Announcements & News Releases

Full Year Financial Statement And Dividend Announcement For The Period Ended 31 Dec 2003

Feb 26, 2004

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3),

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    •  
        HALF-YEAR AND FULL YEAR RESULTS



1(a) An income statement (for the group) together with a comparative statement for the

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      corresponding period of the immediately preceding financial year.

 

 
2003
2002
Increase/
 
Jan-Dec
Jan-Dec
(Decrease)
 
($'000)
($'000)
%
Turnover
81,172
45,267
79%
Other operating income
686
1,541
(55%)
Raw and consumable materials
(36,679)
(18,535)
98%
Personnel expenses
(5,814)
(6,890)
(16%)
Depreciation and amortisation
(2,164)
(2,301)
(6%)
Other operating costs and expenses (Note 1)
(17,033)
(6,959)
145%
Profit from operations
20,168
12,123
66%
Financial expenses – net
(158)
(270)
(41%)
Profit before share of results of Associated Company
20,010
11,853
69%
Share of results of associated company
(69)
(50)
38%
Profit before tax and minority interests
19,941
11,803
69%
Income tax
(677)
56
nm
Profit after tax and before minority interests
19,264
11,859
62%
Minority interests
246
402
(39%)
Net profit for the year
19,510
12,261
59%
    Nm means not meaningful.

    Note 1 - Other operating costs in year ended 31 Dec 03 included civil work and subcontract costs for projects of S$8.7 million

     



1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement

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      as at the end of the immediately preceding financial year.

 

 
Group
Group
Company
Company
$'000
31-Dec-03
31-Dec-02
31-Dec-03
31-Dec-02
CURRENT ASSETS        
Cash and bank balances
5,389
3,770
248
132
Fixed deposits
26,505
13,338
10,633
9,283
Stocks
7,982
5,402
1,077
619
Trade debtors
19,517
12,813
13,307
2,613
Work-in-progress
15,759
16,195
-
-
Other debtors, deposits & prepayments
2,912
2,379
60
1,006
Due from subsidiaries (non-trade)
-
-
-
26,400
Due from subsidiaries (trade)
-
-
10,215
4,757
Total current assets
78,064
53,897
35,540
44,810
CURRENT LIABILITIES        
Trade creditors
20,425
5,374
564
469
Other creditors and accruals
1,353
1,932
998
437
Provision for income tax
592
387
(3)
-
Provision for warranty
50
50
-
-
Provision for directors' fees
243
-
243
-
Hire purchase creditors, current
32
47
-
-
Finance lease creditors, current
14
14
-
-
Short term loans
2,291
1,686
-
-
Long term loans, current
1,579
1,623
1,579
1,154
Total current liabilities
26,579
11,113
3,381
2,060
Net current assets
51,485
42,784
32,159
42,750
NON-CURRENT ASSETS        
Fixed assets
15,120
13,021
1,110
1,103
Construction-in-progress
10,071
-
-
-
Due from subsidiaries (non-trade)
-
-
40,055
-
Subsidiaries
-
-
7,269
8,039
Associated company
351
255
-
-
Long-term investment
3,432
1,735
-
-
Intangibles
9,117
3,506
99
-
Total non-current assets
38,091
18,517
48,533
9,142
NON-CURRENT LIABILITIES        
Hire purchase creditors, non-current
48
73
-
-
Finance lease creditors, non-current
-
63
-
-
Deferred tax liabilities
271
489
-
-
Long term loan, non-current
2,723
4,267
2,307
3,846
Total non-current liabilities
3,042
4,892
2,307
3,846
Total net assets
86,534
56,409
78,385
48,046
SHARE CAPITAL AND RESERVES        
Share capital
15,624
11,809
15,624
11,809
Share premium
31,606
22,378
31,606
22,378
Translation reserve
(667)
(647)
-
-
Revenue reserve
38,916
20,375
31,155
13,859
Share capital and reserves before minority interest
85,479
53,915
78,385
48,046
Minority interests
1,055
2,494
-
-
Total capital and reserves
86,534
56,409
78,385
48,046




1(b)(ii) Aggregate amount of group's borrowings and debt securities.

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    •  
        Underlying assets in the hire purchase and finance leases.
    • Amount repayable in one year or less, or on demand

      As at 31/12/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
             
      46
      3,870
      61
      3,309


      Amount repayable after one year

      As at 31/12/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
             
      48
      2,723
      136
      4,267


      Details of any collateral



1(c) A cash flow statement (for the group), together with a comparative statement for

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      the corresponding period of the immediately preceding financial year.

