Ecsh 3q 2009 Announcement 111109
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ECS HOLDINGS LIMITED Third Quarter Financial Statement and Dividend Announcement PART I – INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS. 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. 1(a)(i) Income Statement for the third quarter and 9 months ended 30 September 2009.
Group Three Months Ended
Nine Months Ended
30 September
30 September
2009
2008
%
2009
2008
%
$’000
$’000
Increase/ (Decrease)
$’000
$’000
Increase/ (Decrease)
885,317
750,978
17.9
2,359,337
2,226,299
6.0
(844,041)
(714,873)
18.1
(2,247,979)
(2,114,539)
6.3
41,276
36,105
14.3
111,358
111,760
(0.4)
2,519
1,108
127.3
4,778
3,489
36.9
Selling & distribution expenses
(15,522)
(14,570)
6.5
(44,389)
(46,343)
(4.2)
General & administrative expenses
(10,110)
(9,777)
3.4
(27,994)
(29,006)
(3.5)
Operating profit (note 1)
18,163
12,866
41.2
43,753
39,900
9.7
Finance costs
(1,460)
(2,915)
(49.9)
(3,589)
(8,433)
(57.4)
193
601
(67.9)
633
5
Nm
Profit from operations before tax
16,896
10,552
60.1
40,797
31,472
29.6
Income tax expense
(5,210)
(2,065)
152.3
(11,313)
(7,011)
61.4
Profit for the period
11,686
8,487
37.7
29,484
24,461
20.5
10,304
7,595
35.7
26,167
21,503
21.7
1,382
892
54.9
3,317
2,958
12.1
11,686
8,487
37.7
29,484
24,461
20.5
Revenue Cost of sales Gross profit Other income including interest income
Share of profit of associate
Attributable to: Owners of the Company Minority interests
1
1(a)(ii) Statement of Comprehensive Income for the third quarter and nine months ended 30 September 2009.
Group
Group
Three Months Ended 30 September
Profit for the period
Nine Months Ended 30 September
%
%
2009
2008
2009
2008
$’000
Increase/ $’000 (Decrease)
$’000
Increase/ $’000 (Decrease)
11,686
8,487
37.7
29,484
24,461
20.5
(3,080)
3,613
Nm
(4,544)
(3,425)
32.7
8,606
12,100
(28.9)
24,940
21,036
18.6
7,623
11,206
(32.0)
22,033
18,668
18.0
983
894
10.0
2,907
2,368
22.8
8,606
12,100
(28.9)
24,940
21,036
18.6
Other comprehensive income Exchange gain/(loss) on translation of net assets of foreign subsidiaries Total comprehensive income for the period Attributable to: Owners of the Company Minority interests Profit for the period
Breakdown and explanatory Notes to Income Statement
1.
The following items have been included in arriving at operating profit:-
Group
Three Months Ended
Nine Months Ended
30 September
30 September
2009
2008
% Increase/
$’000
$’000
(Decrease)
$’000
(700)
(696)
0.6
(2,161)
(2,157)
0.2
(1,338)
(603)
121.9
(3,065)
(1,303)
135.2
Allowance made for inventory obsolescence and inventories written off
(213)
(314)
(32.2)
(943)
(1,360)
(30.7)
Foreign exchange (loss)/gain
(315)
(151)
108.6
(633)
1,007
Nm
64
(50)
56
(139)
Nm
Depreciation and amortisation
Allowance made for doubtful debts and bad debts written off net of bad debts recovered
Gain/(loss) on sale of property, plant and equipment
Nm
2009
% 2008 Increase/ $’000 (Decrease)
2
1(b)(i) A Statement of Financial Position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Group 30 September 31 December 2009 2008 $’000 $’000
Company 30 September 31 December 2009 2008 $’000 $’000
Non-Current Assets Property, plant and equipment Investment in subsidiaries Investment in associate Other assets Intangible assets Deferred tax assets
8,481
10,918
209
225
-
-
172,224
174,374
7,894
7,284
-
-
290
303
139
151
33,535
33,522
13
-
5,179
4,257
-
-
55,379
56,284
172,585
174,750
Inventories
189,236
175,292
-
-
Trade and other receivables
519,847
444,662
62,357
57,732
63,922
50,518
831
2,087
773,005
670,472
63,188
59,819
Current Assets
Cash and bank balances
Current Liabilities Bank overdrafts (Unsecured) Trade and other payables
1,138
1,016
-
-
368,760
275,424
33,693
13,629
Deferred income
558
556
-
-
Bank borrowings
117,513
125,576
16,700
20,660
Finance lease liabilities Current tax payable
Net Current Assets
70
4
-
-
6,830
3,412
125
97
494,869
405,988
50,518
34,386
278,136
264,484
12,670
25,433
64,450
66,600
64,450
66,600
Non-Current Liabilities Bank borrowings Deferred tax liabilities
869
886
27
27
Deferred income
965
978
-
-
Finance lease liabilities
138
218
-
-
66,422
68,682
64,477
66,627
267,093
252,086
120,778
133,556
112,815
112,815
112,815
112,815
Equity attributable to owners of the Company Share capital Other reserves Retained earnings Minority interests Total Equity
(2,188)
11,811
-
9,865
139,274
113,175
7,963
10,876
249,901
237,801
120,778
133,556
17,192
14,285
-
-
267,093
252,086
120,778
133,556
3
Notes to Statement of Financial Position 1(b)(ii) Aggregate amount of group’s borrowings and debt securities. Amount repayable in one year or less, or on demand
As at 30/09/2009
As at 31/12/2008
$’000
$’000
$’000
$’000
Secured
Unsecured
Secured
Unsecured
-
118,651
-
126,592
Amount repayable after one year
As at 30/09/2009
As at 31/12/2008
$’000
$’000
$’000
$’000
Secured
Unsecured
Secured
Unsecured
-
64,450
-
66,600
Details of any collateral Nil.
