Southern Packaging Group Limited

Transcription

1 Southern Packaging Group Limited Unaudited Half Year Financial Statements for the Period Ended 30 June 2011 PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS During the last financial year, the presentation currency of the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company was changed from Singapore dollar to Renminbi as all its business operations are principally carried out in the People s Republic of China and hence management is of the view that Renminbi will better reflect the operations of the Group. 1(a) Statement of Comprehensive Income for the Group, together with a comparative statement for the corresponding period of the immediately preceding financial year Group Group Change Jan-Jun 2011 Jan-Jun 2010 RMB 000 RMB 000 Revenue 323, ,122 12% Cost of sales (Note) (260,148) (212,898) 22% Gross profit 63,417 75,224 (16%) Gross profit margin 20% 26% Other operating income (net) 3,639 1,301 NM Selling and distribution costs (Note) (19,688) (20,329) (3%) Administrative expenses (26,264) (26,024) 1% Share of profit (loss) of associate 296 (503) NM Finance costs (5,096) (3,420) 49% Profit before income tax 16,304 26,249 (38%) Income tax expense (4,003) (7,302) (45%) Profit for the period 12,301 18,947 Attributable to: Owners of the company 12,301 18,947 (35%) Note: Transportation expenses have been reclassified from cost of sales to selling and distribution costs to better reflect its nature. NM: not meaningful 1

2 (a) 1(a)(i) Statement of Other Comprehensive Income Profit for the period Exchange differences arising on translation of foreign operations Total comprehensive income for the period attributable to owners of the Company Group Group Jan-Jun 2011 Jan-Jun 2010 RMB 000 RMB ,301 18,947 (512) (168) 11,789 18,779 (a) 1(a)(ii) The accompanying notes to the financial statements form an integral part of the financial statements. Profit before income tax has been arrived at after charging / (crediting): Group Group Jan-Jun 2011 Jan-Jun 2010 RMB 000 RMB 000 Sales of raw materials or moulds (2,401) (3,044) Interest income (222) (396) Rental income (241) (205) Government grants (517) (303) Foreign currency exchange (gain) losses (304) 2,840 Loss on disposal of property, plant and equipment 2 - Depreciation on property, plant and equipment 20,804 19,329 Depreciation on investment property Amortisation of prepaid lease payments Write-back of allowance for doubtful debts (566) (125) (Write-back of) allowance for inventories (688) 442 Interest expense 5,096 3,420 Bad debts written off

3 1(b)(i) Statement of Financial Position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Current assets: Group Group Company Company 30 Jun Dec Jun Dec 2010 RMB 000 RMB 000 RMB 000 RMB 000 Cash and bank balances 66,464 82,470 2,590 1,437 Trade receivables 166, , Other receivables, deposits and prepayments 9,958 18,934 7,368 6,250 Inventories 76,807 82, Prepaid lease payments Total current assets 320, ,247 9,958 7,687 Non-current assets: Investment in subsidiaries , ,999 Investment in associate 72,382 72,086 Property, plant and equipment 276, , Investment property Prepaid lease payments 27,582 27, Deferred tax assets 1,990 2, Total non-current assets 379, , , ,999 Total assets 700, , , ,686 3

4 Group Group Company Company 30 Jun Dec Jun Dec 2010 RMB 000 RMB 000 RMB 000 RMB 000 Current liabilities: Trade payables 93, , Other payables 21,551 21,575 21,341 21,071 Short-term bank loans and current portion of long-term bank loans 157, , Current portion of finance leases 877 2, Income tax payable 7,998 7, Deferred government subsidy Total current liabilities 281, ,565 21,341 21,071 Long-term liability: Deferred government subsidy 1,937 1, Total non-current liability 1,937 1, Capital and reserves: Issued capital 225, , , ,094 Statutory reserves 31,116 26, Accumulated profits 159, ,343 63,902 61,521 Capital contribution 12,648 12, Translation reserve (11,587) (11,075) - Total shareholders equity 417, , , ,615 Total liabilities and shareholders equity 700, , , ,686 4