 

('$000)
2003
2002
 
Jan-Dec
Jan-Dec
Cash Flows from operating activities    
Profit before tax 19,941 11,803
Adjustments:    
Share of results of associated company 69 50
Amortisation of goodwill and intangible assets 465 998
Provision for doubtful debts 1,079 601
Bad debts written off 10 850
Provision for Stock obsolescence 111 13
Depreciation of fixed assets 1,699 1,303
Loss/ (Gain) on disposal of fixed assets 12 (1)
Interest expense 437 353
Interest income (278) (83)
Grants (7) (76)
Operating profit before working capital changes 23,538 15,811
Stocks (2,690) (2,523)
Trade debtors (7,792) (9,488)
Work-in-progress 436 (1,853)
Other debtors, deposits and prepayments (532) (795)
Trade creditors 15,050 3,988
Other creditors and accruals (719) 461
Provision for directors' fee 243
-
Cash generated from operations 27,534 5,601
Interest paid (437) (353)
Income tax paid (690) (1,826)
Net cash generated from operating activities 26,407 3,422
Cash flows from investing activities    
Other investment (1,698) (1,735)
Development Costs(R&D) (7,269) (1,216)
Investment in associate
(27)
-
Purchase of fixed assets (3,874) (3,210)
Proceeds from disposal of fixed assets 63 15
Construction in progress (10,071) -
Interest received 278 83
Grant received 7 76
Net cash used in investing activities (22,591) (5,987)
Cash flows from financing activities    
Proceeds from issue of new shares 13,045 12,625
Dividend payment (969) (1,834)
(Payments)/proceeds from long-term loan, net
(1,588)
4,554
Proceeds of term loan, net 605 478
Payment of hire purchase creditors (40) (48)
Change in finance lease creditors (63) (26)
Net cash from financing activities 10,991 15,749
Net increase in cash and cash equivalents 14,806 13,184
Cash and cash equivalents at beginning of the period 17,108 4,421
Effect of exchange rate changes (20) (497)
Cash and cash equivalents at end of the period 31,894 17,108
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    •  



1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or

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      (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.







1(d)(ii) Details of any changes in the company's share capital arising from rights issue,

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      bonus issue, share buy-backs, exercise of share options or warrants, conversion of
      other issues of equity securities, issue of shares for 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.
  •  
      1. A private placement of 11,811,000 new ordinary shares of S$0.05 each at a price of S$1.00 per share was announced on 30 December 2002. The new shares were listed on 9 January 2003.

      2. 2,008,500 new ordinary shares of S$0.05 each were issued pursuant to options exercised under the Hyflux Employee Shares Option Scheme ("Scheme").

      3. Bonus issue of 62,471,748 ordinary shares of S$0.05 each on the basis of one ordinary shares credited as fully paid for four existing shares held was announced on 28 August 2003 and listed on 11 December 2003.



2. Whether the figures have been audited or reviewed and in accordance with

  •  
      which auditing standard or practice.

    The figures have not been audited or reviewed.



3. Where the figures have been audited or reviewed, the auditors' report (including

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      any qualifications or emphasis of a matter).


Not applicable


4. Whether the same accounting policies and methods of computation as in the

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      issuer's most recently audited annual financial statements have been applied.
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      The same accounting policies and methods of computation are being followed as in the audited financial statements for year ended 31 December 2002.



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.
  •  
      Not applicable.



6. Earnings per ordinary share of the group for the current financial period reported

  •  
      on and the corresponding period of the immediately preceding financial year,
      after deducting any provision for preference dividends.

 

 
Jan – Dec 2003
Jan – Dec 2002
Earnings per ordinary share after deducting any provision for preference dividends were:    
Based on the weighted average number of ordinary shares in issue; and
7.7 cents
5.3 cents
On a fully diluted basis
7.5 cents
5.2 cents
    Average no of shares for the period ended 31 December 2003 is 253,964,013 as compared to
    230,241,909 in 2002.



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 financial period reported on; and
      (b) immediately preceding financial year.

 

 
31-Dec-03
31-Dec-02
Net asset value per ordinary share of:    
Group
27.4 cents
22.8 cents
Company
25.1 cents
20.3 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 financial period reported on.

  •  

      Income Statement

      For the financial year ended 31 December 2003, the group's sales rose by 79% to S$81.2 million and net profit increased by 59% to S$19.5 million compared to 2002.

      The Group continued to grow its business in its 2 core markets in China and Singapore. Sales in Singapore doubled to S$48.4 million compared to a year ago. This is largely due to the completion of 2 municipal projects for Singapore's Public Utilities Board. China's sales surged by 62% to S$32.1 million mainly attributable to growing sales in the pharmaceutical and biotechnology sectors. The group's new consumer product - dragonfly launched in 4th quarter of 2003 contributed 3% of the group's total sales.

      In tandem with higher sales, raw materials and consumables doubled to S$36.7 million. Other operating costs and expenses increased by 145% to S$17.0 million primarily due to civil work and subcontract costs of S$8.7 million for the 2 municipal projects in Singapore as well as the start up and operating cost for the new consumer division. The fall in personnel expenses by 16% compared to last year resulted from improved deployment of resources in the execution of projects.

      Net profit margin reduced marginally to 24% compared to 27% last year mainly due to lower margins from the municipal projects.


      Balance Sheet

      The group's equity base has strengthened to S$85.5 million from S$53.9 million as of the beginning of the year. This is mainly due to net profit for the year of S$19.5 million, the private placement of 11.8 million shares and 2 million of option shares exercised pursuant to the Hyflux Employee Share Option Scheme less dividend payment.

