INNOVALUES LIMITED (Company Registration No E)

Transcription

1 INNOVALUES LIMITED (Company Registration No E) THIRD QUARTER AND NINE MONTHS FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2016 PART I INFORMATION REQUIRED FOR QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR ANNOUNCEMENTS 1(a)(i) A statement of comprehensive income, for the, together with a comparative statement for the corresponding period of the immediately preceding financial year CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Note Change Change S$'000 S$'000 % S$'000 S$'000 % Revenue 31,458 28, % 88,861 86, % Cost of sales (21,116) (20,203) 4.5 % (60,521) (60,979) (0.8)% Gross profit 10,342 8, % 28,340 25, % Other items of income Interest income (2.9)% % Other gains ,133 (89.1)% 450 4,626 (90.3)% Other items of expenses Marketing and distribution costs (658) (468) 40.6 % (1,726) (1,617) 6.7 % Administrative expenses (2,919) (2,927) (0.3)% (8,339) (8,128) 2.6 % Finance costs 2 (18) (59) (69.5)% (71) (211) (66.4)% Other losses 1 (3) (67) (95.5)% (8) (83) (90.4)% Profit before tax 3 7,120 7,661 (7.1)% 18,729 20,520 (8.7)% Income tax expense 4 (1,134) (946) 19.9 % (2,692) (2,373) 13.4 % Net profit 5,986 6,715 (10.9)% 16,037 18,147 (11.6)% Other comprehensive income / (loss): Exchange differences on translating foreign operations Other comprehensive income / (loss) for the period, net of tax Total comprehensive income for the period 771 (2,092) N.M. (1,972) (3,238) (39.1)% 771 (2,092) N.M. (1,972) (3,238) (39.1)% 6,757 4, % 14,065 14,909 (5.7)% Note: N.M. - Not meaningful Page 1

2 1(a) (ii) Note 1 Breakdown and explanatory notes to the consolidated statement of comprehensive income Other gains / (losses) comprise the following: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Change Change S$'000 S$'000 % S$'000 S$'000 % Other gains: Foreign exchange transaction gain, net 324 3,082 (89.5)% 359 4,485 (92.0)% Gain on disposal of plant and equipment N.M. Other income (62.7)% (15.0)% 343 3,133 (89.1)% 450 4,626 (90.3)% Other losses: Fair value loss on financial instruments - (15) N.M Loss on disposal of plant and equipment - (3) N.M. (4) - N.M. Plant and equipment written off (3) (49) (93.9)% (4) (83) (95.2)% (3) (67) (95.5)% (8) (83) (90.4)% Note 2 Finance costs comprise the following: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Change Change S$'000 S$'000 % S$'000 S$'000 % Interest paid and payable to banks for: - term loans (1) (17) (94.1)% (8) (68) (88.2)% - bills payable (13) (18) (27.8)% (34) (57) (40.4)% Hire-purchase interest (4) (24) (83.3)% (29) (86) (66.3)% (18) (59) (69.5)% (71) (211) (66.4)% Note 3 Profit before tax is stated after charging the following: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Change Change S$'000 S$'000 % S$'000 S$'000 % Depreciation expense (1,661) (1,799) (7.7)% (5,088) (5,568) (8.6)% Note 4 Income tax comprises the following: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Change Change S$'000 S$'000 % S$'000 S$'000 % Income tax expenses (1,134) (946) 19.9 % (2,692) (2,373) 13.4 % Deferred tax expenses Note: N.M. - Not meaningful (1,134) (946) 19.9 % (2,692) (2,373) 13.4 % Page 2

3 1(b)(i) A statement of financial position (for the issuer and ), together with a comparative statement as at the end of the immediately preceding financial year Note Company 30 Sep Dec Sep Dec 2015 S$'000 S$'000 S$'000 S$'000 Non-current assets Property, plant and equipment 35,044 34, ,167 Investment in subsidiaries ,285 31,285 Other financial assets ,485 35,321 32,665 32,833 Current assets Inventories A 8,127 10, Trade and other receivables B 32,540 25,599 32,360 25,635 Other assets 1,681 1, Cash and cash equivalents 35,461 30,643 25,331 20,721 77,809 68,162 57,841 46,610 Total assets 113, ,483 90,506 79,443 Equity attributable to owners of the parent Share capital 13,560 12,248 13,560 12,248 Retained earnings 80,377 72,871 3,447 10,017 Other reserves (4,343) (2,689) 1, Total equity 89,594 82,430 18,148 23,088 Non-current liabilities Deferred tax liabilities Other financial liabilities C Finance leases Current liabilities Income tax payable 1,625 1, ,183 Trade and other payables 18,944 15,319 69,376 52,537 Other financial liabilities C 2,258 2,470 2,187 2,282 Finance leases 132 1, ,959 20,199 72,167 56,094 Total liabilities 23,700 21,053 72,358 56,355 Total equity and liabilities 113, ,483 90,506 79,443 Page 3

