Dmx Technologiies 3q2009 Financial Stmts 091109
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DMX TECHNOLOGIES GROUP LTD
UNAUDITED FINANCIAL STATEMENTS FOR THIRD QUARTER OF FY2009 1(a) An Income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated Statement of Comprehensive Income Group 3Q
3Q
9 months
Group
Note 1
9 months
2Q
2009
2008
Change
2009
2008
Change
2009
US$'000
US$'000
%
US$'000
US$'000
%
US$'000
46,332
45,654
1.49%
133,882
123,452
8.45%
48,814
(34,446)
(33,686)
2.26%
(101,170)
(91,448)
10.63%
(37,914)
Gross profit
11,886
11,968
-0.69%
32,712
32,004
2.21%
10,900
Gross profit %
25.65%
26.21%
-0.56%
24.43%
25.92%
-1.49%
22.33%
31
121
-74.38%
92
540
-82.96%
42
Distribution expenses
(2,974)
(2,941)
1.12%
(8,091)
(8,410)
-3.79%
(2,632)
Administrative expenses
(2,425)
(3,401)
-28.70%
(8,530)
(9,272)
-8.00%
(2,864)
Other operating expenses
(3,058)
(2,658)
15.05%
(8,987)
(7,527)
19.40%
(2,953)
Share of result of a jointly controlled entity
(93)
-
NM
(320)
-
NM
(84)
Finance costs
(141)
(151)
-6.62%
(407)
(632)
-35.60%
(160)
Profit before income tax
3,226
2,938
9.80%
6,469
6,703
-3.49%
2,249
Income tax expenses
(474)
(606)
-21.78%
(919)
(1,066)
-13.79%
(319)
Profit after income tax
2,752
2,332
18.01%
5,550
5,637
-1.54%
1,930
2,655
2,192
21.12%
5,044
5,400
-6.59%
1,571
97
140
-30.71%
506
237
113.50%
359
Profit after income tax
2,752
2,332
18.01%
5,550
5,637
-1.54%
1,930
PAT margin
5.94%
5.11%
4.15%
4.57%
(63)
(206)
-69.42%
(66)
685
-109.64%
60
(63)
(206)
-69.42%
(66)
685
-109.64%
60
2,689
2,126
26.48%
5,484
6,322
-13.26%
1,990
Revenue Cost of sales
Other operating income
Profit attributable to: Equity holders of the parent Minority interests
3.95%
Other comprehensive income: Exchange differences on translating foreign operations Other comprehensive income for the period Total comprehensive income for the period
Q3-FY09 Results Announcement
PAGE 1
DMX TECHNOLOGIES GROUP LTD
Total comprehensive income attributable to: Equity holders of the parent Minority interests Total comprehensive income for the period
2,592
1,986
30.51%
4,978
6,085
-18.19%
1,631
97
140
-30.71%
506
237
113.50%
359
2,689
2,126
26.48%
5,484
6,322
-13.26%
1,990
Operating profit is arrived at after crediting and (charging)
Interest income
31
65
-52.31%
92
360
-74.44%
42
Interest expense
(141)
(152)
-7.24%
(407)
(633)
-35.70%
(160)
Share-based payment expenses
(220)
(100)
120.00%
(660)
(600)
10.00%
(220)
Net foreign exchange (loss) gain
932
(270)
-445.19%
854
(271)
-415.13%
241
Allowance for doubtful trade
(18)
(11)
63.64%
(182)
(285)
-36.14%
(15)
Allowance for stock obsolescence
(3)
(184)
NM
(13)
(241)
-94.61%
-
Amortisation of intangible assets
(2,812)
(2,242)
25.42%
(8,105)
(6,254)
29.60%
(2,696)
Depreciation of fixed assets
(1,053)
(823)
27.95%
(3,039)
(2,229)
36.34%
(999)
16
(1)
-1700.00%
49
(29)
-268.97%
33
(5)
-
NM
(27)
-
NM
(22)
(93)
-
NM
(320)
-
NM
(84)
Profit / (loss) on disposal of property, plant and equipment Fair value change of derivative financial Instrument Share of result of a jointly controlled entity
Note 1: 2Q09 Profit and loss statement is used for comparison purposes only.
Q3-FY09 Results Announcement
PAGE 2
DMX TECHNOLOGIES GROUP LTD
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. The Group
Statements of Financial Position
The Company
Note 1
Note 2
30-Sep-09
31-Dec-08
30-Jun-09
30-Sep-09
31-Dec-08
US$'000
US$'000
US$'000
US$'000
US$'000
12,906 3,408 3,653 123,286 6,152 10,850
15,055 8,616 121,687 4,399 9,112
14,806 5,346 1,678 125,194 5,840 9,999
371 1,295 105,123 -
98 1,382 104,651 -
Total current assets Non-current assets: Property, plant and equipment Goodwill Intangible assets Investments in subsidiaries Interests in a jointly controlled entity Deferred tax assets
160,255
158,869
162,863
106,789
106,131
8,609 27,677 26,178 597 89
7,059 26,559 27,298 528 80
7,632 26,559 25,131 690 85
11,534 -
11,534 -
Total non-current assets
63,150
61,524
60,097
11,534
11,534
Total Assets LIABILITIES AND EQUITY Current liabilities: Bank loans Trust receipt loans Trade payables Other payables Current portion of finance leases
223,405
220,393
222,960
118,323
117,665
3,894 2,194 11,639 11,421 7
7,317 3,985 10,675 12,470 63
4,271 2,687 13,301 11,497 14
1,269 -
261 -
Total current liabilities
29,155
34,510
31,770
1,269
261
2,474 108 681
152 688
2,121 112 680
-
-
3,263
840
2,913
-
-
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
ASSETS Current assets: Cash and cash equivalent Pledged bank deposits Derivative financial instruments Trade receivables Other receivables and prepayments Inventories
Note 1
Non-Current Liability Bank loans Finance leases Deferred tax liabilities Total non-current liability Capital, reserves and minority interests: Issued capital Share premium Contributed surplus
Q3-FY09 Results Announcement
PAGE 3
DMX TECHNOLOGIES GROUP LTD
Legal reserve Currency translation reserve Share option reserve Accumulated profits (losses) Equity attributable to equity holders of the Company
7 2,861 1,720 68,948
7 2,927 1,060 63,904
7 2,923 1,500 66,293
1,720 (1,267)
1,060 (257)
190,137
184,499
187,324
117,054
117,404
850
544
953
-
-
Total equity
190,987
185,043
188,277
117,054
117,404
Total liabilities and equity
223,405
220,393
222,960
118,323
117,665
Minority interest
Note 1 : Balance sheet as at 31 December 2008 is the latest audited balance sheet. Note 2 : Balance sheet as at 30 June 2009 is used for comparison.