4
1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.
Cash Flows from Operating Activities Profit from operations before taxation Adjustments for : Share of profit of associate Fair value changes on financial instruments Depreciation of property, plant and equipment Gain on disposal of other assets (Gain)/loss on disposal of property, plant and equipment Interest expense Interest income Operating profit before working capital changes
Three Months Ended
Nine Months Ended
30 September 2009 2008 $'000 $'000
30 September 2009 2008 $'000 $'000
16,896
10,552
40,797
31,472
(193) (153) 700
(601) 696
(633) 2,260 2,161
(5) 2,157
(64) 1,460 (119)
(287) 50 2,915 (69)
(56) 3,589 (816)
(287) 139 8,433 (195)
18,527
13,256
47,302
41,714
(16,249) (42,325) 48,503
(7,328) 10,275 (8,967)
(18,312) (78,836) 99,408
(34,926) (38,294) 24,107
Cash generated from/(utilised in) operations Income taxes paid
8,456 (3,736)
7,236 (2,488)
49,562 (8,813)
(7,399) (6,568)
Net cash flow from operating activities
4,720
4,748
40,749
(13,967)
Cash Flows from Investing Activities Interest received Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceed from sale of other assets
119 (396) 2,146 -
816 (1,298) 2,207 -
195 (1,929) 26 665
(1)
(17)
Changes in working capital : Inventories Trade and other receivables Trade and other payables
Purchase of other assets Net cash flow from investing activities
1,869
69 (938) 1 665 (203)
1,724
(1,060)
Cash Flows from Financing Activities Interest paid Dividend paid Proceeds from bank loans Repayment of bank loans Payment of finance lease instalments (Loan to)/repayment from associate Payment to minority shareholders
(1,570) 117,475 (97,430) (44) (277) -
(2,884) 63,264 (52,722) (10) 76 -
(4,826) (9,865) 435,705 (441,712) (74) (7,448) (68)
(9,818) (5,480) 263,808 (218,126) (24) 662 (13)
Net cash flow from financing activities
18,154
7,724
(28,288)
31,009
Net increase in cash and cash equivalents
24,743
12,269
14,185
15,982
Cash and cash equivalents at beginning of the period
38,508
41,266
49,502
39,425
Effects of exchange rate changes on balances held in foreign currencies Cash and cash equivalents at end of the period
(467) 62,784
741 54,276
(903) 62,784
(1,131) 54,276
5
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 capitalisation 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 (i) Consolidated statement of changes in equity for the nine months ended 30 September 2009 Currency Dividend General Accum ulated Translation Reserve Reserve Profits Reserve $'000 $'000 $'000 $'000
Share Capital $'000
Minority Interest $'000
Total Equity $'000
237,801
14,285
252,086
Bal as at 1 Jan 2009
112,815
9,865
2,423
113,175
Total comprehensive income for the period
-
-
-
6,919
3,212
10,131
709
10,840
112,815
9,865
2,423
120,094
2,735
247,932
14,994
262,926
Total comprehensive income for the period
-
-
-
8,944
4,279
1,215
5,494
Final tax exempt one-tier dividend paid at 2.7 cents per share
-
-
-
Dividend paid to minority shareholders
-
-
-
112,815
-
2,423
128,970
(1,930)
242,278
16,209
258,487
-
-
-
10,304
(2,681)
7,623
983
8,606
112,815
-
2,423
139,274
(4,611)
249,901
17,192
267,093
Bal as at 31 Mar 2009
Bal as at 30 Jun 2009 Total comprehensive income for the period Bal as at 30 Sep 2009
(9,865)
(477)
Total $'000
(4,665)
(68)
-
(9,865)
-
(9,865)
-
(68)
-
(68)
(ii) Consolidated statement of changes in equity for the nine months ended 30 September 2008
Share Capital $'000
Currency Dividend General Accum ulated Translation Reserve Reserve Profits Reserve $'000 $'000 $'000 $'000
112,815
5,679
669
Transfer of profit
-
-
731
Total comprehensive income for the period
-
-
-
112,815
5,679
Total comprehensive income for the period
-
-
Final tax exempt one-tier dividend paid at 1.5 cents per share
-
Bal as at 1 Jan 2008
Bal as at 31 Mar 2008
Bal as at 30 Jun 2008 Total comprehensive income for the period Bal as at 30 Sep 2008
(5,480)
95,210
Minority Interest $'000
Total $'000
Total Equity $'000
(1,720)
212,653
10,983
223,636
(7)
-
-
-
5,888
(5,022)
866
1,136
2,002
1,400
100,374
(6,749)
213,519
12,119
225,638
-
8,012
(1,416)
6,596
338
6,934
-
-
(724)
112,815
199
1,400
108,386
-
-
-
7,595
112,815
199
1,400
115,981
-
(5,480)
-
(5,480)
(8,165)
214,635
12,457
227,092
3,611
11,206
894
12,100
(4,554)
225,841
13,351
239,192
6
(iii) Statement of changes in equity of the company for the nine months ended 30 September 2009
Share Capital $'000
Dividend Reserve $'000
Accumulated Profits / (Losses) $'000
Total $'000
Bal as at 1 Jan 2009
112,815
9,865
10 ,876
133,556
Total comp rehe nsive income for the period
-
-
530
530
112,815
9,865
11 ,406
134,086
Total comp rehe nsive income for the period
-
-
Final tax exempt one-tier di vidend paid at 2.7 cents per share
-
Bal as at 31 Mar 2009
Bal as at 30 Jun 20 09
-
112,815
-
9 ,147
-
-
(1 ,184)
112,815
-
7 ,963
Total comp rehe nsive income for the period Bal as at 30 Sep 2009
(9,865)
(2 ,259)
(2,259) (9,865) 121,962
(1,184) 120,778
(iv) Statement of changes in equity of the company for the nine months ended 30 September 2008
S hare Capital $'000
Accumulated Profits / (Losses) $'000
Dividend Reserve $'000
Total $'000
Bal as at 1 Jan 2008
112,815
5,679
6,228
124,722
Total comp rehe nsive income for the period
-
-
3,687
3,687
112,815
5,679
9,915
128,409
Total comp rehe nsive income for the period
-
-
Final tax exempt one-tier di vidend paid at 1.5 cents per share
