Singapore - Chinese flexible foam group FoaMasters International Ltd wants to cancel its share trading on AIM (the UK's alternative investment market) and plans to offer existing shareholders the chance to sell their shares back to the group.
A 6 March statement from the Singapore-headquartered group, whose major plants are across mainland China, said the decision followed a "continued challenging trading environment." FoaMasters said these conditions resulted from "the rise in costs of raw materials in the early part of 2008, which led to a material decrease in margin, followed by a significant drop in demand for foam products as the global recession impacted both the international and local markets in which FoaMasters operates."
Also, after the Company's admission to AIM in December 2007, its quoted share price fell substantially following poor trading results and a lack of liquidity in the shares.
As a result of current market conditions, FoaMasters said it "has no current intention of raising new funds" through selling shares and the directors do not expect the liquidity of the shares to improve in the short to medium term.
In 2008, FoaMasters had seven foam plants in China and two in Vietnam, with plans to set up a further two plants in China. The group had a record year in 2007 when revenue rose 42 percent to $102.6 million against 2006, gross profit grew 43 percent to $16.7 million and after-tax profit rose 44 percent to $7.9 million. But the start of 2008 saw slow growth in sales, causing it to warn that the group's 2008 results would be below market expectations.
PIC: FoaMasters was the first Chinese company to trade on AIM, in 2007. l-r Richard Cheong, deputy ceo, Jack Cheong, ceo, Kim Seng Teh, chairman.