4 Notes to the consolidated statement of financial position Note A Inventories comprise the following: 30 Sep Dec 2015 Change S$'000 S$'000 % Finished goods 2,444 3,744 (34.7)% Work in progress 1,570 1, % Raw materials and consumables 4,113 4,977 (17.4)% 8,127 10,084 (19.4)% Note B Trade and other receivables comprise the following: 30 Sep Dec 2015 Change S$'000 S$'000 % Trade receivables: Outside parties 32,461 25, % Less allowance for impairment Subtotal 32,461 25, % Other receivables: Other receivables % Trade and other receivables 32,540 25, % Note C Other financial liabilities comprise the following: 30 Sep Dec 2015 Change S$'000 S$'000 % Non-current: Bank loans - 24 N.M. Non-current, total - 24 N.M. Current: Bank loans (86.3)% Bills payable to banks 2,187 1, % Current, total 2,258 2,470 (8.6)% Total 2,258 2,494 (9.5)% 1(b)(ii) Aggregate amount of s borrowings and debt securities 30 Sep Dec 2015 Secured Unsecured Total Secured Unsecured Total S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 Amount repayable - in one year or less, or on demand 132 2,258 2,390 1,017 2,470 3,487 - after one year Details of any collateral 346 2,258 2,604 1,317 2,494 3,811 Secured borrowings at 30 September 2016 and 31 December 2015 refer to obligations under finance leases that are secured by plant and equipment purchased under finance leases. Page 4

5 1(c) A statement of cash flows (for the ), together with a comparative statement for the corresponding period of the immediately preceding financial year Note 30 Sep Sep 2015 S$'000 S$'000 Operating activities Profit before tax 18,729 20,520 Adjustments for: Interest expense Interest income (83) (71) Depreciation of property, plant and equipment 5,088 5,568 Loss / (gain) on disposal of plant and equipment 4 (34) Plant and equipment written off 4 83 Share-based payments Net effect of exchange rate changes in consolidating subsidiaries (1,735) (1,669) Operating cash flows before changes in working capital 22,396 24,771 Changes in working capital: Inventories 1,957 (1,639) Trade and other receivables (6,941) (4,956) Other assets 155 (68) Trade and other payables 3,625 (339) Cash flows from operations 21,192 17,769 Income tax paid (2,461) (1,298) Net cash flows from operating activities 18,731 16,471 Investing activities Disposal of plant and equipment Purchase of plant and equipment (5,574) (4,580) Increase in other financial assets (60) - Interest received Net cash flows used in investing activities (5,518) (4,398) Financing activities Interest paid (71) (211) Repayment of loans (474) (3,187) Increase in interest-bearing borrowings, net 344 2,033 Finance leases repayments (975) (880) Dividends paid (8,531) (8,447) Decrease in cash restricted in use - 8 Proceeds from equity share options exercised 1, Net cash flows used in financing activities (8,395) (10,327) Net increase in cash and cash equivalents 4,818 1,746 Cash and cash equivalents at beginning of the year 30,482 22,671 Cash and cash equivalents at end of the period A 35,300 24,417 Page 5

6 Notes to the consolidated statement of cash flows Note A Cash and cash equivalents comprise the following: 30 Sep Sep 2015 S$'000 S$'000 Cash and cash equivalents as per statement of cash flows 35,300 24,417 Cash restricted in use Cash and cash equivalents as per statement of financial position 35,461 24,577 Cash restricted in use refers to bank balances of subsidiaries held by banks to cover bank guarantees issued. Page 6