-
Bal as at 31 Mar 2008
Bal as at 30 Jun 20 08 Total comp rehe nsive income for the period Bal as at 30 Sep 2008
(5,480)
(1,824)
-
(1,824)
(5,480)
112,815
199
8,091
121,105
-
-
341
341
112,815
199
8,432
121,446
7
1(d)(ii) Details of any changes in the company’s share capital arising from rights issue, bonus issue, share buy-back, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or 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 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. During the quarter ended 30 September 2009, the Company did not issue any shares. As at 30 September 2009 and 30 September 2008, the Company has no outstanding share options of unissued ordinary shares. 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 preceeding year. Issued and fully paid ordinary share capital Number of shares (‘000) 2009 At 30 September 2009
365,360
2008 At 31 December 2008
365,360
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. N.A. 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice. These figures have not been audited or reviewed. However, our auditors have performed certain procedures and enquiries. These procedures are substantially less in scope than an audit or a review in accordance with Singapore Standard on Review Engagements (SSRE) 2410. 3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of a matter). N.A. 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 Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements as at 31 December 2008 except as described in paragraph 5. 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 Amendments and Interpretations to the Singapore Financial Reporting Standards (“FRSs”) for periods effective from 1 January 2009 are currently being assessed to have no material impact on the Group results.
8
6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Three Months Ended 30 September 2009 2008
Nine Months Ended 30 September 2009 2008
Earnings per ordinary share for the year based on net profit attributable to shareholders:(i) Based on weighted average number of ordinary shares in issue
2.82 cents
2.08 cents
7.16 cents
5.89 cents
Weighted average number of shares (‘000)
365,360
365,360
365,360
365,360
2.82 cents
2.08 cents
7.16 cents
5.89 cents
365,360
365,360
365,360
365,360
(ii) On a fully diluted basis Weighted average number of shares (‘000)
In arriving at the fully diluted earnings per share, only those potential ordinary shares arising from the exercise of options which would dilute the basic earnings per share of the Group are included in the computation.
9
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 period reported on and (b) immediately preceding financial year. GROUP 30 September 2009 31 December 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period
68.40 cents
65.09 cents
COMPANY 30 September 2009 31 December 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period
33.06 cents
36.55 cents
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group’s business. It must include a discussion of the following:(a) 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; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current period reported on. Review of Group Performance Business Segment Information Revenue 3 Months Ended 30 Sep 2009 2008 $’000 Distribution Enterprise Systems IT Services Share of profit of associate Total
Distribution Enterprise Systems IT Services
$’000
562,227 315,582 7,508 885,317
Change
482,563 261,501 6,914 750,978
16.5 20.7 8.6 Nm 17.9
Revenue 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 1,481,196 1,381,172 7.2 856,448 818,788 4.6 21,693 26,339 (17.6)
Share of profit of associate Total
%
2,359,337
2,226,299
Profit before Interest & Taxation 3 Months Ended 30 Sep % 2009 2008 $’000
$’000
8,401 9,357 405 193 18,356
Change
5,531 6,920 415 601 13,467
51.9 35.2 (2.4) (67.9) 36.3
Profit before Interest & Taxation 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 21,054 18,410 14.4 21,377 20,327 5.2 1,322 1,163 13.7
Nm
633
5
Nm
6.0
44,386
39,905
11.2
10
Geographical Segment Information Revenue 3 Months Ended 30 Sep 2009 2008 $’000 $’000 North Asia South East Asia Share of profit of associate Total
North Asia South East Asia Share of profit of associate Total
477,792 407,525 885,317
382,585 368,393 750,978
Revenue 9 Months Ended 30 Sep 2009 2008 $’000 $’000 1,254,152 1,127,566 1,105,185 1,098,733 2,359,337 2,226,299
% Change 24.9 10.6 Nm 17.9
% Change 11.2 0.6 Nm 6.0
Profit before Interest & Taxation 3 Months Ended 30 Sep % 2009 2008 $’000 8,721 9,442 193 18,356
$’000 6,363 6,503 601 13,467
Change 37.1 45.2 (67.9) 36.3
Profit before Interest & Taxation 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 20,764 20,874 (0.5) 22,989 19,026 20.8 633 5 Nm 44,386 39,905 11.2
