[SINGAPORE] EuroSports Global   : 5G1 -11.46%said its board&rsquo s   : 5G1 -11.46%nominating   : 5G1 -11.46%committee had independently assessed the charges against executive chairman and chief executive Melvin Goh &ndash including taking into account his key role in the company &ndash before concluding that he should not step down from his current positions.

 

The Catalist-listed luxury automobile distributor&rsquo s board was responding to queries from the Singapore Exchange (SGX) on Wednesday (Aug 6) over its decision not to show Goh the door after the 68-year-old was charged on Tuesday.

 

Goh was accused of engaging in conduct likely to create a false or misleading appearance of active trading in EuroSports Global&rsquo s shares, instigating two persons to use deception in the trading of the company&rsquo s shares, as well as failing to inform EuroSports Global about the change in his shareholding in the company.

 

EuroSports Global&rsquo s board said in a regulatory statement on Tuesday that it had decided that Goh was &ldquo suitable&rdquo to continue his current roles, after the nominating committee reassessed the situation and listened to his explanations. The committee concluded that the matter did not give rise to any defect of character or call into question Goh&rsquo s integrity.

 

In its responses on Wednesday, the board reiterated that Goh has not been proven guilty. It added that he plays a crucial role in the company, citing his involvement in the recent sale of treasury shares to strengthen the company&rsquo s financial position.

 

The board also did not implement any measures to safeguard against any risk associated with Goh&rsquo s continued involvement in his executive roles, since the alleged offences do not relate to the operations of the company, nor were they committed against it.

 

However, the board decided that the company should initiate its succession plan earlier.       . 

 

RHT Capital, the sponsor, also told SGX that it took into account the nominating committee&rsquo s considerations and Goh&rsquo s &ldquo not guilty&rdquo plea before concluding was he was suitable to continue in his current roles.

Luxury car distributor EuroSports Global expects to report both lower revenue and higher losses for FY2024 ended March.

 

As flagged when it reported its 1HFY2024 ended Sept, higher car taxes for higher-end cars announced in the Singapore Budget for 2023 had dampened the demand for higher-end cars.

 

In addition, the late arrival of two Lamborghini models, which it distributes, affected the company' s sales as well.

 

The company expects to report its FY2024 on or before May 27.

EuroSports Global, once a purveyor of luxury automobiles like Lamborghini and Alfa Romeo, is pivoting sharply in response to the burgeoning electric vehicle (EV) market. The company has ventured into its own line of EVs, capitalising on the growing demand for sustainable transportation solutions. 

 

In November 2020, it raised US$6.3 million to form Scorpio Electric (Scorpio). Without disclosing the investors&rsquo identities, the funds were used to develop the brand&rsquo s software and hardware for its first electric motorcycle. It was slated to launch in 2021 but the pandemic hit, and Scorpio faced production delays. 

 

In January 2023, Scorpio raised another US$6.75 million ($9 million) to develop and test its first electric motorcycle, the Scorpio Electric X1. These funds will be used to manufacture the first batch of X1 pre-production prototypes, while mass production and global deliveries have commenced since 1H2023. 

 

Some funds will also be allocated to expand the brand&rsquo s portfolio and develop new premium electric motorcycle models.

 

&ldquo The pandemic presented our business with plenty of hurdles. It was a contributing factor to our new production timeline,&rdquo says Scorpio Electric CEO Joshua Goh in an interview with The Edge Singapore.

 

Joshua &mdash who is the son of Melvin Goh, founder, CEO and executive chairman of EuroSports &mdash says Scorpio was born from Melvin&rsquo s vision to create a world-class motorcycle brand. Melvin founded EuroSports in 1998 when it started distributing Lotus automobiles in Singapore. It eventually started distributing Lamborghini and Alpha Romeo vehicles as well.

In a 2021 interview with The Edge Singapore, Melvin said: &ldquo Time is ticking, and if the world is going to switch to EVs, then we better catch the opportunity to create our own brand and to create Singapore&rsquo s first brand.&rdquo

 

While Melvin founded Scorpio, which was named after his horoscope, he has since passed the reins to Joshua. Melvin still holds an advisory role in the company and works closely with Joshua, who acknowledges that both his parents played an important role in his move into this position as CEO. 

 

Electric dreams

 

Joshua shares similar goals to Melvin&rsquo s. He says: &ldquo Electrification is here today because, internationally, everyone has come to a consensus that we must battle climate change.&rdquo

 

While four-wheelers have led the way towards the shift to EVs, Joshua sees the two-wheeler market as the perfect platform to accept the change towards electrification because of its small form.