1b (ii) Aggregate amount of group’s borrowings and debts securities Group Borrowings and Debts securities Group
Amount repayable in one year or less, or on demand Unsecured Secured
Amount repayable after one year Unsecured Secured
As at 30 Sep 2009 US$'000
As at 31 Dec 2008 US$'000
3,894 2,201 6,095
7,317 4,048 11,365
2,474 108 2,582
152 152
Details of any collateral As at 30 Sep 2009, the Group has: (1) pledged bank deposits of US$3,408,000 (31 Dec 2008: US$8,616,000) and NIL (31 Dec 2008: US$1,382,000) & (2) pledged derivative financial instruments of US$3,653,000 (31 Dec 2008: NIL) and US$1,295,000 (31 Dec 2008: NIL) of the Group and the Company respectively were pledged to financial institutions to secure general banking facilities granted to the Group.
Q3-FY09 Results Announcement
PAGE 4
DMX TECHNOLOGIES GROUP LTD 1 (c) A cash flow statement (for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of Cash Flows
3Q 2009 US$ '000
3Q 2008 US$ '000
9 months 2009 US$ '000
9 months 2008 US$ '000
3,226
2,938
6,469
6,703
1,053
823
3,039
2,229
Interest expenses
141
152
407
633
Allowance for doubtful trade & other receivables
18
11
182
285
Allowance for inventories
3
184
13
241
2,812
2,242
8,105
6,254
5
-
27
-
Share-based payment expenses
220
100
660
600
Share of result of a jointly controlled entity
93
-
320
-
(16)
1
(49)
29
(31)
(65)
(92)
(360)
7,524
6,386
19,081
16,614
Trade receivables
1,953
(6,488)
(1,718)
(15,925)
Other receivables, deposits and prepayments
(239)
(1,154)
(1,680)
(2,918)
Inventories
(658)
507
(1,555)
(463)
Trade payables
(1,703)
2,645
923
4,169
Other payables
(1,630)
658
(2,603)
907
5,247
2,554
12,448
2,384
Income tax paid Interest paid
(477) (141)
(165) (152)
(935) (407)
(573) (633)
Interest received
31
65
92
360
4,660
2,302
11,198
1,538
(3,829)
(2,505)
(6,955)
(7,141)
-
(320)
-
(320)
(1,858)
(745)
(4,462)
(2,435)
1,938
255
5,208
(3,555)
Acquisition of interests in a jointly-controlled entity
-
-
(389)
-
Proceeds on disposal of derivative financial instruments
-
-
-
3,024
Purchase of derivative financial instruments
(1,980)
-
(3,680)
-
Cash flows from operating activities: Profit before income tax Adjustments for: Depreciation expenses
Amortization expenses Fair value change of derivative financial instruments
Loss (Gain) on disposal of property, plant and equipment Interest income Operating cash flows before movement in working capital
Cash generated from operations
Net cash generated from operating activities Cash flows from investing activities Addition to intangible assets Increase in long term investment Purchase of property, plant & equipment Decrease (increase) in pledged bank deposit
Q3-FY09 Results Announcement
PAGE 5
DMX TECHNOLOGIES GROUP LTD Proceeds from disposal of property, plant and equipment
-
-
70
-
Deposit paid for acquisition of an investment
-
57
-
-
(5,729)
(3,258)
(10,208)
(10,427)
Net cash used in investing activities Cash flows from financing activities New bank loans raised
743
-
15,670
-
Increase (decrease) in trust receipts loans
(493)
567
(1,791)
(4)
Repayment of bank loans
(795)
(1,147)
(16,647)
(7,055)
Repayment of finance leases
(11)
(16)
(100)
(47)
Dividend payment
(200)
-
(200)
-
Net cash used in financing activities
(756)
(596)
(3,068)
(7,106)
Net effect of exchange rate changes on consolidating subsidiaries
(75)
(165)
(71)
710
Net decrease in cash and cash equivalents
(1,900)
(1,717)
(2,149)
(15,285)
Cash and cash equivalent at beginning of the quarter
14,806
26,419
15,055
39,987
Cash and cash equivalent at the end of the quarter
12,906
24,702
12,906
24,702
Q3-FY09 Results Announcement
PAGE 6
DMX TECHNOLOGIES GROUP LTD
(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.
Statement of Changes in Equity GROUP Q3 2009 Movement
Balance at 1 Jul 2009 Currency translation difference
Issued capital
Share premium
Contributed surplus
Legal reserve
*Currency translation reserve
Share Option reserve
Accumulated profits / (loss)
Total
Minority interests
Total Equity
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
26,571
88,496
1,534
7
2,923
1,500
66,293
187,324
953
188,277
-
-
-
-
(62)
-
-
(62)
-
(62)
Dividends Recognition of sharebased payment
-
-
-
-
-
-
-
-
(200)
(200)
-
-
-
-
-
220
-
220
-
220
Total comprehensive income for the period
-
-
-
-
-
-
2,655
2,655
97
2,752
26,571
88,496
1,534
7
2,861
1,720
68,948
190,137
850
190,987
23,048
85,113
1,534
7
3,052
2,011
62,724
177,489
291
177,780
Currency translation difference
-
-
-
-
(206)
-
-
(206)
-
(206)
Recognition of sharebased payment
-
-
-
-
-
100
-
100
-
100
Total comprehensive income for the period
-
-
-
-
-
-
2,192
2,192
140
2,332
23,048
85,113
1,534
7
2,846
2,111
64,916
179,575
431
180,006
Balance at 30 Sep 2009
Q3 2008 Movement Balance at 1 Jul 2008
Balance at 30 Sep 2008
Q3-FY09 Results Announcement
PAGE 7
DMX TECHNOLOGIES GROUP LTD
COMPANY
Issued capital
Share premium
Contributed surplus
Legal reserve
* Currency translation reserve
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Balance at 1 Jul 2009
26,571
88,496
1,534
-
-
1,500
(883)
117,218
-
117,218
Recognition of sharebased payment
-
-
-
-
-
220
-
220
-
220
Total comprehensive income for the period
-
-
-
-
-
-
(384)
(384)
-
(384)
26,571
88,496
1,534
-
-
1,720
(1,267)
117,054
-
117,054
Balance at 1 Jul 2008
23,048
85,113
1,534
-
-
2,011
(51)
111,655
-
111,655
Recognition of sharebased payment
-
-
-
-
-
100
-
100
-
100
Total comprehensive income for the period
-
-
-
-
-
-
(103)
(103)
-
(103)
23,048
85,113
1,534
-
-
2,111
(154)
111,652
-
111,652
Q3 2009 Movement
Balance at 30 Sep 2009
Share Option reserve
Accumulated profits / (loss)
Total
Minority interests
Total Equity
Q3 2008 Movement
Balance at 30 Sep 2008
* Other comprehensive income
Q3-FY09 Results Announcement
PAGE 8
DMX TECHNOLOGIES GROUP LTD
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 purposes 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 end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.
