NICO STEEL HOLDINGS LIMITED

Transcription

1 The initial public offering of the shares of Nico Steel Holdings Limited was sponsored by Westcomb Capital Pte Ltd ( the Manager ). The Manager assumes no responsibility for the contents of this announcement. PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF FULL YEAR RESULTS To reflect the substance of the restructuring exercise, the acquisitions of subsidiaries under common control were accounted for in a manner similar to the pooling of interests method of consolidation. The prior year figures of the have been restated to include the balances relating to the common control related companies. 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. CONSOLIDATED INCOME STATEMENTS (Amount expressed in thousands of United States of American dollar ( USD )) Increase/ FY2005 FY2004 (Decrease) % Revenue 23,988 14, Cost of sales (20,404) (11,383) 79.2 Gross profit 3,584 2, Other operating income Distribution expenses (147) (70) Administrative expenses (2,078) (1,412) 47.2 Profit from operations 1,765 1, Finance costs (293) (188) 55.9 Profit from ordinary activities before taxation 1,472 1, Income tax expenses (101) (73) 38.4 Net Profit from ordinary activities for the year 1,371 1, Page 1 of 13

2 Other notes: Profit from operations is arrived at after charging / (crediting) the following items: FY2005 FY2004 Depreciation of property, plant and equipment Directors remuneration Directors fees 10 - Exchange loss / (gain) 133 (13) Interest expenses Staff costs Interest income from bank (55) (25) Page 2 of 13

3 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. BALANCE SHEETS (Amounts expressed in thousands of United States of American dollar ( USD )) Company 28/2/ /2/ /2/ /2/2004 USD'000 USD'000 USD'000 USD'000 Non-current assets Property, plant and equipment 3,081 3, Investment in subsidiaries - - 4, Long-term investments Intangible assets ,129 3,096 4, Current assets Inventories 4,919 3, Trade and other receivables 7,391 3, Cash at banks and in hand 5,497 3, ,807 11,093 1, Less: Current liabilities Bank overdrafts Trade and other payables 2,294 2,228 1, Bills payable (secured) 3,941 2, Interest-bearing bank loans 6,470 3, Current tax payable ,292 7,705 2, Net current assets / (liabilities) 4,515 3,388 (1,134) (684) 7,644 6,484 3, Less: Non-current liabilities Interest-bearing bank loans 1,901 2, Deferred tax liabilities ,940 2, Net assets 5,704 4,344 3, Share capital 3, , Reserves 1,909 3,354 (153) (66) Shareholders'equity 5,704 4,344 3, Page 3 of 13

4 1(b)(ii) Aggregate amount of group s borrowings and debt securities. 28/2/ /2/2004 Amount repayable in one year or less, or on demand Secured - Bank loan A Bank loan B Bank loan C 2,929 2,339 - Bank loan D Bank loan E 17 - Bank loan F Bank loan G 795 Unsecured bank loans 2, Obligations under hire purchase ,470 3,107 Amount repayable after one year Secured - Bank loan A 1,469 1,473 - Bank loan B Bank loan D Bank loan F 1 Obligations under hire purchase ,901 2,103 Details of any collateral Bank loan A is secured by a mortgage over the s leasehold property and is guaranteed by an affiliated corporation. Bank loan B is secured by a fixed charge on fixed deposits of the as at 28 February 2005 of US$705,973 (2004: US$500,000). Bank loan C is secured by a fixed charge over the fixed deposits of the as at 28 February 2005 of US$2,566,854 (2004: US$2,515,044). With effect from 7 April 2005, the Executive Directors of the and Tang Hee Kya have been released as guarantors under the Guarantee executed by them in respect of the bank loan C. Their personal guarantee is now replaced by a corporate guarantee provided by the Company. Bank loan D is secured by a machinery of the Company with an aggregate carrying amount of US$63,821 (2004: US$72,939). Bank loan F is secured by a machinery of the Company with an aggregate carrying amount of US$9,579 (2004: US$10,777). Bank loan G is secured by a fixed charge over the fixed deposits of the and Company as at 28 February 2005 of US$504,405 (2004: Nil). The unsecured loans are also guaranteed by the Company. All the bank loans except for bank loan C are guaranteed by the Executive Directors of the and Tang Hee Kya. Page 4 of 13