 

Scorpio is looking to break into this market. It has already raised over US$13 million to fund its business, and Joshua observes that much more investment is being made into the overall EV industry. 

 

Although Scorpio did not disclose the identity of its investors, it has announced that Chinese EV giant BYD is a key technology partner of the group. BYD has been contracted to assemble the X1 in its manufacturing facility in Shenzhen. BYD&rsquo s agreement to the partnership was a surprise, as Joshua admits this is a relatively small project for a giant like BYD to consider.

 

&ldquo Apart from offering supply chain management expertise, BYD, as our partner, has also supported us in sharing their experience as a market leader. They have assisted us in reviewing our designs and provided engineering advice,&rdquo says Joshua. 

 

Scorpio signed a non-binding memorandum of understanding (MOU) in April 2021 with Strides, an SMRT unit, to develop and distribute smart electric motorcycles to commercial and corporate clients in Singapore and the rest of Asia Pacific. 

 

The MOU has since lapsed due to delays in the production line and the product&rsquo s overall launch. Joshua explains that Scorpio &ldquo does not believe&rdquo in removable and swappable batteries and instead favours fast-charging EVs that can cater to higher performance. 

 

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&ldquo As we explored this exercise with Strides, we realised that EV adoption is still low today. We are unable to create a product that is catered to businesses and corporations that want something fast, good, and cheap,&rdquo he says.

 

&ldquo Also, due to the nascent battery technology, the performance of a low-cost electric motorbike will be below that of an ICE [internal combustion engine] equivalent. So, we decided not to pursue this venture with Strides,&rdquo he adds.

 

Hitting the road

 

The X1 was launched at the Esposizione Internazionale Ciclo Motociclo e Accessori exhibition &mdash a leading motorcycle show &mdash in Milan, Italy, in November last year. Joshua says the X1 will first be launched in Europe, with deliveries expected in the summer of 2024. Alongside the X1 launch, Scorpio has released two concept models: Xi and Alpha.

 

On Apr 2, Scorpio announced that it has appointed distributors in selected global markets as part of its ongoing global expansion strategy. It has appointed distributors in Japan, the Philippines, Portugal and Spain. 

 

&ldquo We have meticulously chosen these markets based on various factors, including the presence of passionate enthusiasts, a burgeoning two-wheeler consumer market, and a growing inclination towards electric mobility solutions,&rdquo says Johsua. He adds that the company is also looking to enter other territories in Southeast Asia and Europe, regions Scorpio has identified as having strong market penetration and growth potential. 

 

Throughout the distributor selection process, Scorpio has prioritised criteria such as local market network, expertise, established facilities and infrastructure, regulatory compliance and a symbiotic relationship with the brand&rsquo s core values. The company remains steadfast in its commitment to delivering the X1, with production and shipments expected to commence in 4Q2024. 

 

Revving up costs

 

Scorpio may be considered a start-up company, but it is also a subsidiary of EuroSports, which holds a 73.69% stake.

 

In EuroSports&rsquo latest 1HFY2023 ended September 2023, revenue decreased by 70.4% y-o-y to $8.63 million, mainly due to the lower volume of cars distributed. With lower revenue, EuroSports recorded a loss of $6.2 million, widening from a loss of $2.3 million in the same period a year ago. 

 

Scorpio Electric, meanwhile, is incurring costs under EuroSports&rsquo balance sheet and has yet to contribute meaningfully. &ldquo The group anticipates top-line growth as we commence deliveries [of the X1] in summer 2024,&rdquo said EuroSports in its 1HFY2023 results announcement. 

 

As at April 16, shares in EuroSports are down nearly 18% over the year to 16 cents, giving it a market capitalisation of some $40.3 million. 

 

Throughout 2023, the group performed several share buybacks. Joshua comments: &ldquo Our share buyback activities signal to the market that we, EuroSports, see its share price as being undervalued.&rdquo

 

Joshua, too, is a company shareholder, with a 1.94% stake in EuroSports. He adds: &ldquo As an investor, the buybacks are a sign that the group thinks it is undervalued. As a shareholder, I am equally invested in making sure that we succeed.&rdquo

 

Joshua&rsquo s focus is on building Scorpio, and he has no plans of making further investments. Over the next few months, Scorpio will intensify its efforts to strengthen partnerships and explore new avenues for growth in the selected markets. It plans to grow its distributor and dealer network to over 10 to 15 cities in Asia Pacific and Europe. 

EuroSports Global plans to raise up to $3.3 million by placing out convertible bonds, in yet another round of fundraising to drive the growth of its electric scooter venture, Scorpio Electric.

 

The bonds, to be placed out by Evolve Capital, are for a three-year term and carry an interest of 4%.