Share Capital Changes
Number of shares ' 000
US$ ' 000
531,410
26,571
Ordinary shares of US$0.05 each at 1 Jan 2009 & 30 Sep 2009
Share Options & Contingent Shares As at 30 Sep 2009, the following Employee Share Options remained outstanding:
Date of grant
Exercise Period
Exercise price per share
Balance at beginning of year or date of grant, if later
Total exercised
Total cancelled
Balance outstanding as at 30 Sep 2009
(22,133)
3,305,544
3 October 2003
2 October 2004 to 26 May 2013
S$0.6778
3,327,677
-
25 April 2008
24 April 2009 to 25 April 2018
S$0.226
19,919,580
-*
-
19,919,580
28 November 2008
27 November 2009 to 28 Nov 2018
S$0.093
20,000,000
-
-
20,000,000
Total
43,247,257
-
(22,133)
43,225,124
*As at 2 October 2009, 7,387,000 shares were issued pursuant to the exercise of employee share options.
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.
Total no of issued shares
Number of shares
As at 31 December 2008
531,410,184
As at 30 September 2009
531,410,184
Q3-FY09 Results Announcement
PAGE 9
DMX TECHNOLOGIES GROUP LTD
1(d) (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at end of the current financial period reported on The Company has not implemented Share Purchase Plan. As such, there is no treasury shares transaction for year ending 30 September 2009.
2.
Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. Singapore Standard on Auditing 910, Engagements to Review Financial Statements, or an equivalent standard). The figures have not been audited or reviewed.
3.
Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of matter). The figures have not been audited or reviewed.
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 accounting policies and methods of computation applied by the Group are consistent with those used in its most recently audited financial statements as at 31 December 2008 except for the adoption of certain Financial Reporting Standards (“FRS”) and interpretations of FRS (“INT FRS”) that are mandatory for the financial year beginning on or after 1 January 2009. The adoption of these FRS and INT FRS has no significant impact on the financial position or performance of the Group.
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. On 1 January 2009, the Group adopted the revised adopted the revised Singapore Financial Reporting Standard (“FRS 1R”) – Presentation of Financial Statements. FRS 1R requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income. Components of comprehensive income are presented in the Consolidated Statement of Comprehensive Income.
Q3-FY09 Results Announcement
PAGE 10
DMX TECHNOLOGIES GROUP LTD 6.
Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediate preceding financial year, after deducting any provision for preference dividends. Earnings per share
Based on the weighted average number of ordinary shares on issue (US cents) On fully diluted basis (US Cents)
The Group 3Q 3Q 2009 2008
The Group 9 months 9 months 2009 2008
Note 1
0.50
0.48
0.95
1.17
Note 2
0.47
0.48
0.91
1.17
Note 1) The weighted average number of ordinary shares in issue for 3Q2009: 531,410,184 and YTD Sep 2009: 563,189,468 (3Q2008 & YTD Sep 2008 are also 460,960,102). Note 2) The earnings per share on a fully diluted basis are calculated on the adjusted average number of ordinary shares for 3Q2009: 531,410,184 and YTD Sep 2009: 553,633,811 (3Q2008 & YTD Sep 2008 are also 460,960,102).
7.
Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year. Net asset value per share Net asset value per ordinary share (US cents)
The Group
The Company
30-Sep-09
31-Dec-08
30-Sep-09
31-Dec-08
35.78
34.72
22.03
22.09
Net asset value per ordinary share as at 30 Sep 2009 and 31 Dec 2008 are calculated based on share capital of the Company of 531,410,184 shares.
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, (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected cash flow, working capital, assets or liabilities of the group during the current financial period reported on.
Profit and Loss Statement The following paragraphs should be read in conjunction with our Profit and Loss Statement for quarter ended 30 September 2009 as presented on Section 1(a) of this document. Revenue The Group reported a 1.5% increase in 3Q09 revenue to US$46.3m over 3Q08. For the 9 months of FY09, the Group registered 8.5% revenue growth to US$133.9m.
Q3-FY09 Results Announcement
PAGE 11
DMX TECHNOLOGIES GROUP LTD Digital Media group continued to be the growth driver of revenue for 3Q09 and the 9 months; at 11.0% and 23.3% respectively. This spurred Digital Media Group to contribute 34.5% of 3Q09 and 34.3% of revenue for the 9 months. Although Managed Services division grew by 47% growth in 3Q09, this growth was insufficient to offset the lower Infrastructure Solutions revenue; especially from outside of China. As a result, Infrastructure Enabling group registered a decline in revenue of 2.9% in 3Q09. For the 9 months of FY09, Infrastructure Enabling group contributed 65.7% of total revenue; compared to 69.8% in the same corresponding period last year. The Group had a slow quarter of revenue from outside China in 3Q09; as compared to 3Q08, due to the festive season in Malaysia and Indonesia. Revenue from this geography declined to 17.8%; compared to 26% in 3Q08. This led to a revenue contribution of 24.6% for the 9 months of FY09 versus 27.7% for the 9 months of FY08. Revenue from China grew by 13.1% for the 9 months and China contributed 75.4% of total revenue; compared to 72.3% in the previous corresponding period. Gross Margins Gross margins in 3Q09 normalized back to 25.7%; compared to 22.3% in 2Q09 and 26.21% in 3Q08. For the 9 months; gross margins at 24.4% was 1.5% lower than the previous period due to sales mix. Operating Expenses (Distribution and Administrative Expenses) The Group continued to exercise control over its operating expenses; despite generating higher revenue for the 9 months. 3Q09 total operating expense at US$5.4m was about US$0.9m lower than 3Q08. US$0.2m increase in depreciation expense was offset by about US$1.2m exchange gains from the stronger Indonesian rupiah and Korean Won. Similarly, US$0.8m higher depreciation expenses for 9 months of FY09 were offset by total US$0.7m savings in distribution and administration expenses and US$1.1m of exchange gains. As a result, the Group achieved a US$1.1m lower total operating expense of US$16.6m for the 9 months of FY09 over the same period last year. Other operating expenses Total other operating expense in 3Q09 at US$3.1m was about US$0.4m more than 3Q08. For the 9 months of FY09, other operating expense at US$9.0m was US$1.5m higher than the 9 months of FY08. The increase was due mainly to increases in amortisation expenses as a result of on-going commercialization of the Group’s software. The Group incurred expenditure on software development activities to generate new products and add more features to its multi-media software during the last three years as part of DMX’s ongoing software development activities. Such expenditure were capitalised as intangible assets and amortised on a straight-line basis over 3 years upon commercial deployment. As the Group gained momentum in the commercial deployment of its multi-media software in the digital media market, higher amortisation of intangible assets was charged. Earnings DMX’s 3Q09 profit after tax at US$2.8m was US$0.4m or 18.0% better than 3Q08 and 42.6% better than 2Q09. For the 9 months, the Group has caught up with the profit after tax of the previous period at US$5.6m; and exceeded full year 2008 PAT of US$3.6m.
Q3-FY09 Results Announcement
PAGE 12
DMX TECHNOLOGIES GROUP LTD
Balance Sheet The following paragraphs should be read in conjunction with our Balance Sheet as of 30 September 2009 as presented on Section 1(b) (i) of this document. Total current assets increased slightly by US$1.4m to US$160.3m as at 30 September 2009. This was due to the net positive impact from:•
US$2.1m decrease in cash and cash equivalents to US$12.9m.