5 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. CONSOLIDATED CASH FLOW STATEMENTS (Amounts expressed in thousands of United States of America dollars ( USD )) FY2005 FY2004 Operating activities Profit from operating activities before taxation 1,472 1,265 Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible assets 3 - Gain from disposal of property, plant and equipment - (4) Interest expense Interest income (55) (25) Operating profit before working capital changes 1,919 1,643 Changes in working capital: Inventories (1,492) (819) Trade and other receivables (3,424) (103) Trade and other payables Bills payable 1,918 (2,022) Additional fixed deposits pledged to banks (761) (545) Cash generated from operations (1,402) (1,516) Interest income received Income taxes paid (133) (100) Cash flows from operating activities (1,480) (1,591) Investing activities Proceeds from disposal of property, plant and equipment - 18 Purchase of property, plant and equipment (216) (156) Purchase of intangible assets (26) - Purchase quoted shares - (24) Cash flows from investing activities (242) (162) Page 5 of 13

6 FY2005 FY2004 Financing activities Interest paid (293) (188) Proceeds from interest-bearing bank loans 3,177 1,173 Repayment to directors (366) - Repayment of hire purchase financing (16) (22) Cash flows from financing activities 2, Net increase/(decrease) in cash and cash equivalents 780 (790) Cash and cash equivalents at beginning of the year 560 1,350 Cash and cash equivalents at end of the year 1, For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and fixed deposits pledged to the financial institutions, and form an integral part of the s cash management. Page 6 of 13

7 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. STATEMENTS OF CHANGES IN EQUITY (Amounts expressed in thousands of United States of America dollars ( USD )) The Share Capital Merger Deficit Currency Translation Reserve Accumulated Profits / (Losses) Total At 1 Mar * - - 2,162 3,152 Net profit for the year ,192 1,192 At 29 Feb ,354 4,344 Issue of ordinary shares for 2,805 (2,825) acquisitions of subsidiaries - - (20) Exchange differences on consolidation of foreign subsidiaries Net profit for the year ,371 1,371 At 28 Feb ,795 (2,825) 9 4,725 5,704 The Company At 1 Mar (21) 310 Net loss for the year (45) (45) At 29 Feb (66) 265 Issue of ordinary shares for - 3, ,464 acquisitions of subsidiaries Net loss for the year (87) (87) At 28 Feb , (153) 3,642 * includes the share capital of Nico Steel Solutions (S) Pte Ltd and Nico Steel Centre (Thailand) Co., Ltd totaling of US$659,000. Page 7 of 13

8 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for 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. Other than the changes in the Company s share capital arising from the restructuring exercise undertaken by the as described on page 46 and the issue of new shares pursuant to the Company s public listing as described on page 42 of the Prospectus dated 30 March 2005, there has been no change in the Company s share capital as at 28 February Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 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 has applied the same accounting policies and methods of computation for the current reporting period compared to the audited financial statements for the corresponding period ended 29 February 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. Not applicable. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. FY2005 FY2004 Profit after taxation 1,371 1,192 No of shares ( 000) FY2005 FY2004 Weighted average number of ordinary shares in issue applicable to earnings per share 65,052 65,052 Earning per share (US cents) - basic and diluted Page 8 of 13

9 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 financial period reported on; and (b) immediately preceding financial year. Company (USD'000) (USD'000) (USD'000) (USD'000) Net assets 5,704 4,344 3, Net asset value per ordinary share based on the existing issued share capital as at the respective period (US cents) 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; REVIEW OF OPERATIONS Our revenue increased by approximately US$9.8 million, or 69.3%, from US$14.2 million in FY2004 to US$24.0 million in FY2005, in line with our aggressive marketing efforts to promote our Customised Metal Alloys to our customers. Our Customised Metal Alloys continue to be our main revenue generator, contributing 80.0% of the s revenue, while the Commercial Metal Alloys take up the remaining 20.0%. BREAKDOWN OF GROUP REVENUE BY PRODUCT CATEGORIES FY2005 FY2004 USD'000 % USD'000 % Commercial Metal Alloys 4, , Customised Metal Alloys 19, , Total 23, , In FY2005, as part of the s diversification strategy, we introduced our Customised Metal Alloys to a new customer in the Thermal Solutions market. In order to break into this market, we accepted a lower margin for our Customised Metal Alloys with this customer. The low margin derived from this customer was compensated by the high sales volume committed by this customer with a payment term via secured bank letter-of-credit. In FY2005, revenue from the Thermal Page 9 of 13

