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Third Quarter Financial Statement And Dividend Announcement 2009

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Third Quarter Financial Statement and Dividend Announcement

Income Statement

Balance Sheet

Review of Group Performance

(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.

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.

Commentary

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.