•
US$5.2m decrease in pledged bank deposits.
•
US$3.7m increase in derivative financial instruments which are mainly structured deposits and bonds placed with banks.
•
US$1.6m increase in trade receivables to US$123.3m. Of the US$123.3m trade receivables, about 86.9% or US$107.1m (30 June 09: 83.6% or US$104.7m) relates to projects with numerous telecom operators in China, Malaysia, Indonesia and numerous cable TV operators in China. All these operators are reputable and credit-worthy customers. The nature of such projects is that payment is based on milestone performance such as equipment delivery, project installation, completion and acceptances; which may take between 6 to 18 months to be fully accepted. The Group recognizes revenue upon delivery of equipment to customers; while collections are on project milestone basis. Trade receivables relating to projects that the Group are still implementing ie invoiced but not past due amounted to US$108.3m or 87.8%; as compared to US$108.6m or 86.8% as at 30 June 2009 and US$102.7m or 84.4% as at 31 December 2008. For the 9 months till 30 Sep 09, 61% or US$80.2m of 31 December 2008 trade receivables has been collected. Aging of total trade receivables are as follows:-
30 September 09 30 June 09 31 March 09 31 December 08
0-180 days 53% 47% 46% 54%
181-360 days 30% 32% 29% 32%
361-540 days 13% 17% 21% 14%
Over 540 days 4% 4% 4% 0%
The above trade receivables are irrevocable and not from any interested party. The Group has a task force in place that work closely with the each of the telecom and cable TV operator on the progress of each project being implemented. •
US$1.8m increase in other receivables and prepayments.
•
US$1.8m increase in inventories as a result of indent inventory placed for customers to be delivered in the next quarter.
Non-current assets increased by about US$1.7m to US$63.2m as at 30 September 2009 from US$61.5m as at 31 December 2008. The increase was due to US$1.5m increase in capital
Q3-FY09 Results Announcement
PAGE 13
DMX TECHNOLOGIES GROUP LTD expenditure on spares and demonstration equipment to support the increased revenue and customers; US$1.1m increase in goodwill resulting from acquisition of 1MP and US$1.1m decrease in intangible assets. Total current liabilities decreased by about US$5.3m to US$29.2m as at 30 September 2009. This was due mainly to US$3.4m decrease in bank loans and US$1.8m decrease in trust receipts loans. Non-current liabilities increased by US$2.5m to US$3.3m as at 30 September 2009. The Group secured a new long term bank loan of about US$2.4m. The Group increased its total equity by US$6.0m to US$191.0m as at 30 September 2009. This was contributed largely by US$5.0m increase in accumulated profits and US$0.7m increase in share option reserve.
Cash flow The following paragraphs should be read in conjunction with our Cash flow Statement as of 30 September 2009 as presented on section 1(c) of this document. During 3Q09 and the 9 months of FY09, the Group generated US$5.2m and US$12.4m of cash from operations respectively. These ware significant improvements over the same corresponding period. Improved collections from trade receivables and overall management of payables during the period enabled the Group to generate positive cash flow from operations. After payment for income tax and interest, the Group generated net cash from operating activities of US$4.7m and US$11.2m for 3Q09 and 9 months of FY09 respectively, compared to US$2.3m and US$1.5m cash generation during 3Q08 and 9 months of FY08. Net cash used in investing activities in 3Q09 was US$5.7m; compared to US$3.3m in 3Q08. For the 9 months, the Group utilized about US$10.2m in investing activities; which was about the same amount utilized for the 9 months of FY08. The Group utilized about US$0.8m and US$3.1m cash from financing activities in 3Q09 and 9 months of FY09 respectively. The Group repaid more trust receipts loans. During 3Q09, cash generated from operating activities were lower than cash utilisation in investing and financing activities, giving rise to US$1.9m decrease in cash and cash equivalent for the quarter. This decrease in 3Q09 caused the Group to end the 9 months of FY09 with about US$12.9m in cash and cash equivalent; about US$2.2m below the start of the year.
9.
Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and actual results. No forecast was given.
Q3-FY09 Results Announcement
PAGE 14
DMX TECHNOLOGIES GROUP LTD 10.
A commentary at the date of the announcement of the 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. As the Group enters into its last quarter of FY09, the Group sees improving market sentiment and increased activities by telecom operators and enterprises on IT capex spending and hence believes that our core business activities will remain on track for the rest of FY2009. The improved sentiment has given the Group measured confidence that it should not need to incur any unexpected impairment or allowances for the year. With the profits after tax for the 9 months of FY09 at US$5.6m, about US$2.0m higher than full year 2008, and barring unforeseen circumstances, the Group expects FY09 profits after tax to be much better than FY08. Additionally, the Group believes that our established business network, customer reference base and track record have strengthened our ongoing long-term business fundamentals. With the primary objective of enhancing these business fundamentals, the Group entered into a subscription agreement with KDDI Corporation of Japan on 10 September 2009. This strategic transaction is intended to accelerate the growth of the Group to become a leading telecom and media solutions provider in Asia Pacific. KDDI is the second largest telecom operator in Japan and one of the mega-carrier in Asia Pacific providing fixed, mobile and broadcasting services. According to the agreement, the Group will issue over 588 million new shares to KDDI; raising cash of about S$188.4 million. Upon completion of the proposed transaction towards end of the year; KDDI will become a 50.1% controlling shareholder of the Group; on a fully diluted basis. KDDI will support the Group to continue to develop and grow its existing business through referring appropriate business opportunities, jointly developing new products and services and by transferring specialized technology, where appropriate, to enhance the Group’s competitiveness and products offering. Additionally, the capital raised will enhance the balance sheet of the Group; enabling the Group to participate in bigger projects, expand its geographical coverage and invest into new application business to take advantage of the new business opportunities within the telecom industry in China. The proposed transaction is subject to shareholders’ approval at a Special General Meeting to be held in Singapore on 20 November 2009. The Group looks forward to forging ahead with this strategic investment and alliance; to capitalise on the anticipated business opportunities.
11. Dividend a.
Current Financial Period Reported On Any dividend declared for the current financial period reported on?
Q3-FY09 Results Announcement
No
PAGE 15
DMX TECHNOLOGIES GROUP LTD
Name of dividend Dividend Type Dividend amount per share (in S$ cents) Tax Rate b.
Nil Nil Nil Nil
Corresponding Period of the immediately preceding financial year. Any dividend declared for the corresponding period of the immediately preceding financial year? No Name of dividend Dividend Type Dividend amount per share (in S$ cents) Tax Rate
c.
Not Applicable Not Applicable Not Applicable Not applicable
Date payable Not Applicable
d.
Books Closure date. Not applicable
12.
If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared or recommended for the year.
13.
Statement Pursuant to Rule 705(5) of the Listing manual The Directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the Group’s unaudited financial result for the third quarter ended 30 September 2009 to be false or misleading in any material aspect.