(a) Revenue The Group’s revenue for the nine months ended 30 September 2009 (“9M 2009”) was 6.0% higher at $2.36b as compared to the same period ended 30 September 2008 (“9M 2008”). This was driven by moderate growth of 7.2% and 4.6% in the Distribution and Enterprise Systems segments respectively. For 3Q 2009, the Group’s revenue increased by 17.9% to $885.3m as compared to 3Q 2008 of $751.0m, with distribution and enterprise systems driving this growth at 16.5% and 20.7% respectively. In the Distribution segment, demand for notebooks and desktops continued to rise, while in the Enterprise Systems segment, there was more corporate spending seen in enterprise servers. Geographically, North Asia registered a strong 24.9% growth year-on-year in the third quarter, with desktops, notebooks and networking hardwares driving this growth. Revenue in South East Asia was also up by 10.6% in 3Q 2009 vs 3Q 2008. (b) Profitability The Group’s net profit after tax and minority interests (“NPATMI”) for 9M 2009 increased by 21.7% to $26.2m as compared to $21.5m for 9M 2008. For the current quarter, the Group’s NPATMI grew by 35.7% to $10.3m as compared to $7.6m over the same corresponding period in 2008. This was achieved as the Group continues to place strong focus on cost and working capital management, amidst the current economic difficulty, which resulted in significant reduction in operating and finance costs. Gross margin for 3Q 2009 declined marginally to 4.7% from 4.8% in 3Q 2008 due to lower margins for Enterprise Systems in 3Q 2009. Selling and distribution expenses in 3Q 2009 increased by 6.5% to $15.5m as compared to 3Q 2008, mainly contributed by higher commissions as a result of higher gross profits achieved as well as from higher provisions for doubtful debts. General and administrative expenses increased by a moderate 3.4% to $10.1m. Overall, total operating expenses as a percentage of revenue improved from 3.2% in 3Q 2008 to 2.9% in 3Q 2009 as a result of cost savings from improved operational efficiencies and the continued stringent management of operating costs. Finance costs were 49.9% lower in 3Q 2009 vs 3Q 2008 as a result of reduced bank borrowings from improved working capital utilisation in the current quarter. Gross bank borrowings fell by $40.1m to $183.1m as at 30 September 2009 from $223.2m as at 30 September 2008. 11
The Group’s net profit before interest and tax (“PBIT”) for 3Q 2009 improved by 36.3% to $18.4m from $13.5m in 3Q 2008. Both the Distribution and Enterprise business segments experienced an increase in PBIT by 51.9% and 35.2% respectively in 3Q 2009 as compared to 3Q 2008. On a geographical basis, North Asia recorded strong growth in profitability for 3Q 2009, registering a 37.1% improvement over the previous year corresponding period. South East Asia region, on the other hand, registered an improvement in profitability of 45.2% for 3Q 2009 against 3Q 2008. (c) Statement of Financial Position The Group's total shareholders funds were $249.9m as at 30 September 2009, an increase of $12.1m from $237.8m as compared to 31 December 2008. The Group generated a positive operating cash flow of $4.7m in 3Q 2009, which was comparable to 3Q 2008. For 9M 2009, the Group achieved a positive operating cash flow of $40.7m, reversing from a negative operating cash flow of $14.0m in 9M 2008. Group bank borrowings decreased by $10.1m to $183.1m as at 30 September 2009, from $193.2m as at 31 December 2008. Net gearing has also been reduced to 0.48 as at 30 September 2009 from 0.60 as at 31 December 2008, and from 0.75 as at 30 September 2008.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. N.A. 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. In view of the positive economic outlook in the region, coupled with the improved operational efficiency, tighter cost management and healthier working capital turns, the Directors are confident that FY2009 performance will be better than FY2008.
12
11. Dividend (a) Present Period Any dividend recommended for the current financial period reported on ? None (b) Previous Corresponding Period Any dividend declared for the corresponding period of the immediately preceding financial year ? None (c) Date payable N.A. (d) Books closure date N.A. 12. If no dividend has been declared/recommended, a statement to that effect. N.A.
13
PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1,Q2, Q3 or Half Year Results) 13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer’s most recently audited annual financial statements, with comparative information for the immediately preceding year. N.A. 14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. N.A. 15. A breakdown of sales as follows:N.A. 16. A breakdown of the total annual dividend (in dollar value) for the issuer’s latest full year and its previous full year as follows:N.A.
14
17. Interested Person Transactions Under General Mandate. Aggregate value of all interested transactions during the financial year under review (excluding transactions less than S$100,000 and transactions concluded under shareholders' mandate pursuant to Rule 920)
Aggregate value of all transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
a) Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries
-
433,667
b) Transactions for the sale of goods and services with Enrich Platinum Sdn. Bhd. and its subsidiaries
158,442
-
Name of Interested Persons
The above transactions are for the third quarter ended 30 September 2009.
BY ORDER OF THE BOARD Eddie Foo Toon Ee Company Secretary 11 November 2009
15
ECS HOLDINGS LIMITED
CONFIRMATION BY BOARD PURSUANT TO RULE 705(4) OF THE LISTING MANUAL
On behalf of the Board of Directors of the Company, we, the undersigned, hereby confirm to the best of our knowledge that nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the 3rd quarter ended 30 September 2009 to be false or misleading in any material respect.