5 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable in one year or less, or on demand As at 30/06/2011 As at 31/12/2010 RMB 000 RMB 000 Secured Unsecured Secured Unsecured 158, ,642 - Amount repayable after one year As at 30/06/2011 As at 31/12/2010 RMB 000 RMB 000 Secured Unsecured Secured Unsecured Details of any collateral The bank loans are secured as follows: (a) Secured by buildings, plant and machinery, prepaid lease payments, investment property and pledged fixed deposits; (b) Corporate guarantees by the Company; and (c) Personal guarantee by two controlling shareholders of the Company. The Group s obligations under finance leases are secured by the lessors title to the leased plant and machinery. 5

6 1(c) Statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Operating activities Group Jan-Jun 2011 RMB 000 Group Jan-Jun 2010 RMB 000 Profit before income tax 16,304 26,249 Adjustments for: Depreciation on property, plant and equipment 20,804 19,329 Depreciation on investment property Amortisation of prepaid lease payments Share of profit of associate (296) 503 Interest income (222) (396) Interest expense 5,096 3,420 Net foreign exchange gain (317) (148) (Write-back of) allowance for inventories (688) 442 Write-back of allowance for doubtful debts (566) (125) Bad debts written off Loss on disposal of property, plant and equipment 2 - Operating profit before working capital changes 40,614 49,476 Trade receivables (6,598) 5,442 Other receivables, deposits and prepayments 8,976 (1,994) Inventories 6,380 (2,222) Trade payables (29,738) 5,746 Other payables (1,286) 15,057 Cash generated from operations 18,348 71,505 Interest paid (5,096) (3,420) Interest received Income tax paid (2,544) (5,207) Net cash from operating activities 10,930 63,274 Investing activities Purchase of property, plant and equipment (20,551) (45,338) Proceeds from sale of property, plant and equipment 849 6,515 Long-term investment - (53,087) Net cash (used in) from investing activities (19,702) (91,910) 6

7 Financing activities Group Jan-Jun 2011 RMB 000 Group Jan-Jun 2010 RMB 000 Net repayments from related parties 1, Proceeds from bank loans 119,043 97,596 Repayments of bank loans (120,270) (81,135) (Increase) Decrease in pledged fixed deposits 2,501 - Repayment of finance leases (1,354) (1,089) Dividends paid (5,720) (18,458) Net cash used in financing activities (4,538) (3,074) Effect of exchange rate changes on the balance of cash and cash equivalents (195) (34) Net decrease in cash and cash equivalents (13,505) (31,744) Cash and cash equivalents at beginning of the year 79, ,053 Cash and cash equivalents at end of period (Note A) 65,664 82,309 Note A: Cash and Cash Equivalents Group Group Jan-Jun 2011 Jan-Jun 2010 RMB 000 RMB 000 Cash and bank balances 66,464 83,683 Less: Fixed deposits pledged as security (800) (1,374) Cash and cash equivalents at end of period 65,664 82,309 7

8 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 capitalization issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Issued Capital Statutory Reserve Capital Contribution Accumulated profits Translation Reserve Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance as at 1 Jan ,094 26, ,752 (10,416) 381,527 Total comprehensive income/(loss) for the period ,947 (168) 18,779 Dividends - (18,458) - (18,458) Balance as at 30 Jun ,094 26, ,241 (10,584) 381,848 Balance as at 1 Jan ,094 26,097 12, ,343 (11,075) 411,107 Total comprehensive - income for the period ,301 (512) 11,789 Transfer to statutory reserve - 5,019 (5,019) - - Dividends - - (5,720) - (5,720) Balance as at 30 Jun ,094 31,116 12, ,905 (11,587) 417,176 8