      Current assets increased by 45% to S$78.0 million due to stronger cash position of S$32 million and higher trade debtors. Current liabilities increased by 139% to S$26.6 million due to trade creditors and accruals. This led to the lower current ratio of 2.9 compared to 4.8 last year.

      At the company level, trade debtors increased to S$13.3 million from S$2.6 million last year due to billings made to Sinolac project in December 2003.
      During the year, the group invested a total of S$19.6 million in non-current assets in which S$10 million was for the development of the seawater desalination plant, S$5.6 million for research and development projects and licensing fee and S$1.7 million for the investment in Sinolac.

      Despite the new share issue and the bonus share issue earnings per share was up by 45% to 7.7 cents. Debt equity ratio was 0.08 compared to 0.14 last year. Return on equity was maintained at 27%.

      Cashflow Statement
  •  
      The strong cash position of S$32 million was mainly due to cash generated from operating activities of S$26.4 million and proceeds from new share issues of S$13 million, partially offset by in investment outlay of S$22.6 million. Such outlay was primarily for capital expenditure for the seawater desalination plant and for R&D.

  •  



9. Where a forecast, or a prospect statement, has been previously disclosed to

  •  
      shareholders, any variance between it and the actual results.
  •  
      The target revenue of S$ 90 million was on the basis of the group's ability to recognize a portion of the sub-contract work (forecast to be about S$ 10 mil) that the group will undertake as subcontractor for the desalination project. Following the change in ownership in Singspring, where Hyflux Ltd is now the sole shareholder, the costs and revenues of such sub-contract work was eliminated on the consolidation of the group's accounts in accordance with Singapore Financial Reporting Standards. In view of the above, the group's revenue of S$81.2 million is above target.



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.
  •  
      Current order book stood at S$62 million, comprising all industrial projects and orders for consumer products. This is in contrast to the order book last year of S$60 million of which only S$24 million was from industrial projects. This pointed to the strong growth in our industrial sales which typically have a shorter duration of 3-9 months for completion. China will continue to be a high growth market for us in our pharmaceutical and biotechnology industrial segments as well as in the new chemical and petrochemical segments. For 2004, the Group also expects stronger sale of consumer products. The Singapore market is expected to see a steady pipeline of municipal projects



11. Dividend

  •  
      (a) Current Financial Period Reported On

      Any dividend recommended for the current financial period reported on? Yes

      Name of Dividend
      First & Final
      Dividend Type
      Cash
      Dividend Amount per Share (in cents) 0.7 cents per ordinary share (less tax)    
      Optional:- Dividend Rate (in %)      
      Par value of shares
      5.0 Cents
      Tax Rate
      22%


      (b) Corresponding Period of the Immediately Preceding Financial Year

      Any dividend declared for the corresponding period of the immediately preceding financial year? Yes

      Name of Dividend
      Final
      Interim
      Dividend Type
      Cash
      Cash
      Dividend Amount per Share (in cents) 0.5 cents per ordinary share (less tax) 1 cent per ordinary share (less tax)  
      Optional:- Dividend Rate (in %)      
      Par value of shares
      5.0 Cents
      5.0 Cents
      Tax Rate
      22%
      22%


      (c) Date payable

      To be announced later.


      (d) Books closure date

      To be annouced later



12. If no dividend has been declared/recommended, a statement to that effect.

  •  
    •  
        Not applicable




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.

 

 
2003
2002
Increase/
 
S$'000
%
S$'000
%
(Decrease)
SALES          
By Geographical market          
Singapore
48,405
59%
23,902
53%
103%
China
32,098
40%
19,820
44%
62%
Others
669
1%
1,545
3%
-57%
Total
81,172
100%
45,267
100%
79%
           
PROFIT FROM OPERATION          
By Geographical market          
Singapore
7,747
38%
4,991
41%
55%
China
12,358
61%
7,048
58%
75%
Others
63
0%
84
1%
-25%
Total
20,168
100%
12,123
100%
66%
  •  
      Sales from Singapore doubled to S$48.4 million in 2003. However, the percentage increase in profit from operations of 55% is lower than that of percentage increase in sales mainly due to the lower margins for municipal projects.

      Profit from China market is up by 75% to S$12.4 million primarily due to higher margins from increased industrial sales.




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.
    Please see review of performance above.




15. A breakdown of sales.


 
2003
2002
Increase/
Breakdown of sales
$'000
$'000
(Decrease)
Sales reported for first half year
37,366
18,774
99%
Profit after tax before minority interest reported for first half year
8,924
3,739
139%
Sales reported for second half year
43,806
26,493
65%
Profit after tax before minority interest reported for second half year
10,340
8,121
27%




16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest

  •  
      full year and its previous full year.

      Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details)

       
      Latest Full Year (2003)
      Previous Full Year (2002)
      Ordinary
      969
      1,834
      Preference
      0
      0
      Total:
      969
      1,834





BY ORDER OF THE BOARD

Lim Kim Seng
Company Secretary
26/02/2004