On behalf of the Board of Directors
11 November 2009
16
Group Three Months Ended
Nine Months Ended
30 September
30 September
2009
2008
%
2009
2008
%
$’000
$’000
Increase/ (Decrease)
$’000
$’000
Increase/ (Decrease)
885,317
750,978
17.9
2,359,337
2,226,299
6.0
(844,041)
(714,873)
18.1
(2,247,979)
(2,114,539)
6.3
41,276
36,105
14.3
111,358
111,760
(0.4)
2,519
1,108
127.3
4,778
3,489
36.9
Selling & distribution expenses
(15,522)
(14,570)
6.5
(44,389)
(46,343)
(4.2)
General & administrative expenses
(10,110)
(9,777)
3.4
(27,994)
(29,006)
(3.5)
Operating profit (note 1)
18,163
12,866
41.2
43,753
39,900
9.7
Finance costs
(1,460)
(2,915)
(49.9)
(3,589)
(8,433)
(57.4)
193
601
(67.9)
633
5
Nm
Profit from operations before tax
16,896
10,552
60.1
40,797
31,472
29.6
Income tax expense
(5,210)
(2,065)
152.3
(11,313)
(7,011)
61.4
Profit for the period
11,686
8,487
37.7
29,484
24,461
20.5
10,304
7,595
35.7
26,167
21,503
21.7
1,382
892
54.9
3,317
2,958
12.1
11,686
8,487
37.7
29,484
24,461
20.5
Revenue Cost of sales Gross profit Other income including interest income
Share of profit of associate
Attributable to: Owners of the Company Minority interests
1
1(a)(ii) Statement of Comprehensive Income for the third quarter and nine months ended 30 September 2009.
Group
Group
Three Months Ended 30 September
Profit for the period
Nine Months Ended 30 September
%
%
2009
2008
2009
2008
$’000
Increase/ $’000 (Decrease)
$’000
Increase/ $’000 (Decrease)
11,686
8,487
37.7
29,484
24,461
20.5
(3,080)
3,613
Nm
(4,544)
(3,425)
32.7
8,606
12,100
(28.9)
24,940
21,036
18.6
7,623
11,206
(32.0)
22,033
18,668
18.0
983
894
10.0
2,907
2,368
22.8
8,606
12,100
(28.9)
24,940
21,036
18.6
Other comprehensive income Exchange gain/(loss) on translation of net assets of foreign subsidiaries Total comprehensive income for the period Attributable to: Owners of the Company Minority interests Profit for the period
Breakdown and explanatory Notes to Income Statement
1.
The following items have been included in arriving at operating profit:-
Group
Three Months Ended
Nine Months Ended
30 September
30 September
2009
2008
% Increase/
$’000
$’000
(Decrease)
$’000
(700)
(696)
0.6
(2,161)
(2,157)
0.2
(1,338)
(603)
121.9
(3,065)
(1,303)
135.2
Allowance made for inventory obsolescence and inventories written off
(213)
(314)
(32.2)
(943)
(1,360)
(30.7)
Foreign exchange (loss)/gain
(315)
(151)
108.6
(633)
1,007
Nm
64
(50)
56
(139)
Nm
Depreciation and amortisation
Allowance made for doubtful debts and bad debts written off net of bad debts recovered
Gain/(loss) on sale of property, plant and equipment
Nm
2009
% 2008 Increase/ $’000 (Decrease)
2
1(b)(i) A Statement of Financial Position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Group 30 September 31 December 2009 2008 $’000 $’000
Company 30 September 31 December 2009 2008 $’000 $’000
Non-Current Assets Property, plant and equipment Investment in subsidiaries Investment in associate Other assets Intangible assets Deferred tax assets
8,481
10,918
209
225
-
-
172,224
174,374
7,894
7,284
-
-
290
303
139
151
33,535
33,522
13
-
5,179
4,257
-
-
55,379
56,284
172,585
174,750
Inventories
189,236
175,292
-
-
Trade and other receivables
519,847
444,662
62,357
57,732
63,922
50,518
831
2,087
773,005
670,472
63,188
59,819
Current Assets
Cash and bank balances
Current Liabilities Bank overdrafts (Unsecured) Trade and other payables
1,138
1,016
-
-
368,760
275,424
33,693
13,629
Deferred income
558
556
-
-
Bank borrowings
117,513
125,576
16,700
20,660
Finance lease liabilities Current tax payable
Net Current Assets
70
4
-
-
6,830
3,412
125
97
494,869
405,988
50,518
34,386
278,136
264,484
12,670
25,433
64,450
66,600
64,450
66,600
Non-Current Liabilities Bank borrowings Deferred tax liabilities
869
886
27
27
Deferred income
965
978
-
-
Finance lease liabilities
138
218
-
-
66,422
68,682
64,477
66,627
267,093
252,086
120,778
133,556
112,815
112,815
112,815
112,815
Equity attributable to owners of the Company Share capital Other reserves Retained earnings Minority interests Total Equity
(2,188)
11,811
-
9,865
139,274
113,175
7,963
10,876
249,901
237,801
120,778
133,556
17,192
14,285
-
-
267,093
252,086
120,778
133,556
3
Notes to Statement of Financial Position 1(b)(ii) Aggregate amount of group’s borrowings and debt securities. Amount repayable in one year or less, or on demand
As at 30/09/2009
As at 31/12/2008
$’000
$’000
$’000
$’000
Secured
Unsecured
Secured
Unsecured
-
118,651
-
126,592
Amount repayable after one year
As at 30/09/2009
As at 31/12/2008
$’000
$’000
$’000
$’000
Secured
Unsecured
Secured
Unsecured
-
64,450
-
66,600
Details of any collateral Nil.