9 Issued Capital Accumulated profits Total The Company RMB 000 RMB 000 RMB 000 Balance as at 1 Jan ,094 84, ,174 Dividends (18,458) (18,458) Total comprehensive loss for the period - 1,008 1,008 Balance as at 30 Jun ,094 66, ,724 Balance as at 1 Jan ,094 61, ,615 Dividends - (5,720) (5,720) Total comprehensive income for the period - 8,101 8,101 Balance as at 30 Jun ,094 63, ,996 9

10 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. Nil 1(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. 30 June December 2010 Total number of issued shares 272,674, ,674,048 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 Company s auditor. 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. Except as disclosed in Note 5 below, the Group and the Company has adopted the same accounting policies and methods of computation in the financial statements for the current financial period compared to the audited financial statements for the financial year ended 31 December

11 5. 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 Group and the Company adopted all the applicable new and revised Singapore Financial Reporting Standards (FRSs) and Interpretations of FRS ( INT FRS ) that are relevant to its operations and effective for annual periods beginning on or after 1 January The adoption of the new/revised FRSs and INT FRS does not have a material impact on the financial statements of the Group and of the Company in the current period.. 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. Earnings per ordinary share for the year based on Group Group Jan-Jun 2011 Jan-Jun 2010 RMB RMB net profit attributable to shareholders (RMB): 4.51 cents 6.95 cents Basic earnings per share for the first half of FY2011 is calculated based on the Group s profit for the period of RMB12,301,000 attributable to owners of the Company divided by the weighted average number of ordinary shares of 272,674,048 in issue (2010: RMB18,947,000 divided by the weighted average number of ordinary shares of 272,674,048 in issue). There is no diluted earnings per share as there are no shares under options. 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. Group Group Company Company 30 Jun Dec Jun Dec 2010 RMB RMB RMB RMB Net asset value (NAV) per ordinary share (RMB) The NAV per share as at 30 June 2011 were calculated based on the number of shares in issue of 272,674,048 shares (31 December 2010 were calculated based on the number of shares in issue of 272,674,048 shares). 11

12 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. The review must discuss 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; it must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on Review of Group Performance Revenue The Group s revenue increased by RMB35.5 million (12%) from RMB288.1 million in the first half of FY 2010 to RMB323.6 million in the first half of FY During the six months period, the Group adjusted the prices of its products, to reflect the upward trend of raw material purchase prices. Sales volume has increased in addition to the increase in selling prices. Sales volume of rigid packaging increased by RMB20.93 million (15%) from RMB139.81million in the first half of FY2010 to RMB in the first half of FY2011 whilst sales volume of flexible packaging increased by RMB14.51 million (9.8%) from RMB million to RMB million in the first half of FY2011. Gross Profit The Group s gross profit decreased by RMB11.8 million (16%) to RMB63.42 million for the first half of FY2011 compared to RMB75.22 million in the previous corresponding period. The gross profit margin decreased by 6 percentage points to 20% for the first half of FY2011 compared to 26% in the first half of FY2010. Cost of sales increased by 22% as a result of the significant increase in cost of raw materials and direct labor costs. Although the Group has adjusted its selling prices to take into account the upward trend in costs, its pricing adjustment was not enough to cover the increased costs. There was about RMB18.5 million increases in cost of sales due to increase in raw material purchase prices. The direct labour cost increased RMB2.5 million. The increase in costs is partly offset by the increase in the sales price as mentioned above. Other Operating Income Other operating income increased by RMB2.34 million to RMB3.64 million for the first half of FY2011 compared to RMB1.3 million in the previous corresponding period. This increase was due to: a) A foreign exchange gain of RMB0.3 million recognised in the first half of FY 2011 due to appreciation of Euro against HKD. A foreign exchange loss of RMB2.84 million was recorded in the first half of FY2010. The increase is offset by: b) Lower other operating income from sale of moulds and raw materials of RMB0.64 million; and 12