7 1(d)(i) A statement (for the issuer and ) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalization issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Share capital Capital reserve Share option reserve Statutory reserve Translation reserve Retained earnings Total equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 January ,891 1, ,853 (3,075) 58,314 70,663 Share-based payments Dividends paid (8,447) (8,447) Total comprehensive (loss) / income for the period (3,238) 18,147 14,909 Equity share options exercised Balance at 30 September ,248 1, ,853 (6,313) 68,014 77,645 Balance at 1 January ,248 1, ,934 (6,658) 72,871 82,430 Share-based payments Dividends paid (8,531) (8,531) Total comprehensive (loss) / income for the period (1,972) 16,037 14,065 Equity share options exercised 1, ,312 Balance at 30 September ,560 1,212 1,141 1,934 (8,630) 80,377 89,594 Company Share capital Share option reserve Retained earnings Total equity $'000 $'000 $'000 $'000 Balance at 1 January , ,143 19,502 Share-based payments Dividends paid - - (8,447) (8,447) Total comprehensive income for the period - - 6,378 6,378 Equity share options exercised Balance at 30 September , ,074 17,953 Balance at 1 January , ,017 23,088 Share-based payments Dividends paid - - (8,531) (8,531) Total comprehensive income for the period - - 1,961 1,961 Equity share options exercised 1, ,312 Balance at 30 September ,560 1,141 3,447 18,148 Page 7

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 well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, 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. (A) Share Capital During the three months ended 30 September 2016 since the end of the previous period reported on, there was no movement in the Company s share capital. (B) Convertibles Share Options The Company has an employee share option scheme known as the Innovalues Share Option Scheme 2011 which form an integral component of the compensation plan designed to reward and retain eligible participants whose services are vital to its well-being and success. During the three months ended 30 September 2016, since the end of the previous period reported on, there was no movement in the outstanding share options issued. As at 30 September 2016, there were 6,012,000 outstanding share options which would entitle the holders to subscribe for a total of 6,012,000 ordinary shares of the Company (30 September 2015: 9,031,000). Save as disclosed above, the Company has no other outstanding convertibles and treasury shares as at 30 September 2016 and 30 September (d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. The Company has no treasury shares as at 30 September 2016 and 31 December The total number of issued shares excluding treasury shares as at 30 September 2016 was 328,109,000 (31 December 2015: 325,243,000). 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable 2 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 of the Company. 3 Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter) Not applicable Page 8

9 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 and the Company have adopted the same accounting policies and methods of computation in the financial statements for the current period compared with the audited financial statements for the year ended 31 December 2015 except for the adoption of accounting standards (including its consequential amendments) and interpretations applicable for the financial year beginning 1 January 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 adoption of the new and revised FRSs (including its consequential amendments) and interpretations is assessed to have no material impact on the results of the and of the Company for the period ended 30 September Earnings per ordinary share of the for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Earnings per ordinary share of the, after deducting any provision for preference dividends (in cents): (a) Based on the weighted average number of ordinary shares on issue 3 Months Ended 30 Sep 9 Months Ended 30 Sep (b) On a fully diluted basis Earnings per share (rounded to 2 decimal places) for the period ended 30 September 2016 is computed based on the weighted average number of ordinary shares in issue during the period of 326,835,000 (30 September 2015: 324,050,000). Diluted earnings per share (rounded to 2 decimal places) for the period ended 30 September 2016 is computed based on the adjusted weighted average number of ordinary shares in issue during the period of 329,697,000 (30 September 2015: 327,086,000). 7 Net asset value (for the issuer and ) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year Net asset value per ordinary share based on issued share capital at the end of the financial year (in cents) Company 30 Sep Dec Sep Dec Net asset value per ordinary share as at 30 September 2016 is calculated based on the existing issued share capital of 328,109,000 ordinary shares outstanding as at 30 September 2016 (31 December 2015: 325,243,000). Page 9

