KUCHING: Hubline Bhd has generated a first time revenue of RM6.3 million in third quarter ended June 30, 2019 (Q3-2019) from the recent acquisition of a 51 percent stake in aviation company Layang Layang Aerospace Sdn Bhd.
The shipping firm paid about RM14.2 million for the stake in Layang Layang, and the acquisition was completed on May 15, 2019.
Layang Layang provides a comprehensive range of services, from flying doctor to emergency medical services, search and rescue operations to aerial sightseeing, aerial survey, mapping and photography to aerial precision lifting as well as passenger and air cargo transportation.
Hubline announced recently that it would invest in eight more aircraft to boost its fleet and to venture into the air transportation service for the oil & gas industry.
The additional aircraft it is buying include two fixed-wing aircraft and six helicopters (two twin and four single engines) to bring its fleet to 28 aircraft to support the growing demand of general aviation services in the region.
Hubline said since acquiring the 51 percent equity interest in Layang Layang, the company had been able to enjoy the benefits from an expanded revenue stream and participate in the profits of the latter.
The company said its board of directors has realised that the investment in Layang Layang provides potential expansion opportunities especially in the flying academy as well as flying doctor and emergency medical air evacuation services, general air charter and oil & gas sector.
The flying academy, which has been awarded a 10-year pioneer status by Mida, provides training for pilots in Kota Kinabalu, Ipoh and Kuala Penyu.
In Q3-2019, Hubline’s group revenue surged to RM31.79 million from RM27.1 million in Q3-2018. However, the group incurred a net loss of RM397,000 against profit of RM325,000 during the same period.
The shipping segment’s turnover fell to RM25.5 million from RM27.1 million as the number of voyage charters had declined to 52 from 58 previously. In Q2-2019, Hubline recorded group revenue of RM24.55 million.
Over a nine-month period, Hubline posted a higher revenue of RM84.32 million from RM74.36 million during the first three quarters of 2018. However, group net profit was down to RM438,000 from RM2.17 million.
“The shipping segment has continued to perform satisfactorily. The board continues to be confident that we are able to maintain market share in the dry bulk business, and are optimistic about our performance going forward.
“The group is confident that Layang Layang will have a positive contribution to the group,” it added when commenting on prospects.
On the proceeds of about RM52.44 million raised from a recent rights issue with warrants, Hubline said RM22.43 million had been utilised to repay bank borrowings,
RM10.33 million for the acquisition of barges and RM11.3 million as working capital.
Hubline said the drawdown for sub-tranche 1 of Tranche 1 amounting to RM2 million from the company’s proposed issuance of redeemable convertible notes programme (RCN) was received on Jan 18, 2019.
The proposed issuance of RCN involves an aggregate principal of up to RM200 million. It is a five-year programme that covers up to Feb 18, 2024.
Hubline intends to utilise RM95 million out of the RM200 million from RCN for capital expenditure (acquisition of tugs, barges and vessels), RM70,000 for repayment of borrowings and RM25 million for working expenses. The balance of RM10 million is set aside to pay for the estimated expenses in related to the RCN issuance.
As at June 30, 2019, Hubline group’s total borrowings stood at about RM80.87 million.
