Financial Statement Announcement for the First Quarter Ended 31 March 2013
Profit & Loss
Consolidated Statement of Comprehensive Income
(1) The figures were restated due to the completion of the Purchase Price Allocation exercise in accordance with FRS 103 (R) Business Combinations following the acquisition of AS Sunningdale Tech Latvia (formerly known as Akciju Sabiedriba ATEC) and ATEC of Sweden AB on Aug 2011. The profit and loss was previously adjusted in 2Q12 and 1H12.
Review of Performance
CONSOLIDATED INCOME STATEMENT
January – March 2013 ("1Q13")
The Group's revenue decreased marginally by 0.5% from $110.6 million in 1Q12 to $110.1 million in 1Q13. The decrease in revenue was from the Automotive and Mould Fabrication segments, partially offset by growth in the Healthcare business segment.
The decline in Automotive was mainly due to lower orders from Europe OEMs and was a direct result of the slow outlook in the European economy. The decline in Mould Fabrication was due to the fact that more tools were closed last year in 1Q12. The increase from the Healthcare business segment was due to our new plant in Latvia, which started mass production towards the end of 4Q12 and added further capacity in March 2013.
During the period, gross profit decreased by 11.5% from $13.3 million in 1Q12 to $11.8 million in 1Q13. Gross margin for 1Q13 was 10.7% compared to 12.0% in 1Q12. The reduction in gross margin was due to lower capacity utilization, product mix and increase in staff costs.
The decrease in other expenses was mainly due to foreign exchange loss of $0.4 million in 1Q12 as compared to foreign exchange gain of $0.2 million in 1Q13.
The lower finance costs were mainly due to repayment of certain loans and lower interest rates.
The Group achieved a net profit of $2.3 million compared to $3.0 million in 1Q12.
CONSOLIDATED BALANCE SHEET
The Group's property, plant and equipment were at $148.1 million as at 31 March 2013 compared to $147.6 million as at 31 December 2012. During the quarter, the Group incurred $3.4 million in capital expenditure for machineries. Property, plant and equipment was stated net of $6.5 million (1Q12: $6.7 million) in depreciation charges incurred during the quarter.
The increase in trade and other receivable was mainly due to delay in collections from certain customers as the last day of March 2013 fell on a weekend.
The decrease in tax payable was due to payments made.
The Group maintained a cash balance of $47.1 million as at 31 March 2013 (31 December 2012: $52.7 million) resulting in net debt of $14.8 million (31 December 12: $5.9 million) mainly due to payment for property, plant and equipment, income tax and the delay in collections.
CONSOLIDATED CASHFLOW STATEMENT
January - March 2013 ("1Q13")
Net cash used in operating activities was $7.0 million for 1Q13, compared to net cash generated from operating activities of $5.9 million for 1Q12 due to payments of suppliers and income tax and delay in the collections from certain customers as the last day of March 2013 fell on a weekend and increase in inventories. Net cash used in investing activities was $2.7 million for 1Q13 compared to $3.1 million in 1Q12. Net cash generated from financing activities for 1Q13 was $3.0 million compared to $1.2 million in 1Q12.
Commentary On Current Year Prospects
Little has changed over the last quarter. The business environment remains challenging in Europe, and while there is some growth in the US and China, it has been slower than in the past. This year's significant minimum wage increase in Malaysia and continuous rising costs in China, two countries where we have large operations, and pricing pressure from customers due to competition will continue to squeeze our margins.
In our Automotive business segment, our European customers have completed adjusting down their inventories in the pipeline and we expect a lower but more stable demand for the rest of the year. We are busy with new programs, but mass production will begin only in 1H2014.
In our consumer/IT business segment, our intensified effort to develop new customers for one of our large operations, where revenue fell significantly in 2012 when a major customer changed their supply chain strategy, has paid off. Revenue from new customers was able to partially close the gap. Other plants remain stable and busy.
The Healthcare business growth momentum will continue for the rest of 2013. All our Healthcare plants remain very busy. Our European plant has also successfully increased the capacity in Q2 2013.
Despite the challenges ahead, the management team remains optimistic but cautious for the rest of 2013. Our continuous striving for operational excellence, initiative to develop new capabilities and customers for long term sustainability and discipline in adhering to a profitable business model will allow us to remain on course.