PART I INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS.

Transcription

1 ECS HOLDINGS LIMITED First Quarter Financial Statement and Dividend Announcement PART I INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS. 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. 1(a)(i) Income Statement for the quarter ended 31 March Group Three Months Ended % 31 March $ 000 $ 000 Increase/ (Decrease) Revenue 715, ,806 (1.3) Cost of sales (684,403) (689,590) (0.8) Gross profit 30,778 35,216 (12.6) Other income including interest income 1,364 1,716 (20.5) Selling & distribution expenses (13,420) (14,402) (6.8) General & administrative expenses (8,328) (10,204) (18.4) Operating profit (note 1) 10,394 12,326 (15.7) Finance costs (1,453) (2,581) (43.7) Share of profit/(loss) of associate 226 (274) Nm Profit from operations before tax 9,167 9,471 (3.2) Income tax expense (1,562) (2,437) (35.9) Profit for the period 7,605 7, Attributable to: Owners of the Company 6,919 5, Minority interests 686 1,146 (40.1) 7,605 7,

2 1(a)(ii) Statement of Comprehensive Income for the quarter ended 31 March Group Three Months Ended 31 March $ 000 $ 000 % Increase/ (Decrease) Profit for the period 7,605 7, Other comprehensive income Exchange gain/(loss) on translation of net assets of foreign subsidiaries 3,235 (5,032) Nm Total comprehensive income for the period 10,840 2, Attributable to: Owners of the Company 10, ,069.9 Minority interests 709 1,136 (37.6) Profit for the period 10,840 2, Breakdown and explanatory Notes to Income Statement The following items have been included in arriving at operating profit:- Group Three Months Ended 31 March % 2009 $ $ 000 Increase/ (Decrease) Depreciation and amortisation (731) (837) (12.7) Allowance reversed/(made) for doubtful debts and bad debts written off net of bad debts recovered 748 (310) Nm Allowance made for inventory obsolescence and inventories written off (1,182) (114) Foreign exchange gain (16.5) Gain on sale of property, plant and equipment 2 - Nm 2

3 1(b)(i) A Statement of Financial Position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Group Company 31 March 31 December 31 March 31 December $ 000 $ 000 $ 000 $ 000 Non-Current Assets Property, plant and equipment 10,892 10, Investment in subsidiaries , ,774 Investment in associate 7,532 7, Other assets Goodwill on consolidation 33,522 33, Deferred tax assets 4,315 4, ,564 56, , ,150 Current Assets Inventories 176, , Trade and other receivables 484, , , ,332 Cash and bank balances 39,300 50,518 13,268 2, , , , ,419 Current Liabilities Bank overdrafts (Unsecured) 2,223 1, Trade and other payables 317, ,424 42,407 13,629 Deferred income Bank borrowings 99, ,576 15,300 20,660 Finance lease liabilities Current tax payable 2,189 3,412 (4) , ,988 57,703 34,386 Net Current Assets 277, ,484 94,821 92,033 Non-Current Liabilities Bank borrowings 68,850 66,600 68,850 66,600 Deferred tax liabilities Deferred income Finance lease liabilities ,896 68,682 68,877 66, , , , ,556 Equity attributable to owners of the Company Share capital 112, , , ,815 Other reserves 15,023 11,811 9,865 9,865 Retained earnings 120, ,175 11,406 10, , , , ,556 Minority interests 14,994 14, Total Equity 262, , , ,556 3

4 Notes to Statement of Financial Position 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable in one year or less, or on demand As at 31/03/2009 As at 31/12/2008 $ 000 $ 000 $ 000 $ 000 Secured Unsecured Secured Unsecured - 102, ,592 Amount repayable after one year As at 31/03/2009 As at 31/12/2008 $ 000 $ 000 $ 000 $ 000 Secured Unsecured Secured Unsecured - 68,850-66,600 Details of any collateral 4

5 1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Three Months Ended 31 March $'000 $'000 Cash Flows from Operating Activities Profit from operations before taxation 9,167 9,471 Adjustments for : Share of (profit)/loss of associate (226) 274 Depreciation of property, plant and equipment Gain on disposal of property, plant and equipment (2) - Interest expense 1,453 2,581 Interest income (453) (134) Operating profit before working capital changes 10,670 13,029 Changes in working capital : Inventories 2,885 (23,107) Trade and other receivables (30,169) (25,126) Trade and other payables 35,988 (10,307) Cash generated from / (utilised in) operations 19,374 (45,511) Income taxes paid (2,825) (2,035) Net cash flow from operating activities 16,549 (47,546) Cash Flows from Investing Activities Interest received Purchase of property, plant and equipment (595) (434) Proceeds from disposal of property, plant and equipment 2 4 Purchase of other assets (1) - Purchase of club membership - (18) Net cash flow from investing activities (141) (314) Cash Flows from Financing Activities Interest paid (2,598) (3,661) Proceeds from bank loans 123, ,151 Repayment of bank loans (150,152) (66,650) Payment of finance lease instalments (14) (6) Repayment from associate Dividend paid to minority shareholders - (13) Net cash flow from financing activities (29,571) 35,926 Net decrease in cash and cash equivalents (13,163) (11,934) Cash and cash equivalents at beginning of the period 49,502 39,425 Effects of exchange rate changes on balances held in foreign currencies 738 (969) Cash and cash equivalents at end of the period 37,077 26,522 5