 

The placement " will improve its cash flow to further support the working capital requirements of the group, which includes the upcoming production of the Scorpio Electric X1 and development of future Scorpio Electric products," says EuroSports.

 

" We are incredibly excited about the potential of our X1 in the premium EV two-wheeler market," says Melvin Goh, executive chairman and CEO of EuroSports, better known for its car distributorship business.

 

" We have invested in the X1 to deliver advance technical specifications, performance and technology. As EV adoption accelerates over the next decade, Scorpio Electric will be perfectly positioned to become a market leader," he adds.

 

EuroSports, better known for distributing high-end sports cars here, announced plans to go into the electric motorcycle market back in Dec 2018.

 

Back then, it announced that wholly-owned EuroSports Technologies had received $2 million in seed capital, with a commitment of another $3 million subject to certain milestones.

 

On Oct 2021, EuroSports says its electric motorcycle unit, Scorpio Electric, has launched its X1 model " globally" and is taking pre-orders.

 

This January, EuroSports announced that an unnamed investor has put US$5 million into Scorpio Electric, valuing it at US$150 million. With this investment, EuroSports' stake in the subsidiary will be reduced from 75.05% to 72.37%.

SCORPIO Electric, the electric vehicle brand of Catalist-listed luxury car distributor EuroSports Global : 5G1 +4.59%, has secured US$6.8 million in funds from various investors.

 

The startup said on Thursday (Jan 12) that the funds will be used to further develop, test and manufacture the production prototypes of its first batch of electric motorcycles, the Scorpio Electric X1 (X1). 

 

Mass production and global deliveries of the X1 are slated to take place in the second half of 2023. 

 

Some of the funds will also be allocated to developing new premium electric motorcycle models and variants to expand the future portfolio of vehicle model line-up. This is also part of global efforts towards adopting more sustainable energy alternatives, said Scorpio Electric. 

 

Out of the total fundraise of US$6.8 million, about US$1.8 million was secured in May 2022. 

 

The remaining US$5 million was raised in January 2023 through a share subscription agreement with an existing, independent corporate investor of Scorpio Electric over five tranches at the pre-money valuation of US$150 million. 

 

Following the issue of Scorpio Electric subscription shares, EuroSports&rsquo stake in the subsidiary will be effectively reduced to 72.37 per cent from 75.05 per cent previously. Scorpio Electric will remain as one of the group&rsquo s subsidiaries. 

 

Scorpio Electric chief executive Joshua Goh said the company is working closely with an unnamed Chinese conglomerate to assemble the X1. 

 

In the past year, Scorpio Electric has conducted additional research and development of future motorcycle models and seen rapid business development. 

 

The brand is part of EuroSports Technologies, a subsidiary of Singapore-based EuroSports Global, which holds the Lamborghini and Alfa Romeo dealership franchises.

EUROAUTOMOBILE has been unable to achieve commercial viability of its Alfa Romeo distributorship due to prevailing market conditions, parent company EuroSports Global said in a bourse filing on Tuesday (Oct 4).

 

It is for this reason that the company has moved to inform Alfa Romeo&rsquo s manufacturer Fiat Auto of its intention to relinquish their agreement to be the brand&rsquo s importer and distributor in Singapore, it pointed out.

 

The announcement came hours after The Straits Times reported that Komoco Holdings is set to take over the exclusive distributorship next year. The newspaper also noted that EuroAutomobile has shut down its Alfa Romeo showroom at Leng Kee Autopoint and laid off four sales staff on Sep 30.

 

EuroSports, in the latest disclosure, said the group is in the midst of negotiating with Fiat Auto on a mutual termination agreement. Further announcements will be made on the effective date of the agreement&rsquo s relinquishment, it added.

 

It also stated, while the showroom has shut down, EuroAutomobile, which has held the distributorship since 2004, will continue to operate a workshop as an independent service provider.

 

EuroSports, meanwhile, stressed its view that the relinquishment is &ldquo in the best interests of the group&rdquo , to restructure its overall business portfolio for long-term sustainable growth. 

 

&ldquo The group will focus on its existing Lamborghini automobile distribution business and development of Scorpio Electric brand electric motorcycles,&rdquo it added.

 

EuroSports also said the relinquishment is not expected to have any material impact on the net tangible assets per share and earnings per share of the company for the current financial year.

 

EuroSports Global is undergoing a strategic review to explore options for its various businesses, with an eye on unlocking value and to drive further growth.

 

The company, whose executive chairman and CEO is Melvin Goh (picture) started in the distribution of luxury cars. It is also providing after-sales servicing and sales of parts and accessories.

 

Over the last couple of years, it has diversified into the development of a premium electric motorcycle under the Scorpio Electric brand.

