TFP Solutions sells loss-making unit

PETALING JAYA: TFP Solutions Bhd is disposing of its loss-making wholly owned subsidiary Tech3 Solutions Sdn Bhd for RM7.90 million cash.

However, the proposed disposal is expected to result in a pro forma gain of RM1.63 million to the group.

In a filing with Bursa , TFP said it has entered into a conditional share sale agreement with Cloud Dynamix Sdn Bhd for the proposed disposal.

Tech3 is principally involved in providing enterprise system solutions. Its revenue has been decreasing over the years from RM60.06 million in ended Dec 31, 2016 (FY16) to RM58.84 million in FY17 and RM33.57 million in FY18, due to lower sales of servers as organisations move towards cloud technology instead of setting up their own ICT infrastructure.

It also suffered net losses of RM1.67 million, RM89,000 and RM625,000 in FY16, FY17 and FY18 respectively due to low gross profit coupled with high operating expenses.

“A substantial amount of funds is required to be invested in research and development in cloud technology for Tech3 to catch up with the existing industry players, it would also have to adopt a vastly different business model from the sale, installation and maintenance of servers to a business model that provides cloud technology services to organisations, which may not provide immediate returns to the group.

“As such, the management of the company is of the view that this is an opportune time to dispose Tech3 and to realise a gain on the disposal as compared to further investing substantial amount of funds to turnaround Tech3’s business,” said TFP.

TFP has identified the business management solutions (BMS) segment as the main revenue driver of the group. It noted that revenue from BMS has been on an increasing trend.

It also intends to venture into new businesses that will create synergy with the existing BMS business, including potential collaboration with its partners to provide financial technology to existing customers.

Of the RM7.9 million proceeds to be raised from the proposed disposal, RM3.64 million will be used as working capital for BMS business, RM4.07 million as funding for new business plans and RM200,000 for estimated expenses of the proposed disposal.

Source: The Sun Daily

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