By Order of the Board
Jismyl Teo Chor Khin Director 9 November 2009
Q3-FY09 Results Announcement
PAGE 16
UNAUDITED FINANCIAL STATEMENTS FOR THIRD QUARTER OF FY2009 1(a) An Income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated Statement of Comprehensive Income Group 3Q
3Q
9 months
Group
Note 1
9 months
2Q
2009
2008
Change
2009
2008
Change
2009
US$'000
US$'000
%
US$'000
US$'000
%
US$'000
46,332
45,654
1.49%
133,882
123,452
8.45%
48,814
(34,446)
(33,686)
2.26%
(101,170)
(91,448)
10.63%
(37,914)
Gross profit
11,886
11,968
-0.69%
32,712
32,004
2.21%
10,900
Gross profit %
25.65%
26.21%
-0.56%
24.43%
25.92%
-1.49%
22.33%
31
121
-74.38%
92
540
-82.96%
42
Distribution expenses
(2,974)
(2,941)
1.12%
(8,091)
(8,410)
-3.79%
(2,632)
Administrative expenses
(2,425)
(3,401)
-28.70%
(8,530)
(9,272)
-8.00%
(2,864)
Other operating expenses
(3,058)
(2,658)
15.05%
(8,987)
(7,527)
19.40%
(2,953)
Share of result of a jointly controlled entity
(93)
-
NM
(320)
-
NM
(84)
Finance costs
(141)
(151)
-6.62%
(407)
(632)
-35.60%
(160)
Profit before income tax
3,226
2,938
9.80%
6,469
6,703
-3.49%
2,249
Income tax expenses
(474)
(606)
-21.78%
(919)
(1,066)
-13.79%
(319)
Profit after income tax
2,752
2,332
18.01%
5,550
5,637
-1.54%
1,930
2,655
2,192
21.12%
5,044
5,400
-6.59%
1,571
97
140
-30.71%
506
237
113.50%
359
Profit after income tax
2,752
2,332
18.01%
5,550
5,637
-1.54%
1,930
PAT margin
5.94%
5.11%
4.15%
4.57%
(63)
(206)
-69.42%
(66)
685
-109.64%
60
(63)
(206)
-69.42%
(66)
685
-109.64%
60
2,689
2,126
26.48%
5,484
6,322
-13.26%
1,990
Revenue Cost of sales
Other operating income
Profit attributable to: Equity holders of the parent Minority interests
3.95%
Other comprehensive income: Exchange differences on translating foreign operations Other comprehensive income for the period Total comprehensive income for the period
Q3-FY09 Results Announcement
PAGE 1
DMX TECHNOLOGIES GROUP LTD
Total comprehensive income attributable to: Equity holders of the parent Minority interests Total comprehensive income for the period
2,592
1,986
30.51%
4,978
6,085
-18.19%
1,631
97
140
-30.71%
506
237
113.50%
359
2,689
2,126
26.48%
5,484
6,322
-13.26%
1,990
Operating profit is arrived at after crediting and (charging)
Interest income
31
65
-52.31%
92
360
-74.44%
42
Interest expense
(141)
(152)
-7.24%
(407)
(633)
-35.70%
(160)
Share-based payment expenses
(220)
(100)
120.00%
(660)
(600)
10.00%
(220)
Net foreign exchange (loss) gain
932
(270)
-445.19%
854
(271)
-415.13%
241
Allowance for doubtful trade
(18)
(11)
63.64%
(182)
(285)
-36.14%
(15)
Allowance for stock obsolescence
(3)
(184)
NM
(13)
(241)
-94.61%
-
Amortisation of intangible assets
(2,812)
(2,242)
25.42%
(8,105)
(6,254)
29.60%
(2,696)
Depreciation of fixed assets
(1,053)
(823)
27.95%
(3,039)
(2,229)
36.34%
(999)
16
(1)
-1700.00%
49
(29)
-268.97%
33
(5)
-
NM
(27)
-
NM
(22)
(93)
-
NM
(320)
-
NM
(84)
Profit / (loss) on disposal of property, plant and equipment Fair value change of derivative financial Instrument Share of result of a jointly controlled entity
Note 1: 2Q09 Profit and loss statement is used for comparison purposes only.
Q3-FY09 Results Announcement
PAGE 2
DMX TECHNOLOGIES GROUP LTD
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. The Group
Statements of Financial Position
The Company
Note 1
Note 2
30-Sep-09
31-Dec-08
30-Jun-09
30-Sep-09
31-Dec-08
US$'000
US$'000
US$'000
US$'000
US$'000
12,906 3,408 3,653 123,286 6,152 10,850
15,055 8,616 121,687 4,399 9,112
14,806 5,346 1,678 125,194 5,840 9,999
371 1,295 105,123 -
98 1,382 104,651 -
Total current assets Non-current assets: Property, plant and equipment Goodwill Intangible assets Investments in subsidiaries Interests in a jointly controlled entity Deferred tax assets
160,255
158,869
162,863
106,789
106,131
8,609 27,677 26,178 597 89
7,059 26,559 27,298 528 80
7,632 26,559 25,131 690 85
11,534 -
11,534 -
Total non-current assets
63,150
61,524
60,097
11,534
11,534
Total Assets LIABILITIES AND EQUITY Current liabilities: Bank loans Trust receipt loans Trade payables Other payables Current portion of finance leases
223,405
220,393
222,960
118,323
117,665
3,894 2,194 11,639 11,421 7
7,317 3,985 10,675 12,470 63
4,271 2,687 13,301 11,497 14
1,269 -
261 -
Total current liabilities
29,155
34,510
31,770
1,269
261
2,474 108 681
152 688
2,121 112 680
-
-
3,263
840
2,913
-
-
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
26,571 88,496 1,534
ASSETS Current assets: Cash and cash equivalent Pledged bank deposits Derivative financial instruments Trade receivables Other receivables and prepayments Inventories
Note 1
Non-Current Liability Bank loans Finance leases Deferred tax liabilities Total non-current liability Capital, reserves and minority interests: Issued capital Share premium Contributed surplus
Q3-FY09 Results Announcement
PAGE 3
DMX TECHNOLOGIES GROUP LTD
Legal reserve Currency translation reserve Share option reserve Accumulated profits (losses) Equity attributable to equity holders of the Company
7 2,861 1,720 68,948
7 2,927 1,060 63,904
7 2,923 1,500 66,293
1,720 (1,267)
1,060 (257)
190,137
184,499
187,324
117,054
117,404
850
544
953
-
-
Total equity
190,987
185,043
188,277
117,054
117,404
Total liabilities and equity
223,405
220,393
222,960
118,323
117,665
Minority interest
Note 1 : Balance sheet as at 31 December 2008 is the latest audited balance sheet. Note 2 : Balance sheet as at 30 June 2009 is used for comparison.
