Full Year Financial Statement And Dividend Announcement for the year Ended 31/12/2007
Profit and Loss
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INCOME STATEMENT
Turnover
Group's turnover decreased by 27% from S$91.3 million in FY2006 to $66.2 million in FY2007. The decrease was due mainly to lower selling prices and decreased sale volumes as a result of clearing aged inventories and converting the business model from branch operations to distributorships.
Cost of Sales
Cost of sales decreased by 19% from S$70.8 million in FY2006 to S$57.1 million in FY2007 due to decrease in sale volumes. This was partially offsetted by (1) clearing of aged inventories at lower cost and;(2) low production yield rate as a result of the transfer of certain product lines from Shanghai to Shandong.
Gross Profit
Group's gross profit decreased to S$9.1 million in FY2007 as compared S$20.5 million in FY2006 as a result of lower unit selling price and higher unit cost of sales.Other operating expenses
Other operating expenses decreased by S$3.5 million to S$3.7 million in FY2007, it comprised an additional impairment loss of S$6.3 million for plant and machinery of Shanghai ASA Ceremic Co.,Ltd ("Shanghai ASA") and Shanghai Fortune Ceremic Co.,Ltd ("Shanghai Fortune"), and a onetime write off of leasehold improvements of S$3.3 million. This was offsetted by a gain of S$6.1 million that arose from the disposal of properties of Shanghai Fortune and Shanghai ASA.Selling and distribution Costs
Selling and distribution costs reduced by S$7.5 million after cost reduction programme was implemented during the year.Administrative expenses
Administrative expenses increased from S$7.4 million in FY2006 to S$10 million in FY2007 due mainly to the following:
- Loss of S$1.9 million caused by work stoppages arising from industrial disputes during the year;
- Increase in write-off for doubtful debts by S$1.2 million;
- Layoff compensation of S$0.5 million to Shanghai factory workers;
This was partially offset by:
-reduction in payroll costs of S$0.4 million
Finance Costs
Finance costs reduced by 32% to S$3.0 million in FY2007 as a result of the repayment of bank loans matured during the year. Operating loss before income tax for FY2007 was S$ 32.9 million compared with S$ 31.4 million in FY2006.
Income Tax
The Group registered a net tax credit of S$ 179,000 in FY 2007 as compared to a tax expense of S$1.2 million in FY2006.
Losses from Discontinued Operations
The Group incurred losses from discontinued operations totalling S$1.9 million in FY2007 as a result of the commencement of winding-up of Beijing ASA Fortune Construction Building Material Ltd and Hongkong ASA Ceremic Company Limited and the proposed winding-up of Shanghai ASA Laticrete Adhesive Co.,Ltd in FY2008.
Net loss for the year
The Group's loss for FY2007 was S$34.6 million as compared to S$32.5 million in FY2006.
COMMENTARY ON BALANCE SHEET
Cash and cash equivalents
Cash and cash equivalents decreased by S$5.9 million as detailed in the consolidated cash flow statement. Restricted cash decreased by S$3.2 million due mainly to lesser usage of open letters of credit as a result of lower imports by Shandong ASA Ceramic Co.,Ltd in FY2007 and the change in the mode of payment from acceptance bills to telegraphic transfers.
Property, plant and equipment
Property, plant and equipment decreased by approximately S$19 million from S$84.8 million to S$65.8 million, due mainly to current depreciation charge of S$10.8 million, an impairment loss of S$6.3 million for plant and machinery, disposal of machinery and equipments of S$3.2 million and a write-off of the leasehold improvements of S$3.3 million, partially offsetted by additions of property of S$5.6 million.
Inventories
Inventories decreased by approximately S$11.8 million from S$51.2 million to S$39.4 million, due mainly to an allowance for inventories of S$3 million, and a decrease in finished goods of S$8 million as a result of clearing aged inventories.
Assets classified as held for sale
Assets classified as held for sale decreased from S$28.3 million as at 31 December 2006 to S$8.5 million as at 31 December 2007 due mainly to the Group's disposal of part of its land use right and buildings according to the Circular released at 12 January 2007.
Trade Payables
Trade payables decreased by 27% due mainly to reduction in the volume of the raw materials purchased as a result of lower production and prompt settlement of suppliers.
Amount due to Director
Increase in amount due to director was due mainly to a further loan extended by a director to the Group for working capital purposes.
Bank borrowings
Decrease in bank borrowings was due mainly to repayment of bank loans matured during the year.
Other Payables
Other payables increased by S$4.9 million due mainly to advances amounting to S$5.9 million from Shanghai JinMing Investment Company for the sale of a property owned by Shanghai ASA, partially offsetted by a decrease in accrued expenses of S$1 million.
On the Company level, the amount due from subsidiaries (non-trade) decreased due mainly to the allowances for the doubtful debts of S$6.4 million. Investment in subsidiaries decreased by S$30.9 million due to allowances made aganist the investments in certain loss-making subsidiaries.
COMMENTARY
The Group will continue to convert its business model from branch operations to distributorships and endeavour to focus on big project sales. In this connection, gross margin is also expected to reduce due to keen market competition. In addition, the Group expects a corresponding reduction in its selling and distribution costs and will continue to step up efforts in reducing the general and administrative and other operating expenses.
This release contains certain statements that are not statement of historical fact, i.e. forward-looking statements. Readers can identify some of these statements by forward-looking terms such as 'expect', 'believe', 'plan', 'intend', 'estimate', 'anticipate', 'may', 'will', 'would', 'could' or similar words. However, you should note that these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are made based on current expectations, projections and assumptions about future events. Although ASA Group believes that these expectations, projections and assumptions are reasonable at the time of making them, these forward-looking statements are subject to risks (known and unknown),uncertainties and certain assumptions about ASA Group, its business operations, and the environment it operates in. Actual future performance, outcomes and results may therefore differ materially from those expressed in forward-looking statements. Representative examples of these risk factors include (without limitation) general industry and economic conditions, interest rate movements, cost of capital and capital availability, competition from other companies and venues for sales/manufacture/ distribution of goods and services, shift in customer demands, cus forward-looking statements, which are based on current view of management on future events.
Balance Sheet
