Financial Statement Announcement for the Third Quarter Ended 30 September 2013
Profit & Loss
Consolidated Statement of Comprehensive Income
(1) The figures were restated due to the completion of the Purchase Price Allocation exercise in accordance with FRS 103 (R) Business Combinations following the acquisition of AS Sunningdale Tech Latvia (formerly known as Akciju Sabiedriba ATEC) and ATEC of Sweden AB on Aug 2011. The profit and loss was previously adjusted in 2Q12 and 1H12.
Review of Performance
CONSOLIDATED INCOME STATEMENT
April – June 2013 ("2Q13")
The Group recorded revenue of $123.1 million for 2Q13, a 15.6% increase from $106.4 million in 2Q12. The increase came from all business segments.
During the period, gross profit increased by 12.2% from $12.1 million in 2Q12 to $13.6 million in 2Q13. Gross margin for 2Q13 was 11.0%, slightly lower when compared to 11.4% in 2Q12. The gross margin did not increase despite the double digits increase in revenue mainly due to lower capacity utilization in certain plants in China.
The decrease in other income was mainly due to gain on disposal of property, plant and equipment in 2Q12.
The decrease in other expenses was due to decrease in miscellaneous expenses.
The Group achieved a net profit of $3.5 million in 2Q13 compared to $2.5 million in 2Q12.
CONSOLIDATED BALANCE SHEET
The Group's property, plant and equipment were at $145.2 million as at 30 June 2013 compared to $147.6 million as at 31 December 2012. During the period, the Group incurred $10.0 million in capital expenditure for machineries. Property, plant and equipment was stated net of $13.0 million (1H12: $13.4 million) in depreciation charges incurred during the period.
The increase in trade and other receivable was in line with increase in revenue.
The decrease in tax payable was due to payments made.
The Group maintained a cash balance of $54.8 million as at 30 June 2013 (31 December 2012: $52.7 million) resulting in net debt of $8.7 million (31 December 12: $5.9 million) mainly due to payment for property, plant and equipment, income tax and dividends.
CONSOLIDATED CASHFLOW STATEMENT
April - June 2013 ("2Q13")
Net cash generated from operating activities was $16.1 million for 2Q13, compared to $7.2 million for 2Q12. Net cash used in investing activities was $6.3 million for 2Q13 compared to $6.2 million in 2Q12. Net cash used in financing activities for 2Q13 was $4.1 million compared to $3.5 million in 2Q12.
Commentary On Current Year Prospects
We expect the business environment to remain challenging for the rest of 2013. Although US and Europe are showing signs of economic recovery, it is dampened by a slowdown in China's growth. The rising costs in China and Malaysia where we have large operations and pricing pressure from customers due to competition remain and will continue to squeeze our margins.
We expect our Automotive business segment to remain steady. We are busy preparing our new Tianjin plant for the launch of a major program in 2014.
We expect our Consumer/IT business to be more volatile as one of our major customers changed their supply chain strategy and also because of the overall slowdown in China. Our intensified effort to develop new customers managed to yield some results. We are busy setting up our new Batam plant where we expect to start mass production in 4Q 2013. We also plan to expand our capacity in our Europe plant for a major customer that we currently serve in Asia and North America.
The Healthcare business growth remains on track. We continue to focus on adding new customers as well as developing new programs with our current customers in Asia and Europe.
Despite the challenging business environment, we remain optimistic and very prudent in managing cash flows. The group continues to receive enquiries for new business and we remain selective on incremental investments to address existing and targeted new global accounts. Our focus to build a long term profitable and sustainable business remains on course.Despite the challenges ahead, the management team remains optimistic but cautious for the rest of 2013. Our continuous striving for operational excellence, initiative to develop new capabilities and customers for long term sustainability and discipline in adhering to a profitable business model will allow us to remain on course.