 

According to the company, the review is &ldquo timely&rdquo and will assess various options including potential fundraising exercises restructuring of various subsidiary companies by way of spin-off listings of their own or as de-spac targets.

 

&ldquo Shareholders should note that there is no assurance that any transaction will materialise from the strategic review or that any definitive or binding agreement will be reached,&rdquo says the company.

  Ex-EuroSports Global CEO Goh Kim San was arrested but released on bail of $50,000 an hour later without charges being filed.

- Luxury car distributor EuroSports Global said no charges have been made yet against its former chief executive officer (CEO) Goh Kim San, who was arrested by the Commercial Affairs Department (CAD) on Thursday (Dec 2).

 

In a bourse filing, the group said Mr Goh was asked to be at the CAD' s office at 3pm to be arrested, but was released about an hour later on a bail of $50,000.

 

In August, he was suspended from his duties amid an investigation by the CAD. He was also executive chairman and director of the company, but had " voluntarily agreed" to step down.

 

Given that he has not been charged with any offence so far and has been cooperating with investigations, EuroSports said its nominating committee and board have concluded that he should continue with his duties as executive chairman, CEO and director.

 

The group noted that Mr Goh is also the key person handling the account of Lamborghini and is required to continue to work with Lamborghini on the car dealership in Singapore. " Over the course of many years, Mr Goh has built up a personal relationship of trust with Lamborghini and this relationship is key to the dealership in Singapore," it said.

 

It further said Mr Goh' s leadership is " crucial" to lead the company out of its financial situation wrought by Covid-19.

 

Mr Goh is also " required to provide leadership and direction" as the group' s subsidiary begins production of the new electric motorcycle he will continue to be " tasked to groom the next generation of leaders" to take over the company.

 

EuroSports had been served with an order by the CAD and the Monetary Authority of Singapore (MAS) under Section 20 of the Criminal Procedure Code (Cap 68, 2012 Revised Edition), which requires the company to produce certain documents needed by the authorities for the investigations, which are ongoing.

 

Melvin Goh Kim San (right, in a 2016 photo), executive chairman of Eurosports Global, was at the office of the Commercial Affairs Department, " for investigation" under the Securities and Futures Act. 

 

&ldquo CAD has retained Mr Goh&rsquo s mobile phone as part of the investigation. Mr Goh has voluntarily surrendered his passport to the CAD,&rdquo said the company in its Aug 5 announcement.

 

The company has also been served with an order by the Monetary Authority of Singapore and CAD to, if need asked, produce &ldquo certain documents&rdquo required for the investigation.

&ldquo The company will cooperate with the authorities in this regard.&rdquo

 

Meanwhile, with investigations pending, Goh has &ldquo voluntarily agreed&rdquo to a suspension of his duties as the executive chairman, CEO and director of EuroSports.

 

Andy Goh Kim Hup (left), deputy CEO, will take over in the interim.

&ldquo The board assures that the business and operations of the group will not be affected and will continue as usual.&rdquo

 

CGS-CIMB Research analyst William Tng issued an unrated report on Eurosports Global (ESG), highlighting the company&rsquo s electric motorcycles venture under subsidiary EuroSports Technologies (EST).

 

In the June 9 report, Tng provides a quick re-cap on ESG, noting that it is the only authorised distributor for Lamborghini and Alfa Romeo vehicles in Singapore since 2001 and 2004 respectively. The group also carries customised automobiles from Touring Superleggera.

 

ESG is also the exclusive distributor of the deLaCour brand of watches in Singapore, Malaysia, Indonesia, Thailand and Brunei.

 

On its foray into electric vehicles (EV), Tng notes that EST has been developing a fully electric motorcycle under the brand Scorpio Electric since 2018. &ldquo EST is involved in the research and development of the e-bike and clean energy charging ecosystems,&rdquo Tng says.

 

The X model prototype of the e-bike was unveiled in March, featuring smart connectivity via mobile app and targeting more than 100km/h and a range of 200km on a single charge. 

 

In April, EST signed a non-binding Memorandum of Understanding (MOU) with SMRT&rsquo s Strides Transportation to develop, market and supply smart electric motorcycles.

 

Given the ongoing Covid-19 situation and challenges within the automobile industry,   ESG management expects performance to be negatively impacted due to a slowdown in demand.

 

" EST will continue to incur development expenses and is not expected to generate meaningful revenue in the next 12 months," notes Tng.

 

This comes as ESG reported a net loss of $3.4 million in FY2021 ended March, while it currently trades at a historical P/BV of 4.33 times. Tng also notes that ESG has not paid any dividends in the past five years.