4
1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.
Cash Flows from Operating Activities Profit from operations before taxation Adjustments for : Share of profit of associate Fair value changes on financial instruments Depreciation of property, plant and equipment Gain on disposal of other assets (Gain)/loss on disposal of property, plant and equipment Interest expense Interest income Operating profit before working capital changes
Three Months Ended
Nine Months Ended
30 September 2009 2008 $'000 $'000
30 September 2009 2008 $'000 $'000
16,896
10,552
40,797
31,472
(193) (153) 700
(601) 696
(633) 2,260 2,161
(5) 2,157
(64) 1,460 (119)
(287) 50 2,915 (69)
(56) 3,589 (816)
(287) 139 8,433 (195)
18,527
13,256
47,302
41,714
(16,249) (42,325) 48,503
(7,328) 10,275 (8,967)
(18,312) (78,836) 99,408
(34,926) (38,294) 24,107
Cash generated from/(utilised in) operations Income taxes paid
8,456 (3,736)
7,236 (2,488)
49,562 (8,813)
(7,399) (6,568)
Net cash flow from operating activities
4,720
4,748
40,749
(13,967)
Cash Flows from Investing Activities Interest received Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceed from sale of other assets
119 (396) 2,146 -
816 (1,298) 2,207 -
195 (1,929) 26 665
(1)
(17)
Changes in working capital : Inventories Trade and other receivables Trade and other payables
Purchase of other assets Net cash flow from investing activities
1,869
69 (938) 1 665 (203)
1,724
(1,060)
Cash Flows from Financing Activities Interest paid Dividend paid Proceeds from bank loans Repayment of bank loans Payment of finance lease instalments (Loan to)/repayment from associate Payment to minority shareholders
(1,570) 117,475 (97,430) (44) (277) -
(2,884) 63,264 (52,722) (10) 76 -
(4,826) (9,865) 435,705 (441,712) (74) (7,448) (68)
(9,818) (5,480) 263,808 (218,126) (24) 662 (13)
Net cash flow from financing activities
18,154
7,724
(28,288)
31,009
Net increase in cash and cash equivalents
24,743
12,269
14,185
15,982
Cash and cash equivalents at beginning of the period
38,508
41,266
49,502
39,425
Effects of exchange rate changes on balances held in foreign currencies Cash and cash equivalents at end of the period
(467) 62,784
741 54,276
(903) 62,784
(1,131) 54,276
5
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 capitalisation 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 (i) Consolidated statement of changes in equity for the nine months ended 30 September 2009 Currency Dividend General Accum ulated Translation Reserve Reserve Profits Reserve $'000 $'000 $'000 $'000
Share Capital $'000
Minority Interest $'000
Total Equity $'000
237,801
14,285
252,086
Bal as at 1 Jan 2009
112,815
9,865
2,423
113,175
Total comprehensive income for the period
-
-
-
6,919
3,212
10,131
709
10,840
112,815
9,865
2,423
120,094
2,735
247,932
14,994
262,926
Total comprehensive income for the period
-
-
-
8,944
4,279
1,215
5,494
Final tax exempt one-tier dividend paid at 2.7 cents per share
-
-
-
Dividend paid to minority shareholders
-
-
-
112,815
-
2,423
128,970
(1,930)
242,278
16,209
258,487
-
-
-
10,304
(2,681)
7,623
983
8,606
112,815
-
2,423
139,274
(4,611)
249,901
17,192
267,093
Bal as at 31 Mar 2009
Bal as at 30 Jun 2009 Total comprehensive income for the period Bal as at 30 Sep 2009
(9,865)
(477)
Total $'000
(4,665)
(68)
-
(9,865)
-
(9,865)
-
(68)
-
(68)
(ii) Consolidated statement of changes in equity for the nine months ended 30 September 2008
Share Capital $'000
Currency Dividend General Accum ulated Translation Reserve Reserve Profits Reserve $'000 $'000 $'000 $'000
112,815
5,679
669
Transfer of profit
-
-
731
Total comprehensive income for the period
-
-
-
112,815
5,679
Total comprehensive income for the period
-
-
Final tax exempt one-tier dividend paid at 1.5 cents per share
-
Bal as at 1 Jan 2008
Bal as at 31 Mar 2008
Bal as at 30 Jun 2008 Total comprehensive income for the period Bal as at 30 Sep 2008
(5,480)
95,210
Minority Interest $'000
Total $'000
Total Equity $'000
(1,720)
212,653
10,983
223,636
(7)
-
-
-
5,888
(5,022)
866
1,136
2,002
1,400
100,374
(6,749)
213,519
12,119
225,638
-
8,012
(1,416)
6,596
338
6,934
-
-
(724)
112,815
199
1,400
108,386
-
-
-
7,595
112,815
199
1,400
115,981
-
(5,480)
-
(5,480)
(8,165)
214,635
12,457
227,092
3,611
11,206
894
12,100
(4,554)
225,841
13,351
239,192
6
(iii) Statement of changes in equity of the company for the nine months ended 30 September 2009
Share Capital $'000
Dividend Reserve $'000
Accumulated Profits / (Losses) $'000
Total $'000
Bal as at 1 Jan 2009
112,815
9,865
10 ,876
133,556
Total comp rehe nsive income for the period
-
-
530
530
112,815
9,865
11 ,406
134,086
Total comp rehe nsive income for the period
-
-
Final tax exempt one-tier di vidend paid at 2.7 cents per share
-
Bal as at 31 Mar 2009
Bal as at 30 Jun 20 09
-
112,815
-
9 ,147
-
-
(1 ,184)
112,815
-
7 ,963
Total comp rehe nsive income for the period Bal as at 30 Sep 2009
(9,865)
(2 ,259)
(2,259) (9,865) 121,962
(1,184) 120,778
(iv) Statement of changes in equity of the company for the nine months ended 30 September 2008
S hare Capital $'000
Accumulated Profits / (Losses) $'000
Dividend Reserve $'000
Total $'000
Bal as at 1 Jan 2008
112,815
5,679
6,228
124,722
Total comp rehe nsive income for the period
-
-
3,687
3,687
112,815
5,679
9,915
128,409
Total comp rehe nsive income for the period
-
-
Final tax exempt one-tier di vidend paid at 1.5 cents per share
-
Bal as at 31 Mar 2008
