Financials

Financials

Third Quarter Financial Statement And Dividend Announcement 2014

Financials Archive

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Third Quarter Financial Statement and Dividend Announcement

Income Statement

Statement of Comprehensive Income

Balance Sheet

Review of Group Performance

(a) Revenue

The Group's revenue for the three months ended 30 September 2014 was $1.12b (three months ended 30 September 2013: $999.3m). Geographically, revenue in North Asia increased 16.8% to $682.6m (three months ended 30 September 2013: $584.6m), driven by strong sales of servers, networking hardware, and software products. Revenue in South East Asia increased 5.9% to $439.2m (three months ended 30 September 2013: $414.7m) due to higher sales of phone devices, notebooks, and software products.

Revenue for the Distribution segment in the three months ended 30 September 2014 decreased 6.9% to $622.3m (three months ended 30 September 2013: $668.4m) due to lower sales of media tablets, phone devices, consumer storage products, and supplies. This was mitigated by the increase in revenue from the Enterprise Systems and IT Services segments of 52.0% and 8.5% to $490.8m and $8.7m, respectively (three months ended 30 September 2013: $322.8m and $8.1m, respectively) mainly due to higher sales of servers, software products, enterprise storage products, and networking hardware.

(b) Profitability

The Group's gross profit for the three months ended 30 September 2014 increased 9.7% to $41.9m (three months ended 30 September 2013: $38.2m), as the Group continues its focus to grow the higher margin Enterprise Systems segment which accounted for 43.7% (three months ended 30 September 2013: 32.3%) of total revenue for the current period. Gross profit margin for the three months ended 30 September 2014 declined marginally to 3.7% (three months ended 30 September 2013: 3.8%). This was mainly due to competition in the Enterprise Systems segment mainly for servers and enterprise software products in North Asia.

Total operating expenses for the three months ended 30 September 2014 was $28.9m (three months ended 30 September 2013: $29.1m), representing a marginal decrease of approximately 0.5% compared to the same period last year due to lower provisions made for doubtful debts and favorable non-trade exchange differences. Finance costs for the three months ended 30 September 2014 amounted to $3.6m (three months ended 30 September 2013: $2.2m) due to higher utilization of bank borrowings to support the growth in the Enterprise business, which has longer credit terms.

The Group's net profit after tax and non-controlling interests ("NPATMI") for the three months ended 30 September 2014 was $9.7m (three months ended 30 September 2013: $8.7m), with NPATMI of 0.9% of revenue, consistent with the comparative period.

(c) Statement of Financial Position

The Group's total shareholders' funds as at 30 September 2014 stood at $391.4m (as at 31 December 2013: $371.7m).

The Group's gross bank borrowings as at 30 September 2014 stood at $358.0m (as at 31 December 2013: $259.2m) with higher utilization of bank facilities to support the growth in the Enterprise Systems segment, which is mainly project based and generally has longer credit terms. Cash and bank balances was $127.9m (as at 31 December 2013: $120.9m). Net gearing ratio was 0.59 times as at 30 September 2014 (as at 31 December 2013 and 30 June 2014: 0.37 times and 0.68 times, respectively).

Net cash generated from operating activities for the three months ended 30 September 2014 was $34.0m (cash used for the three months ended 30 September 2013: $22.9m).

Commentary

According to an International Data Corporation report published in August 2014, worldwide IT spending continues to grow on the back of increased investments in technology in the consumer and enterprise segments. Smartphones are expected to lead this growth, followed by enterprise products comprising of infrastructure and software products.

The Group's Enterprise segment, which offers higher margins, is expected to continue to grow.

Barring any unforeseen circumstances, the Board of Directors remains cautiously optimistic about the Group's financial performance in both the fourth quarter and the full financial year ending 31 December 2014.