TOTM Technologies enters deal to sell Yinda Technology units to YPL for S$1,001

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TOTM Technologies has entered a deal to sell all of Yinda Technology Singapore and Yinda Technology (Thailand) to YPL for S$1.00 and S$1,000, respectively, as part of its diversification into identity management biometric technology services in April.

“The proposed disposal is an avenue for the company to reduce its ongoing operational costs in relation to the telecommunications business and exit from its investment in the target companies, so that more resources can be deployed to focus on growing and developing its portfolio within the biometrics business which has proven to be more profitable,” TOTM said in the filing.

The biometric business contributed net profit of S$500,000 for fiscal 2021, despite only having two months of revenue contributions, compared with the group’s net loss of S$8.4 million, mainly from the telecommunications business, TOTM said.

The independent valuer, Cushman & Wakefield VHS, issued a preliminary valuation of nil for the two target companies, the filing said.

“The proposed disposal allows the group to exit from a loss-making business segment,” TOTM said. “The group’s telecommunications projects in Singapore and Thailand continue to be affected and delayed due to measures implemented by the respective governments to curb Covid-19.”

TOTM added that the slowdown in the telecom business began before the pandemic, amid challenges in landing new and larger project contracts with better profit margins — which had led to a revenue drop in fiscal 2020 from fiscal 2019.

For the financial year ended 31 May 2021, Yinda Technology Singapore posted a loss of S$2.14 million and a net liability value of S$3.02 million, the filing said.

Yinda Technology (Thailand) posted a fiscal 2021 loss of 14.94 million baht, or around S$654,000 with a net asset value of 39.08 million baht, the filing said.

TOTM said it expected to record a gain from the sale due to the reversal of net liabilities attributable to the two units of S$415,000 after including offsetting losses.

YPL, an investment holding company involved in information technology and computer services, is an associate of Song Xingyi, who is TOTM’s non-independent non-executive chairman, the filing said. She owns 51.48 percent of Shanghai Yinda Group, which owns 97.09 percent of Shanghai Yinda Science and Technology, which in turn, wholly owns YPL, the filing said.

The deal will require approval from TOTM shareholders at an extraordinary general meeting (EGM), the filing said.