Bal as at 30 Jun 20 08 Total comp rehe nsive income for the period Bal as at 30 Sep 2008
(5,480)
(1,824)
-
(1,824)
(5,480)
112,815
199
8,091
121,105
-
-
341
341
112,815
199
8,432
121,446
7
1(d)(ii) Details of any changes in the company’s share capital arising from rights issue, bonus issue, share buy-back, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or 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 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. During the quarter ended 30 September 2009, the Company did not issue any shares. As at 30 September 2009 and 30 September 2008, the Company has no outstanding share options of unissued ordinary shares. 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 preceeding year. Issued and fully paid ordinary share capital Number of shares (‘000) 2009 At 30 September 2009
365,360
2008 At 31 December 2008
365,360
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. N.A. 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice. These figures have not been audited or reviewed. However, our auditors have performed certain procedures and enquiries. These procedures are substantially less in scope than an audit or a review in accordance with Singapore Standard on Review Engagements (SSRE) 2410. 3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of a matter). N.A. 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 Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements as at 31 December 2008 except as described in paragraph 5. 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 Amendments and Interpretations to the Singapore Financial Reporting Standards (“FRSs”) for periods effective from 1 January 2009 are currently being assessed to have no material impact on the Group results.
8
6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Three Months Ended 30 September 2009 2008
Nine Months Ended 30 September 2009 2008
Earnings per ordinary share for the year based on net profit attributable to shareholders:(i) Based on weighted average number of ordinary shares in issue
2.82 cents
2.08 cents
7.16 cents
5.89 cents
Weighted average number of shares (‘000)
365,360
365,360
365,360
365,360
2.82 cents
2.08 cents
7.16 cents
5.89 cents
365,360
365,360
365,360
365,360
(ii) On a fully diluted basis Weighted average number of shares (‘000)
In arriving at the fully diluted earnings per share, only those potential ordinary shares arising from the exercise of options which would dilute the basic earnings per share of the Group are included in the computation.
9
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 period reported on and (b) immediately preceding financial year. GROUP 30 September 2009 31 December 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period
68.40 cents
65.09 cents
COMPANY 30 September 2009 31 December 2008 Net asset value per ordinary share based on issued share capital as at the end of the financial period
33.06 cents
36.55 cents
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group’s business. It must include a discussion of the following:(a) 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; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current period reported on. Review of Group Performance Business Segment Information Revenue 3 Months Ended 30 Sep 2009 2008 $’000 Distribution Enterprise Systems IT Services Share of profit of associate Total
Distribution Enterprise Systems IT Services
$’000
562,227 315,582 7,508 885,317
Change
482,563 261,501 6,914 750,978
16.5 20.7 8.6 Nm 17.9
Revenue 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 1,481,196 1,381,172 7.2 856,448 818,788 4.6 21,693 26,339 (17.6)
Share of profit of associate Total
%
2,359,337
2,226,299
Profit before Interest & Taxation 3 Months Ended 30 Sep % 2009 2008 $’000
$’000
8,401 9,357 405 193 18,356
Change
5,531 6,920 415 601 13,467
51.9 35.2 (2.4) (67.9) 36.3
Profit before Interest & Taxation 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 21,054 18,410 14.4 21,377 20,327 5.2 1,322 1,163 13.7
Nm
633
5
Nm
6.0
44,386
39,905
11.2
10
Geographical Segment Information Revenue 3 Months Ended 30 Sep 2009 2008 $’000 $’000 North Asia South East Asia Share of profit of associate Total
North Asia South East Asia Share of profit of associate Total
477,792 407,525 885,317
382,585 368,393 750,978
Revenue 9 Months Ended 30 Sep 2009 2008 $’000 $’000 1,254,152 1,127,566 1,105,185 1,098,733 2,359,337 2,226,299
% Change 24.9 10.6 Nm 17.9
% Change 11.2 0.6 Nm 6.0
Profit before Interest & Taxation 3 Months Ended 30 Sep % 2009 2008 $’000 8,721 9,442 193 18,356
$’000 6,363 6,503 601 13,467
Change 37.1 45.2 (67.9) 36.3
Profit before Interest & Taxation 9 Months Ended 30 Sep % 2009 2008 $’000 $’000 Change 20,764 20,874 (0.5) 22,989 19,026 20.8 633 5 Nm 44,386 39,905 11.2