1b (ii) Aggregate amount of group’s borrowings and debts securities Group Borrowings and Debts securities Group
Amount repayable in one year or less, or on demand Unsecured Secured
Amount repayable after one year Unsecured Secured
As at 30 Sep 2009 US$'000
As at 31 Dec 2008 US$'000
3,894 2,201 6,095
7,317 4,048 11,365
2,474 108 2,582
152 152
Details of any collateral As at 30 Sep 2009, the Group has: (1) pledged bank deposits of US$3,408,000 (31 Dec 2008: US$8,616,000) and NIL (31 Dec 2008: US$1,382,000) & (2) pledged derivative financial instruments of US$3,653,000 (31 Dec 2008: NIL) and US$1,295,000 (31 Dec 2008: NIL) of the Group and the Company respectively were pledged to financial institutions to secure general banking facilities granted to the Group.
Q3-FY09 Results Announcement
PAGE 4
DMX TECHNOLOGIES GROUP LTD 1 (c) A cash flow statement (for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of Cash Flows
3Q 2009 US$ '000
3Q 2008 US$ '000
9 months 2009 US$ '000
9 months 2008 US$ '000
3,226
2,938
6,469
6,703
1,053
823
3,039
2,229
Interest expenses
141
152
407
633
Allowance for doubtful trade & other receivables
18
11
182
285
Allowance for inventories
3
184
13
241
2,812
2,242
8,105
6,254
5
-
27
-
Share-based payment expenses
220
100
660
600
Share of result of a jointly controlled entity
93
-
320
-
(16)
1
(49)
29
(31)
(65)
(92)
(360)
7,524
6,386
19,081
16,614
Trade receivables
1,953
(6,488)
(1,718)
(15,925)
Other receivables, deposits and prepayments
(239)
(1,154)
(1,680)
(2,918)
Inventories
(658)
507
(1,555)
(463)
Trade payables
(1,703)
2,645
923
4,169
Other payables
(1,630)
658
(2,603)
907
5,247
2,554
12,448
2,384
Income tax paid Interest paid
(477) (141)
(165) (152)
(935) (407)
(573) (633)
Interest received
31
65
92
360
4,660
2,302
11,198
1,538
(3,829)
(2,505)
(6,955)
(7,141)
-
(320)
-
(320)
(1,858)
(745)
(4,462)
(2,435)
1,938
255
5,208
(3,555)
Acquisition of interests in a jointly-controlled entity
-
-
(389)
-
Proceeds on disposal of derivative financial instruments
-
-
-
3,024
Purchase of derivative financial instruments
(1,980)
-
(3,680)
-
Cash flows from operating activities: Profit before income tax Adjustments for: Depreciation expenses
Amortization expenses Fair value change of derivative financial instruments
Loss (Gain) on disposal of property, plant and equipment Interest income Operating cash flows before movement in working capital
Cash generated from operations
Net cash generated from operating activities Cash flows from investing activities Addition to intangible assets Increase in long term investment Purchase of property, plant & equipment Decrease (increase) in pledged bank deposit
Q3-FY09 Results Announcement
PAGE 5
DMX TECHNOLOGIES GROUP LTD Proceeds from disposal of property, plant and equipment
-
-
70
-
Deposit paid for acquisition of an investment
-
57
-
-
(5,729)
(3,258)
(10,208)
(10,427)
Net cash used in investing activities Cash flows from financing activities New bank loans raised
743
-
15,670
-
Increase (decrease) in trust receipts loans
(493)
567
(1,791)
(4)
Repayment of bank loans
(795)
(1,147)
(16,647)
(7,055)
Repayment of finance leases
(11)
(16)
(100)
(47)
Dividend payment
(200)
-
(200)
-
Net cash used in financing activities
(756)
(596)
(3,068)
(7,106)
Net effect of exchange rate changes on consolidating subsidiaries
(75)
(165)
(71)
710
Net decrease in cash and cash equivalents
(1,900)
(1,717)
(2,149)
(15,285)
Cash and cash equivalent at beginning of the quarter
14,806
26,419
15,055
39,987
Cash and cash equivalent at the end of the quarter
12,906
24,702
12,906
24,702
Q3-FY09 Results Announcement
PAGE 6
DMX TECHNOLOGIES GROUP LTD
(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.
Statement of Changes in Equity GROUP Q3 2009 Movement
Balance at 1 Jul 2009 Currency translation difference
Issued capital
Share premium
Contributed surplus
Legal reserve
*Currency translation reserve
Share Option reserve
Accumulated profits / (loss)
Total
Minority interests
Total Equity
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
26,571
88,496
1,534
7
2,923
1,500
66,293
187,324
953
188,277
-
-
-
-
(62)
-
-
(62)
-
(62)
Dividends Recognition of sharebased payment
-
-
-
-
-
-
-
-
(200)
(200)
-
-
-
-
-
220
-
220
-
220
Total comprehensive income for the period
-
-
-
-
-
-
2,655
2,655
97
2,752
26,571
88,496
1,534
7
2,861
1,720
68,948
190,137
850
190,987
23,048
85,113
1,534
7
3,052
2,011
62,724
177,489
291
177,780
Currency translation difference
-
-
-
-
(206)
-
-
(206)
-
(206)
Recognition of sharebased payment
-
-
-
-
-
100
-
100
-
100
Total comprehensive income for the period
-
-
-
-
-
-
2,192
2,192
140
2,332
23,048
85,113
1,534
7
2,846
2,111
64,916
179,575
431
180,006
Balance at 30 Sep 2009
Q3 2008 Movement Balance at 1 Jul 2008
Balance at 30 Sep 2008
Q3-FY09 Results Announcement
PAGE 7
DMX TECHNOLOGIES GROUP LTD
COMPANY
Issued capital
Share premium
Contributed surplus
Legal reserve
* Currency translation reserve
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Balance at 1 Jul 2009
26,571
88,496
1,534
-
-
1,500
(883)
117,218
-
117,218
Recognition of sharebased payment
-
-
-
-
-
220
-
220
-
220
Total comprehensive income for the period
-
-
-
-
-
-
(384)
(384)
-
(384)
26,571
88,496
1,534
-
-
1,720
(1,267)
117,054
-
117,054
Balance at 1 Jul 2008
23,048
85,113
1,534
-
-
2,011
(51)
111,655
-
111,655
Recognition of sharebased payment
-
-
-
-
-
100
-
100
-
100
Total comprehensive income for the period
-
-
-
-
-
-
(103)
(103)
-
(103)
23,048
85,113
1,534
-
-
2,111
(154)
111,652
-
111,652
Q3 2009 Movement
Balance at 30 Sep 2009
Share Option reserve
Accumulated profits / (loss)
Total
Minority interests
Total Equity
Q3 2008 Movement
Balance at 30 Sep 2008
* Other comprehensive income
Q3-FY09 Results Announcement
PAGE 8
DMX TECHNOLOGIES GROUP LTD
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 purposes 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 end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.