10 8 A review of the performance of the, to the extent necessary for a reasonable understanding of the s business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the during the current financial period reported on Income Statement Overview Excluding the foreign exchange transaction gain, the net profit position of the would have been as follows: 3 Months Ended 30 Sep 9 Months Ended 30 Sep Change Change S$'000 S$'000 % S$'000 S$'000 % Net profit (as reported on page 1) 5,986 6,715 (10.9)% 16,037 18,147 (11.6)% Foreign exchange transaction gain ("forex") 324 3,082 (89.5)% 359 4,485 (92.0)% Net profit excluding forex impact 5,662 3, % 15,678 13, % For the three months ended 30 September 2016 ( 3Q16 ), the recorded a net profit attributable to shareholders of approximately S$6.0 million as compared to a net profit of S$6.7 million for the corresponding period ended 30 September 2015 ( 3Q15 ). Excluding the effect arising from net foreign exchange transaction gains for both reporting periods, the would have reported a net profit of approximately S$5.7 million for 3Q16 and S$3.6 million for 3Q15. This marked a profitable growth of S$2.1 million or 55.8% year-on-year ( yoy ), primarily driven by revenue growth in conjunction with higher gross profit. Together with the first half s performance, the recorded a cumulative net profit attributable to shareholders of S$16.0 million for the nine months ended 30 September 2016 ( 9M16 ) as compared to a net profit of S$18.1 million for the corresponding period ended 30 September 2015 ( 9M15 ). Excluding the effect arising from net foreign exchange transaction gains for both reporting periods, the would have reported a net profit of approximately S$15.7 million for 9M16 and S$13.7 million for 9M15, representing a S$2.0 million or 14.8% yoy increase. Revenue Business Activity 3 Months Ended 30 Sep 9 Months Ended 30 Sep / (-) + / (-) / (-) + / (-) S$'000 S$'000 S$'000 % S$'000 S$'000 S$'000 % Automotive ("AU") 24,438 21,810 2, % 70,839 67,769 3, % Office Automation ("OA") 6,993 6, % 17,955 18,671 (716) (3.8)% Others % (334) (83.3)% Total 31,458 28,218 3, % 88,861 86,841 2, % The s revenue increased by approximately S$3.2 million or 11.5% yoy and S$2.0 million or 2.3% yoy for 3Q16 and 9M16 respectively as compared to their corresponding periods. This was mainly due to an increase in orders from our customers in the Automotive ( AU ) segment. The AU segment continued to be our primary revenue contributor, accounting for about 77.7% and 79.7% of the total revenue for 3Q16 and 9M16 respectively. Revenue from the AU segment increased by approximately S$2.6 million or 12.0% yoy and S$3.1 million or 4.5% yoy for 3Q16 Page 10

11 and 9M16 respectively as compared to their corresponding periods. This revenue growth was mainly driven by an increase in orders from our customers in People s Republic of China ( PRC ) market. Revenue from the Office Automation ( OA ) segment increased by approximately S$0.6 million or 9.5% yoy for 3Q16 as compared to its corresponding period. However, on a nine-month basis, revenue had declined by 3.8% yoy to approximately S$18.0 million mainly attributable to a fall in orders from the s customers in United States of America ( USA ) market. Gross profit The s gross profit increased by approximately S$2.3 million or 29.0% yoy to S$10.3 million for 3Q16 from S$8.0 million for 3Q15 mainly driven by revenue growth and improved operational efficiency. Accordingly, the s overall gross profit margin expanded by 4.5 percentage points to 32.9% for 3Q16 as compared to 28.4% for 3Q15. Together with the first half s performance, the s overall gross profit margin expanded by 2.1 percentage points to 31.9% for 9M16 from 29.8% for 9M15. Marketing and distribution costs Marketing and distribution costs increased by approximately S$190,000 or 40.6% yoy and S$109,000 or 6.7% yoy in 3Q16 and 9M16 respectively over their corresponding periods mainly due to higher delivery costs in tandem with higher sales activities during the period. Administrative expenses Administrative expenses increased by approximately S$211,000 or 2.6% yoy for 9M16 over its corresponding period mainly due to the increase in share-based payment expenses and the directors remuneration. Finance costs Finance costs decreased by approximately S$41,000 or 69.5% yoy for 3Q16 and S$140,000 or 66.4% yoy for 9M16 over their corresponding periods due to overall reduction of finance leases and other financial liabilities. Other gains Other gains decreased by approximately S$2.8 million and S$4.2 million for 3Q16 and 9M16 over their corresponding periods mainly due to much lower net foreign exchange transaction gain being recorded for both 3Q16 and 9M16. The huge net foreign exchange transaction gain recorded for both 3Q15 and 9M15 was mainly attributable to the appreciation of US Dollar ( USD ) against Asian currencies in countries we are operating in as a significant proportion of the s revenue is denominated in USD. Income tax expense Income tax expense increased by approximately S$188,000 and S$319,000 for 3Q16 and 9M16 respectively over their corresponding periods. The increase was mainly attributable to our Malaysian subsidiaries because their reinvestment allowances brought forward were fully utilised in the year of 2015 and therefore no longer available for this financial year. Page 11

