Financials
Half Year Financial Statement For The Year Ended 31 December 2007
PROFIT AND LOSS
BALANCE SHEETS
REVIEW
Profit and LossThe Group reported revenue of $132.06 million for the six months ended 31 December 2007, an increase of 12.17% compared to the same period in 2006. The robust growth in the construction and building industry in Singapore led to strong demand for its cables. The Company's wholly-owned cable factory in Malaysia also recorded impressive revenue growth as a result of greater penetration into new markets.
Other operating income increased to $0.60 million from $0.14 million due largely to exchange gains from a weaker US dollar.
Staff costs increased by 9.17% to $10.39 million from $9.52 million due to higher provision for sales incentives and bonuses arising from the Group's improved performance. The Group had also increased headcount during the period under review to meet the operation needs.
Other operating expenses rose from $4.64 million to $5.50 million, an increase of 18.50%, due primarily to higher utility cost and repair, maintenance expenses of existing plant and machinery and a loss of disposal for subsidiary's property.
Finance costs decreased by 15.42% to $0.81 million from $0.96 million due to interest savings from early repayment of trade bills.
The Group reported a profit after tax of $12.84 million for the period under review, a 5.19% improvement from $12.21 million recorded in the corresponding period in 2006.
Balance Sheet and Cash Flow
The Group's inventory increased by $8.12 million due largely to higher level of inventory held to meet anticipated demand for the second half of the financial year.
The increase in trade receivables of $3.37 million is consistent with the higher revenue registered for the 6 months ended 31 December 2007.
The cash and bank balances increased by $7.37 million due to better credit control.
The trade payables decreased by $6.96 million to $21.21million. This was due to an early settlement of payables in order to enjoy prompt payment discount. The funds for the payment arose from trust receipts which resulted in an increase in other bank borrowings by $14.50 million to $40.22 million.
The Group increased its total long-term borrowings by $1.07 million to finance the requirements of its overseas operations.
The cash and cash equivalents at the end of the current period increased to $10.88 million compared with $2.04 million at the end of the previous financial year.
The net cash used in operating activities of $5.38 million was due to the repayment of trade payables and higher inventories held as finished goods and raw materials.
The net cash used in investing activities of $1.80 million was attributed to capital expenditure for the purchase of plant and machinery of $2.47 million to increase its production capacity which was partially offset by proceeds from the disposal of a property for $0.67 million.
The net cash from financing activities increased to $15.94 million as a result of higher utilisation of trade financing.
COMMENTARY
The volatility of copper prices continues to be a risk factor which could significantly impact the performance of the cable and wire division and thus the Group.
The Group's business is highly dependent on the growth in the construction and building sectors. Despite the sub-prime crisis, it is optimistic that construction activities will continue to expand in Singapore in 2008. The opening of several economic corridors in Malaysia will also present opportunities for the Group's business there.
The expansion of its production capacities in its cable manufacturing plants will enable the Group to take advantage of economic growth in the region. The Group has also laid out plans and strategies to expand its businesses beyond its traditional markets, into the Middle East and Africa.