10 Solutions market amounted to approximately US$4.0 million, or 16.9% of our revenue. In addition, the increase in revenue is due to higher demand from customers as a result of the improved electronics sector. Our gross profit increased by approximately US$802,000, or 28.8%, from US$2.8 million in FY2004 to US$3.6 million in FY2005. We also saw a significant increase in other operating income by approximately US$253,000, or 165.4%, from US$153,000 in FY2004 to US$406,000 in FY2005. This is primarily due to the increase in interest income received from bank deposits as well as the increase in scrap sale during the year. This is in line with the increase in our fixed deposits placed with our banks. Our operating expenses increased by approximately US$743,000, or 50.1%, from US$1.5 million in FY2004 to US$2.2 million in FY2005. This was mainly due to higher distribution and staff costs. Income tax expenses for FY2004 and FY2005 were approximately US$73,000 and US$101,000 respectively, representing effective tax rates of approximately 5.8% and 6.9%respectively. The effective tax rate is lower than the Singapore statutory rate of 20% is mainly due to tax concessions granted to the subsidiaries in the PRC. The growth in sales volume had brought about an increase in our inventory balances of approximately US$1.5 million, or 43.6%, from US$3.4 million as at 29 February 2004 to US$4.9 million as at 28 February The increase in sales volume had also brought about an increase in trade and other receivables of US$3.4 million. With an accumulated net worth of US$5.7 million, the growth of the is primarily financed by the bills payable, in the case of our inventories purchases, and interest bearing loans from the banks, in the case of working capital. As a result, finance cost, mainly comprises interest cost, increased by approximately US$105,000, or 55.9%, from US$188,000 in FY2004 to US$293,000 in FY Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable as this is the Company s first result announcement since its public listing on 7 April 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.. Whilst the expects the market conditions of the industries in which the operates to remain competitive, we are positive on the outlook for the year ahead. Barring unforeseen circumstances, the expects to continue to grow in terms of its revenue. However, we are faced with high material costs. This may have an adverse effect on our profit if we are unsuccessful in passing the increased costs to our customers. We have disclosed on page 33 of our Prospectus dated 30 March 2005 that we have commenced construction of the factory building in Suzhou, the PRC. The new factory building is scheduled to be completed by 3Q FY2006. As at the date of this announcement, the Directors of the Company are not aware of any item or event of a material or unusual nature in relation to the construction of the factory building in Suzhou, the PRC that has occurred between the date to which the Prospectus dated 30 March 2005 refers Page 10 of 13

11 and the date of this announcement, which would affect materially the results of operations of the. 11. Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No. (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? Not applicable (c) Date payable Not applicable. (d) Books closure date Not applicable. 12. If no dividend has been declared/recommended, a statement to that effect. The company does not propose to pay or has it declared any dividends in respect of the financial year ended 28 February Page 11 of 13

12 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. BREAKDOWN OF GROUP REVENUE BY GEOGRAPHICAL REGIONS FY2005 FY2004 % % Singapore 8, , PRC 12, , North Asia Malaysia 2, , Other Countries * Total 23, , * Other Countries comprise mainly Indonesia, Thailand, Vietnam, United Kingdom 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. Revenue from our tradition markets, such as Singapore, Malaysia and the PRC has grown in FY2005 as we stepped up on our marketing efforts towards our customers in these regions. This is in line with the overall growth for our s revenue. Revenue from the PRC almost doubled in FY2005 as compared to FY2004 with an increase of approximately US$6.0 million, or 94.2%, from US$6.3 million in FY2004 to US$12.3 million in FY2005. The increase in activities by our PRC subsidiaries as a result of our customers shifting operations from Singapore to the PRC as well as new PRC customers had also brought about an increase in revenue from this region. We had also commenced our marketing efforts in Northern Asian countries such as Taiwan and South Korea in FY2005. In FY2005, revenue from the Northern Asia sector amounted to approximately US$888,000, contributing 3.7% to the revenue. Page 12 of 13

13 15. A breakdown of sales. Not applicable as this is the Company s first result announcement since its public listing on 7 April A breakdown of the total annual dividend (in dollar value) for the issuer s latest full year and its previous full year. Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details) Latest Full Year () Previous Full Year () Ordinary - NA Preference - NA Total: - NA 17 Interested Person Transactions During the year, there were the following interested person transactions: Company () () () () Affiliated corporation Service fee income The Audit Committee has reviewed the above transactions and concluded that they were carried out on normal commercial terms. BY ORDER OF THE BOARD Tan Chee Khiong, Danny Chairman and President 26 April 2005 Page 13 of 13