12 However, the effective tax rate of the is lower than the statutory tax rate of 17% mainly due to the availability of tax incentives in one of the s subsidiaries. Exchange differences on translating foreign operations Loss on exchange differences arising from translating foreign operations for 9M16 was mainly due to the strengthening of Singapore Dollars ( SGD ) against Chinese Yuan Renminbi ( CNY ) during the period. Financial Position Property, plant and equipment ( PPE ) Property, plant and equipment increased by approximately S$0.1 million from S$34.9 million as at 31 December 2015 to S$35.0 million as at 30 September The increase was mainly due to additions of plant and equipment which are in line with the s plan to ramp up production to meet growing business demands, offset by the depreciation charges during the period. Inventories Inventories decreased by approximately S$2.0 million from S$10.1 million as at 31 December 2015 to S$8.1 million as at 30 September 2016 as a result of the s conscientious effort to reduce its inventory level. Trade and other receivables Trade and other receivables increased by approximately S$6.9 million from S$25.6 million as at 31 December 2015 to S$32.5 million as at 30 September The increase was mainly due to much higher sales transacted towards the end of the quarter of 3Q16 as compared to 4Q15, and slightly slower payments from our customers. However, debt collections continue to remain efficient as those slightly overdue trade debts of substantial amounts were subsequently recovered in October Cash and cash equivalents (As per Statement of Cash Flows) The continued to generate positive cash flows from operating activities, with higher operating cash flows of S$18.7 million for 9M16 as compared to S$16.5 million for 9M15. Net cash flows used in investing activities of S$5.5 million for 9M16 was mainly for capital expenditure, while net cash flows used in financing activities of S$8.4 million was mainly for dividends payment and repayments of finance leases. In view of the above, the closed 9M16 with strong cash and cash equivalents amounting to S$35.3 million, a notable increase of 44.6% yoy from S$24.4 million for 9M15. This has placed the in a better net cash position of S$32.9 million as at 30 September 2016 as compared to a net cash position of S$17.4 million as at 30 September Trade and other payables Trade and other payables increased by approximately S$3.6 million from S$15.3 million as at 31 December 2015 to S$18.9 million as at 30 September The increase was mainly due to the outstanding amounts in relation to the purchases of plant and equipment in our Thailand plant. Page 12

13 Other financial liabilities Other financial liabilities decreased by approximately S$0.2 million from S$2.5 million as at 31 December 2015 to S$2.3 million as at 30 September 2016 mainly due to scheduled repayments of term loans made during the period, offset by higher utilisation of trade facilities to finance the growing business. Finance leases Finance leases decreased by approximately S$1.0 million from S$1.3 million as at 31 December 2015 to S$0.3 million as at 30 September 2016 due to scheduled repayments made during the period. 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results Not applicable 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the operates and any known factors or events that may affect the in the next reporting period and the next 12 months Global economic activity remains subdued while business headwinds such as rising labour costs and foreign exchange rate volatility continue to be a challenge. While being mindful of the tough market conditions, the focuses on improving operational efficiency and tightening cost controls in order to ensure gross profit margin sustainability. Going forward, the remains committed to driving growth in its Automotive segment. Through collaborative long-term relationships with major customers, the is poised to take advantage of the prevailing industry trends towards stricter regulation in safety/control, energy saving and environmental protection. Despite the challenging business environment and barring any unforeseen circumstances, the Board of Directors is cautiously optimistic on the s outlook for the remainder of 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? No Page 13

14 (c) Date payable Not applicable (d) Books closure date Not applicable 12 If no dividend has been declared or recommended, a statement to that effect No dividend has been declared or recommended for the period under review. 13 If the has obtained a general mandate from shareholders for interested person transactions ( IPT ), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect The does not have a general mandate from shareholders for interested person transactions. 14 Confirmation of undertakings from directors and executive officers The Company has procured undertakings from all its directors and executive officers under Rule 720(1) of the Listing Manual. 15 Statement pursuant to Rule 705(5) of the listing Manual The Board of Directors confirms that, to the best of their knowledge, nothing has come to their attention of which may render the interim financial statement for the period ended 30 September 2016 to be false or misleading in any aspect. BY ORDER OF THE BOARD Goh Leng Tse Chairman and Chief Executive Officer 25 October 2016 Page 14