Share Capital Changes
Number of shares ' 000
US$ ' 000
531,410
26,571
Ordinary shares of US$0.05 each at 1 Jan 2009 & 30 Sep 2009
Share Options & Contingent Shares As at 30 Sep 2009, the following Employee Share Options remained outstanding:
Date of grant
Exercise Period
Exercise price per share
Balance at beginning of year or date of grant, if later
Total exercised
Total cancelled
Balance outstanding as at 30 Sep 2009
(22,133)
3,305,544
3 October 2003
2 October 2004 to 26 May 2013
S$0.6778
3,327,677
-
25 April 2008
24 April 2009 to 25 April 2018
S$0.226
19,919,580
-*
-
19,919,580
28 November 2008
27 November 2009 to 28 Nov 2018
S$0.093
20,000,000
-
-
20,000,000
Total
43,247,257
-
(22,133)
43,225,124
*As at 2 October 2009, 7,387,000 shares were issued pursuant to the exercise of employee share options.
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.
Total no of issued shares
Number of shares
As at 31 December 2008
531,410,184
As at 30 September 2009
531,410,184
Q3-FY09 Results Announcement
PAGE 9
DMX TECHNOLOGIES GROUP LTD
1(d) (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at end of the current financial period reported on The Company has not implemented Share Purchase Plan. As such, there is no treasury shares transaction for year ending 30 September 2009.
2.
Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. Singapore Standard on Auditing 910, Engagements to Review Financial Statements, or an equivalent standard). The figures have not been audited or reviewed.
3.
Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of matter). The figures have not been audited or reviewed.
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 accounting policies and methods of computation applied by the Group are consistent with those used in its most recently audited financial statements as at 31 December 2008 except for the adoption of certain Financial Reporting Standards (“FRS”) and interpretations of FRS (“INT FRS”) that are mandatory for the financial year beginning on or after 1 January 2009. The adoption of these FRS and INT FRS has no significant impact on the financial position or performance of the Group.
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. On 1 January 2009, the Group adopted the revised adopted the revised Singapore Financial Reporting Standard (“FRS 1R”) – Presentation of Financial Statements. FRS 1R requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income. Components of comprehensive income are presented in the Consolidated Statement of Comprehensive Income.
Q3-FY09 Results Announcement
PAGE 10
DMX TECHNOLOGIES GROUP LTD 6.
Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediate preceding financial year, after deducting any provision for preference dividends. Earnings per share
Based on the weighted average number of ordinary shares on issue (US cents) On fully diluted basis (US Cents)
The Group 3Q 3Q 2009 2008
The Group 9 months 9 months 2009 2008
Note 1
0.50
0.48
0.95
1.17
Note 2
0.47
0.48
0.91
1.17
Note 1) The weighted average number of ordinary shares in issue for 3Q2009: 531,410,184 and YTD Sep 2009: 563,189,468 (3Q2008 & YTD Sep 2008 are also 460,960,102). Note 2) The earnings per share on a fully diluted basis are calculated on the adjusted average number of ordinary shares for 3Q2009: 531,410,184 and YTD Sep 2009: 553,633,811 (3Q2008 & YTD Sep 2008 are also 460,960,102).
7.
Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year. Net asset value per share Net asset value per ordinary share (US cents)
The Group
The Company
30-Sep-09
31-Dec-08
30-Sep-09
31-Dec-08
35.78
34.72
22.03
22.09
Net asset value per ordinary share as at 30 Sep 2009 and 31 Dec 2008 are calculated based on share capital of the Company of 531,410,184 shares.
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, (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected cash flow, working capital, assets or liabilities of the group during the current financial period reported on.
Profit and Loss Statement The following paragraphs should be read in conjunction with our Profit and Loss Statement for quarter ended 30 September 2009 as presented on Section 1(a) of this document. Revenue The Group reported a 1.5% increase in 3Q09 revenue to US$46.3m over 3Q08. For the 9 months of FY09, the Group registered 8.5% revenue growth to US$133.9m.
Q3-FY09 Results Announcement
PAGE 11
DMX TECHNOLOGIES GROUP LTD Digital Media group continued to be the growth driver of revenue for 3Q09 and the 9 months; at 11.0% and 23.3% respectively. This spurred Digital Media Group to contribute 34.5% of 3Q09 and 34.3% of revenue for the 9 months. Although Managed Services division grew by 47% growth in 3Q09, this growth was insufficient to offset the lower Infrastructure Solutions revenue; especially from outside of China. As a result, Infrastructure Enabling group registered a decline in revenue of 2.9% in 3Q09. For the 9 months of FY09, Infrastructure Enabling group contributed 65.7% of total revenue; compared to 69.8% in the same corresponding period last year. The Group had a slow quarter of revenue from outside China in 3Q09; as compared to 3Q08, due to the festive season in Malaysia and Indonesia. Revenue from this geography declined to 17.8%; compared to 26% in 3Q08. This led to a revenue contribution of 24.6% for the 9 months of FY09 versus 27.7% for the 9 months of FY08. Revenue from China grew by 13.1% for the 9 months and China contributed 75.4% of total revenue; compared to 72.3% in the previous corresponding period. Gross Margins Gross margins in 3Q09 normalized back to 25.7%; compared to 22.3% in 2Q09 and 26.21% in 3Q08. For the 9 months; gross margins at 24.4% was 1.5% lower than the previous period due to sales mix. Operating Expenses (Distribution and Administrative Expenses) The Group continued to exercise control over its operating expenses; despite generating higher revenue for the 9 months. 3Q09 total operating expense at US$5.4m was about US$0.9m lower than 3Q08. US$0.2m increase in depreciation expense was offset by about US$1.2m exchange gains from the stronger Indonesian rupiah and Korean Won. Similarly, US$0.8m higher depreciation expenses for 9 months of FY09 were offset by total US$0.7m savings in distribution and administration expenses and US$1.1m of exchange gains. As a result, the Group achieved a US$1.1m lower total operating expense of US$16.6m for the 9 months of FY09 over the same period last year. Other operating expenses Total other operating expense in 3Q09 at US$3.1m was about US$0.4m more than 3Q08. For the 9 months of FY09, other operating expense at US$9.0m was US$1.5m higher than the 9 months of FY08. The increase was due mainly to increases in amortisation expenses as a result of on-going commercialization of the Group’s software. The Group incurred expenditure on software development activities to generate new products and add more features to its multi-media software during the last three years as part of DMX’s ongoing software development activities. Such expenditure were capitalised as intangible assets and amortised on a straight-line basis over 3 years upon commercial deployment. As the Group gained momentum in the commercial deployment of its multi-media software in the digital media market, higher amortisation of intangible assets was charged. Earnings DMX’s 3Q09 profit after tax at US$2.8m was US$0.4m or 18.0% better than 3Q08 and 42.6% better than 2Q09. For the 9 months, the Group has caught up with the profit after tax of the previous period at US$5.6m; and exceeded full year 2008 PAT of US$3.6m.
Q3-FY09 Results Announcement
PAGE 12
DMX TECHNOLOGIES GROUP LTD
Balance Sheet The following paragraphs should be read in conjunction with our Balance Sheet as of 30 September 2009 as presented on Section 1(b) (i) of this document. Total current assets increased slightly by US$1.4m to US$160.3m as at 30 September 2009. This was due to the net positive impact from:•
US$2.1m decrease in cash and cash equivalents to US$12.9m.