6 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of Changes in Equity (i) Consolidated statement of changes in equity for the three months ended 31 March 2009 Currency Share Dividend General Accumulated Translation Minority Total Capital Reserve Reserve Profits Reserve Total Interest Equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Bal as at 1 Jan ,815 9,865 2, ,175 (477) 237,801 14, ,086 Total comprehensive income for the period ,919 3,212 10, ,840 Bal as at 31 Mar ,815 9,865 2, ,094 2, ,932 14, ,926 (ii) Consolidated statement of changes in equity for the three months ended 31 March 2008 Currency Share Dividend General Accumulated Translation Minority Total Capital Reserve Reserve Profits Reserve Total Interest Equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Bal as at 1 Jan ,815 5, ,210 (1,720) 212,653 10, ,636 Transfer of profit (724) (7) Total comprehensive income for the period ,888 (5,022) 866 1,136 2,002 Bal as at 31 Mar ,815 5,679 1, ,374 (6,749) 213,519 12, ,638 6

7 (iii) Statement of changes in equity of the company for the three months ended 31 March 2009 Share Dividend Accumulated Capital Reserve Profits Total $'000 $'000 $'000 $'000 Bal as at 1 Jan ,815 9,865 10, ,556 Total comprehensive income for the period Bal as at 31 Mar ,815 9,865 11, ,086 (iv) Statement of changes in equity of the company for the three months ended 31 March 2008 Share Dividend Accumulated Capital Reserve Profits Total $'000 $'000 $'000 $'000 Bal as at 1 Jan ,815 5,679 6, ,722 Total comprehensive income for the period - - 3,687 3,687 Bal as at 31 Mar ,815 5,679 9, ,409 7

8 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-back, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. During the quarter ended 31 March 2009, the Company did not issue any shares. As at 31 March 2009, the Company has no outstanding share options of unissued ordinary shares. The outstanding share options as at 31 March 2008 amounted to 110,000 unissued ordinary shares. 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice. These figures have not been audited or reviewed. However, our auditors have performed certain procedures and enquiries. These procedures are substantially less in scope than an audit or a review in accordance with Singapore Standard on Review Engagements (SSRE) Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements as at 31 December 2008 except as described in paragraph If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The Amendments and Interpretations to the Singapore Financial Reporting Standards ( FRSs ) for periods effective from 1 January 2009 are currently being assessed to have no material impact on the Group results. 8

9 6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Earnings per ordinary share for the year based on net profit attributable to shareholders:- 3 Months 3 Months Ended Ended 31 Mar Mar 2008 (i) Based on weighted average number of ordinary shares in issue 1.89 cents 1.61 cents Weighted average number of shares ( 000) 365, ,360 (ii) On a fully diluted basis 1.89 cents 1.61 cents Weighted average number of shares ( 000) 365, ,360 In arriving at the fully diluted earnings per share, only those potential ordinary shares arising from the exercise of options which would dilute the basic earnings per share of the Group are included in the computation. 7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year. GROUP 31 Mar Dec 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period cents cents COMPANY 31 Mar Dec 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period cents cents 9

10 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current period reported on. Review of Group Performance Business Segment Information Revenue Profit before Interest & Taxation 3 months 3 months % 3 months 3 months % ended 31 ended 31 Change ended 31 ended 31 Change Mar 2009 Mar 2008 Mar 2009 Mar 2008 $ 000 $ 000 $ 000 $ 000 Distribution 434, ,735 (5.5) 5,497 6,142 (10.5) Enterprise Systems 272, , ,295 5,816 (26.2) IT Services 7,802 8,419 (7.3) Share of associate's profit/(loss) - - Nm 226 (274) Nm Total 715, ,806 (1.3) 10,620 12,052 (11.9) Geographical Segment Information Revenue Profit before Interest & Taxation 3 months 3 months % 3 months 3 months % ended 31 ended 31 Change ended 31 ended 31 Change Mar 2009 Mar 2008 Mar 2009 Mar 2008 $ 000 $ 000 $ 000 $ 000 North Asia 388, , ,960 5,423 (27.0) South East Asia 326, ,786 (8.7) 6,434 6,903 (6.8) Share of associate's profit/(loss) - - Nm 226 (274) Nm Total 715, ,806 (1.3) 10,620 12,052 (11.9) 10