13 c) Reduced bank interest income of RMB0.17 million. Share of profit (loss) of associate The result of the associate has improved significantly from a loss of RMB0.5 million to a profit RMB0.3 million. The unit is in full operation for the first 6 month. However, the result was affected by fluctuation of costs of materials and the cost of R&D for higher value products. Profit Before Income Tax The Group s profit before income tax decreased by RMB9.95 million (38%) to RMB16.30 million in the first half of FY2011 compared to RMB26.25 million for the previous corresponding period. The reduction in profit before income tax was mainly due to the following: A reduction in gross profit by RMB11.8 million due to increasing costs of raw materials and direct labour cost which were not offset through upward sales adjustments as mentioned above; An increase in bank borrowing interest expense increased by RMB1.67 million An increase in other operating income by RMB2.34 million as mentioned above; and A share of profit of associate of RMB0.3 million was recognised in the first half of FY 2011 as compared to a loss of RMB0.5 million recognised in first half of FY Profit Attributable to the Group Net profit attributable to the Group decreased by RMB6.65million (35%) to RMB12.30 million in the first half of FY2011 compared to RMB18.95 million in the previous corresponding period due to the decrease in profit before income tax. Statement of Cash Flows Net cash used in purchase of property, plant and equipment decreased from RMB91.9 million in FY2010 to RMB19.7 million for the first half of 2011 mainly due to a payment of RMB53 million for long term investment made in FY Current Assets Current assets decreased by RMB23.60 million (6.86%) from RMB344.2 million to RMB320.6 million when compared to the beginning of this year. This was due to the following: Cash and bank balance decreased by RMB16 million; Trade receivables increased by RMB7.07million due to increase of sales volume during the period; Other receivables and prepayments decreased by RMB8.98 million. The breakdown of this item are as follows: 13

14 Group Group 30 Jun Dec 2010 RMB 000 RMB 000 (i) Other receivables (outside parties) 1,980 2,097 (ii) Prepaid to suppliers 7,103 15,609 (iii) Prepaid expenses 875 1,228 Total 9,958 18,934 (i) This is mainly covered by the rental deposits and the products quality deposits which was kept by the customers. (ii) Prepaid to suppliers decreased by RMB8.5 million mainly due to absence of: - utilization of prepayments for purchase of moulds and raw materials, and - utilization of prepayments of construction materials for the plant and equipments. (iii) These items relate mainly to prepaid import taxes. Inventories decreased by RMB5.69 million due to the improvement of sales and production cycle. Current Liabilities Current liabilities decreased by RMB31.47 million (10.07%) from RMB million to RMB281.1 million mainly due to the following: Trade payables decreased by RMB29.74million due to earlier settlement of payments to suppliers; Income tax payable decreased by RMB0.87 million; The short term bank borrowing decreased RMB1.23 million as the company repaid RMB1.52 million during the period; and The current potion of finance leases decreased RMB1.35 million. 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 group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. Barring unforeseen circumstances and given the uncertain economic conditions, we expect the demand for our packaging products to remain stable. However, the Company s overall profitability is still subject to price fluctuations in the cost of its raw materials. 14

15 11. Dividend (a) Current Financial Period Reported On None (b) Corresponding Period of the Immediately Preceding Financial Year None (c) Date payable Not applicable. (d) Books closure date Not applicable. 12. If no dividend has been declared/recommended, a statement to that effect. Not applicable 13. Interested Person Transactions for the Financial Period Ended 30 June Aggregate value of all transactions conducted under a shareholders mandate approved at the AGM pursuant to Rule 920 of the SGX-ST Listing Manual. Jan-Jun 2011 Jan-Jun 2010 RMB 000 RMB 000 Sales of goods Rental expenses Sales of motor vehicle

16 14. Negative Assurance Confirmation We, Pan Shun Ming and Pu Jinbo, confirm that to the best of our knowledge, nothing has come to the attention of the Board of Directors of Southern Packaging Group Limited which may render these interim financial results for the half year ended 30 June 2011 to be materially false or misleading. BY ORDER OF THE BOARD Mr Pan Shun Ming Executive Chairman and Chief Executive Officer (13/8/2011) 16