(a) Revenue The Group’s revenue for the nine months ended 30 September 2009 (“9M 2009”) was 6.0% higher at $2.36b as compared to the same period ended 30 September 2008 (“9M 2008”). This was driven by moderate growth of 7.2% and 4.6% in the Distribution and Enterprise Systems segments respectively. For 3Q 2009, the Group’s revenue increased by 17.9% to $885.3m as compared to 3Q 2008 of $751.0m, with distribution and enterprise systems driving this growth at 16.5% and 20.7% respectively. In the Distribution segment, demand for notebooks and desktops continued to rise, while in the Enterprise Systems segment, there was more corporate spending seen in enterprise servers. Geographically, North Asia registered a strong 24.9% growth year-on-year in the third quarter, with desktops, notebooks and networking hardwares driving this growth. Revenue in South East Asia was also up by 10.6% in 3Q 2009 vs 3Q 2008. (b) Profitability The Group’s net profit after tax and minority interests (“NPATMI”) for 9M 2009 increased by 21.7% to $26.2m as compared to $21.5m for 9M 2008. For the current quarter, the Group’s NPATMI grew by 35.7% to $10.3m as compared to $7.6m over the same corresponding period in 2008. This was achieved as the Group continues to place strong focus on cost and working capital management, amidst the current economic difficulty, which resulted in significant reduction in operating and finance costs. Gross margin for 3Q 2009 declined marginally to 4.7% from 4.8% in 3Q 2008 due to lower margins for Enterprise Systems in 3Q 2009. Selling and distribution expenses in 3Q 2009 increased by 6.5% to $15.5m as compared to 3Q 2008, mainly contributed by higher commissions as a result of higher gross profits achieved as well as from higher provisions for doubtful debts. General and administrative expenses increased by a moderate 3.4% to $10.1m. Overall, total operating expenses as a percentage of revenue improved from 3.2% in 3Q 2008 to 2.9% in 3Q 2009 as a result of cost savings from improved operational efficiencies and the continued stringent management of operating costs. Finance costs were 49.9% lower in 3Q 2009 vs 3Q 2008 as a result of reduced bank borrowings from improved working capital utilisation in the current quarter. Gross bank borrowings fell by $40.1m to $183.1m as at 30 September 2009 from $223.2m as at 30 September 2008. 11
The Group’s net profit before interest and tax (“PBIT”) for 3Q 2009 improved by 36.3% to $18.4m from $13.5m in 3Q 2008. Both the Distribution and Enterprise business segments experienced an increase in PBIT by 51.9% and 35.2% respectively in 3Q 2009 as compared to 3Q 2008. On a geographical basis, North Asia recorded strong growth in profitability for 3Q 2009, registering a 37.1% improvement over the previous year corresponding period. South East Asia region, on the other hand, registered an improvement in profitability of 45.2% for 3Q 2009 against 3Q 2008. (c) Statement of Financial Position The Group's total shareholders funds were $249.9m as at 30 September 2009, an increase of $12.1m from $237.8m as compared to 31 December 2008. The Group generated a positive operating cash flow of $4.7m in 3Q 2009, which was comparable to 3Q 2008. For 9M 2009, the Group achieved a positive operating cash flow of $40.7m, reversing from a negative operating cash flow of $14.0m in 9M 2008. Group bank borrowings decreased by $10.1m to $183.1m as at 30 September 2009, from $193.2m as at 31 December 2008. Net gearing has also been reduced to 0.48 as at 30 September 2009 from 0.60 as at 31 December 2008, and from 0.75 as at 30 September 2008.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. N.A. 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. In view of the positive economic outlook in the region, coupled with the improved operational efficiency, tighter cost management and healthier working capital turns, the Directors are confident that FY2009 performance will be better than FY2008.
12
11. Dividend (a) Present Period Any dividend recommended for the current financial period reported on ? None (b) Previous Corresponding Period Any dividend declared for the corresponding period of the immediately preceding financial year ? None (c) Date payable N.A. (d) Books closure date N.A. 12. If no dividend has been declared/recommended, a statement to that effect. N.A.
13
PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1,Q2, Q3 or Half Year Results) 13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer’s most recently audited annual financial statements, with comparative information for the immediately preceding year. N.A. 14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. N.A. 15. A breakdown of sales as follows:N.A. 16. A breakdown of the total annual dividend (in dollar value) for the issuer’s latest full year and its previous full year as follows:N.A.
14
17. Interested Person Transactions Under General Mandate. Aggregate value of all interested transactions during the financial year under review (excluding transactions less than S$100,000 and transactions concluded under shareholders' mandate pursuant to Rule 920)
Aggregate value of all transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
a) Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries
-
433,667
b) Transactions for the sale of goods and services with Enrich Platinum Sdn. Bhd. and its subsidiaries
158,442
-
Name of Interested Persons
The above transactions are for the third quarter ended 30 September 2009.
BY ORDER OF THE BOARD Eddie Foo Toon Ee Company Secretary 11 November 2009
15
ECS HOLDINGS LIMITED
CONFIRMATION BY BOARD PURSUANT TO RULE 705(4) OF THE LISTING MANUAL
On behalf of the Board of Directors of the Company, we, the undersigned, hereby confirm to the best of our knowledge that nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the 3rd quarter ended 30 September 2009 to be false or misleading in any material respect.
On behalf of the Board of Directors
11 November 2009
16
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