11 (a) Revenue In view of the current economic and financial challenges in the external environment, the Group has adopted a cash conservation strategy by not aggressively pursuing growth in the business for FY Instead, the Group will continue to tighten its credit management and focus on investing in key and strategic customers for future growth. The Group will also continue to place its emphasis on strengthening its balance sheet and its internal operations and processes to derive operational efficiencies and cost savings. Strengthening working capital management and driving strong operational cash flow would remain the key initiatives of the Group in FY For 1Q 2009, the Group s revenue decreased marginally by 1.3% to $715.2m as compared to $724.8m for 1Q 2008 with the main decrease attributed to lower distribution sales of notebooks, printers, supplies and peripheral products. Geographically, North Asia revenue registered a growth of 5.8% in 1Q 2009 as compared to 1Q 2008 mainly due to strong growth in servers and enterprise software products. Conversely, South East Asia revenue declined by 8.7% for 1Q 2009 against 1Q 2008 mainly due to the 12% decrease in distribution sales of consumer IT products and peripherals. (b) Profitability The Group s 1Q 2009 net profit after tax and minority interests ( NPATMI ) grew by 17.5% to $6.9m as compared to $5.9m for 1Q This was achieved on the back of significant cost reductions and interest costs in line with the Group s strong focus on cost and working capital management. Gross margin for 1Q 2009 declined to 4.3% from 4.9% in 1Q 2008 due to higher cost of inventory as a result of weaker Asian currencies against the US Dollar, and higher provisions for inventory obsolescence and losses, particularly in the Enterprise Systems segment. Both selling and distribution expenses and general and administrative expenses in 1Q 2009 decreased by 6.8% and 18.4% to $13.4m and $8.3m respectively as compared to 1Q Overall, total operating expenses as a percentage of revenue improved from 3.39% in 1Q 2008 to 3.04% in 1Q 2009 as a result of cost savings from improved operational efficiencies and the continued tightening of its management of operating costs. In line with lower working capital days, finance costs in 1Q 2009 were 43.7% lower than 1Q 2008, as evidenced by lower bank borrowings of $49.2m to $171.0m as at 31 March 2009 from $220.2m as at 31 March The Group s net profit before interest and tax ( PBIT ) for 1Q 2009 decreased by 11.9% to $10.6m from $12.1m in 1Q Both the Distribution and Enterprise business segments experienced a decrease in PBIT by 10.5% and 26.2% respectively as compared to 1Q In the Distribution segment, the decrease in PBIT was mainly from desktop PCs, printers and handheld devices. In 1Q 2009, although revenue in the Enterprise Systems segment grew by 6.3% against 1Q 2008, PBIT actually decreased by 26.2% mainly due to higher cost of inventory as a result of weaker Asian currencies against the US Dollar and higher provisions made for inventory obsolescence in the Enterprise Systems segment. On a geographical basis, both North Asia and South East Asia recorded a decrease in PBIT by 27.0% and 6.8% respectively against 1Q (c) Statement of Financial Position The Group's total shareholders funds were $247.9m as at 31 March 2009, an increase of $10.1m from $237.8m as compared to 31 December The Group generated a positive operating cash flow of $16.5m in 1Q 2009, as compared to a negative operating cash flow of $47.5m reported in 1Q Group bank borrowings decreased by $22.2m to $171.0m as at 31 March 2009, from $193.2m as at 31 December Net gearing has also been reduced to 0.53 as at 31 March 2009 from 0.60 as at 31 December 2008, and from 0.90 as at 31 March Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. 11

12 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. As the near-term outlook for the global economic and IT industry continues to be uncertain, the Group recognizes the importance of continuing to further strengthen its balance sheet and focus on strengthening its internal operations and processes to improve operational efficiencies and generate cost savings. Over the next few quarters of FY 2009, the Group will continue with its strategy of improving its working capital and credit control management to strengthen its operating cash flows. Despite the anticipated slowdown in demand for ICT products in 2009, the Directors are confident that in Q2 and FY 2009, ECS will remain profitable. 12

13 11. Dividend (a) Present Period Any dividend recommended for the current financial period reported on? None (b) Previous Corresponding Period Any dividend declared for the corresponding period of the immediately preceding financial year? None (c) Date payable (d) Books closure date 12. If no dividend has been declared/recommended, a statement to that effect. 13

14 PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1,Q2, Q3 or Half Year Results) 13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year. 14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. 15. A breakdown of sales as follows:- 16. A breakdown of the total annual dividend (in dollar value) for the issuer s latest full year and its previous full year as follows:- 14

15 17. Interested Person Transactions Under General Mandate. Name of Interested Persons a) Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries b) Transactions for the purchase of goods and services with VST Computers (HK) Ltd and its subsidiaries in the normal course of business and on commercial terms Aggregate value of all interested transactions during the financial year under review (excluding transactions less than S$100,000 and transactions concluded under shareholders' mandate pursuant to Rule 920) Aggregate value of all transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than S$100,000) - 361,122-3,618,683 The above transactions are for the quarter ended 31 March BY ORDER OF THE BOARD Eddie Foo Toon Ee Company Secretary 8 May

16 ECS HOLDINGS LIMITED CONFIRMATION BY THE BOARD PURSUANT TO RULE 705(4) OF THE LISTING MANUAL On behalf of the Board of Directors of the Company, we, the undersigned, hereby confirm to the best of our knowledge that nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the 1 st quarter ended 31 March 2009 to be false or misleading in all material respects. On behalf of the Board of Directors 8 May