•
US$5.2m decrease in pledged bank deposits.
•
US$3.7m increase in derivative financial instruments which are mainly structured deposits and bonds placed with banks.
•
US$1.6m increase in trade receivables to US$123.3m. Of the US$123.3m trade receivables, about 86.9% or US$107.1m (30 June 09: 83.6% or US$104.7m) relates to projects with numerous telecom operators in China, Malaysia, Indonesia and numerous cable TV operators in China. All these operators are reputable and credit-worthy customers. The nature of such projects is that payment is based on milestone performance such as equipment delivery, project installation, completion and acceptances; which may take between 6 to 18 months to be fully accepted. The Group recognizes revenue upon delivery of equipment to customers; while collections are on project milestone basis. Trade receivables relating to projects that the Group are still implementing ie invoiced but not past due amounted to US$108.3m or 87.8%; as compared to US$108.6m or 86.8% as at 30 June 2009 and US$102.7m or 84.4% as at 31 December 2008. For the 9 months till 30 Sep 09, 61% or US$80.2m of 31 December 2008 trade receivables has been collected. Aging of total trade receivables are as follows:-
30 September 09 30 June 09 31 March 09 31 December 08
0-180 days 53% 47% 46% 54%
181-360 days 30% 32% 29% 32%
361-540 days 13% 17% 21% 14%
Over 540 days 4% 4% 4% 0%
The above trade receivables are irrevocable and not from any interested party. The Group has a task force in place that work closely with the each of the telecom and cable TV operator on the progress of each project being implemented. •
US$1.8m increase in other receivables and prepayments.
•
US$1.8m increase in inventories as a result of indent inventory placed for customers to be delivered in the next quarter.
Non-current assets increased by about US$1.7m to US$63.2m as at 30 September 2009 from US$61.5m as at 31 December 2008. The increase was due to US$1.5m increase in capital
Q3-FY09 Results Announcement
PAGE 13
DMX TECHNOLOGIES GROUP LTD expenditure on spares and demonstration equipment to support the increased revenue and customers; US$1.1m increase in goodwill resulting from acquisition of 1MP and US$1.1m decrease in intangible assets. Total current liabilities decreased by about US$5.3m to US$29.2m as at 30 September 2009. This was due mainly to US$3.4m decrease in bank loans and US$1.8m decrease in trust receipts loans. Non-current liabilities increased by US$2.5m to US$3.3m as at 30 September 2009. The Group secured a new long term bank loan of about US$2.4m. The Group increased its total equity by US$6.0m to US$191.0m as at 30 September 2009. This was contributed largely by US$5.0m increase in accumulated profits and US$0.7m increase in share option reserve.
Cash flow The following paragraphs should be read in conjunction with our Cash flow Statement as of 30 September 2009 as presented on section 1(c) of this document. During 3Q09 and the 9 months of FY09, the Group generated US$5.2m and US$12.4m of cash from operations respectively. These ware significant improvements over the same corresponding period. Improved collections from trade receivables and overall management of payables during the period enabled the Group to generate positive cash flow from operations. After payment for income tax and interest, the Group generated net cash from operating activities of US$4.7m and US$11.2m for 3Q09 and 9 months of FY09 respectively, compared to US$2.3m and US$1.5m cash generation during 3Q08 and 9 months of FY08. Net cash used in investing activities in 3Q09 was US$5.7m; compared to US$3.3m in 3Q08. For the 9 months, the Group utilized about US$10.2m in investing activities; which was about the same amount utilized for the 9 months of FY08. The Group utilized about US$0.8m and US$3.1m cash from financing activities in 3Q09 and 9 months of FY09 respectively. The Group repaid more trust receipts loans. During 3Q09, cash generated from operating activities were lower than cash utilisation in investing and financing activities, giving rise to US$1.9m decrease in cash and cash equivalent for the quarter. This decrease in 3Q09 caused the Group to end the 9 months of FY09 with about US$12.9m in cash and cash equivalent; about US$2.2m below the start of the year.
9.
Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and actual results. No forecast was given.
Q3-FY09 Results Announcement
PAGE 14
DMX TECHNOLOGIES GROUP LTD 10.
A commentary at the date of the announcement of the 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. As the Group enters into its last quarter of FY09, the Group sees improving market sentiment and increased activities by telecom operators and enterprises on IT capex spending and hence believes that our core business activities will remain on track for the rest of FY2009. The improved sentiment has given the Group measured confidence that it should not need to incur any unexpected impairment or allowances for the year. With the profits after tax for the 9 months of FY09 at US$5.6m, about US$2.0m higher than full year 2008, and barring unforeseen circumstances, the Group expects FY09 profits after tax to be much better than FY08. Additionally, the Group believes that our established business network, customer reference base and track record have strengthened our ongoing long-term business fundamentals. With the primary objective of enhancing these business fundamentals, the Group entered into a subscription agreement with KDDI Corporation of Japan on 10 September 2009. This strategic transaction is intended to accelerate the growth of the Group to become a leading telecom and media solutions provider in Asia Pacific. KDDI is the second largest telecom operator in Japan and one of the mega-carrier in Asia Pacific providing fixed, mobile and broadcasting services. According to the agreement, the Group will issue over 588 million new shares to KDDI; raising cash of about S$188.4 million. Upon completion of the proposed transaction towards end of the year; KDDI will become a 50.1% controlling shareholder of the Group; on a fully diluted basis. KDDI will support the Group to continue to develop and grow its existing business through referring appropriate business opportunities, jointly developing new products and services and by transferring specialized technology, where appropriate, to enhance the Group’s competitiveness and products offering. Additionally, the capital raised will enhance the balance sheet of the Group; enabling the Group to participate in bigger projects, expand its geographical coverage and invest into new application business to take advantage of the new business opportunities within the telecom industry in China. The proposed transaction is subject to shareholders’ approval at a Special General Meeting to be held in Singapore on 20 November 2009. The Group looks forward to forging ahead with this strategic investment and alliance; to capitalise on the anticipated business opportunities.
11. Dividend a.
Current Financial Period Reported On Any dividend declared for the current financial period reported on?
Q3-FY09 Results Announcement
No
PAGE 15
DMX TECHNOLOGIES GROUP LTD
Name of dividend Dividend Type Dividend amount per share (in S$ cents) Tax Rate b.
Nil Nil Nil Nil
Corresponding Period of the immediately preceding financial year. Any dividend declared for the corresponding period of the immediately preceding financial year? No Name of dividend Dividend Type Dividend amount per share (in S$ cents) Tax Rate
c.
Not Applicable Not Applicable Not Applicable Not applicable
Date payable Not Applicable
d.
Books Closure date. Not applicable
12.
If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared or recommended for the year.
13.
Statement Pursuant to Rule 705(5) of the Listing manual The Directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the Group’s unaudited financial result for the third quarter ended 30 September 2009 to be false or misleading in any material aspect.
By Order of the Board
Jismyl Teo Chor Khin Director 9 November 2009
Q3-FY09 Results Announcement
PAGE 16
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