on two projects in china (facilities outside the group's property portfolio), there was no cooperation between the group and the target group on the group's properties.
as of the end of june, the unaudited book value of road king's investment in the target company was £10.7 million, and it is expected that an accounting gain of approximately £1.3 million will be recognized upon completion of the sale.
regarding the sale, road king said that the company's industrial investment and asset management businesses have been performing poorly. given that the company's real estate development business continues to face challenges, the sale is in line with the company's strategy of divesting its industrial investment and asset management businesses where appropriate.
in explaining the reasons for the transaction, road king stated that the cash inflow of 12 million pounds from the sale can be used for the group's general working capital; based on the target group's past loss performance, its financial condition and the slow recovery of the markets in which it operates (especially mainland china), ecl is unlikely to recover its investment in the target group; the target group is likely to continue to need to seek financial assistance to develop its business, and if ecl does not provide further financial assistance, its investment will be diluted.
the acquisition entity of this transaction is roman technology holdings (hong kong) co., ltd. (hereinafter referred to as "roman hong kong"), a wholly-owned subsidiary of roman holdings (605289.sh). roman holdings is mainly engaged in the design and installation of urban and regional landscape lighting and professional lighting, night economy management services, and energy management and energy-saving renovation projects.
roman hong kong also purchased approximately 15% of the target company's equity held by stuart hetherington, andrew brown and joe jurado, the founders and senior management of the target group's business, respectively, for a total acquisition of no less than 85% of the target company's equity.
according to the interim results for 2024 released by road king, during the period, the company achieved revenue of hk$3.468 billion, a year-on-year decrease of 44.75%; the loss attributable to the owners of the company was hk$1.027 billion, a year-on-year decrease of 15.85%. the toll income of highway projects was equivalent to hk$1.594 billion, a decrease of about 29% from the same period last year, mainly due to the completion of the sale of four highways in the mainland in april 2024, which was no longer included in the relevant performance.
the paper reporter pang jingtao
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