IPC CORPORATION LTD
Full Year Financial Statement And Dividend Announcement
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS
1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year
UNAUDITED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER
/ / / 2002 / 2001 / Increase/
/ / / S$'000 / S$'000 / (Decrease)
%
1.(a) / / Turnover / 17,162 / 6,999 / 145.2
1.(b) / / Cost of sales or classification as followed in the most recent audited annual financial statements / (12,734) / (3,789) / 236.1
1.(c) / / Gross profit / 4,428 / 3,210 / 37.9
1.(d) / / Investment income / - / - / NA
1.(e) / / Other income including interest income / 464 / 1,041 / (55.4)
2.(a) / / Operating loss before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, bad debts, stock written-off, foreign exchange gain/(loss), profit/loss on sale of investments, fixed assets and exceptional items / (3,103) / (4,969) / (37.6)
2.(b)(i) / / Interest on borrowings / - / - / NA
2.(b)(ii) / / Depreciation and amortisation / (1,025) / (1,707) / (40.0)
2.(b)(iii) / / Allowance for doubtful debts & bad debts written back / 124 / 95 / 30.5
2.(b)(iv) / / Write-off for Stock Obsolescence / (12) / (61) / (80.3)
2.(b)(v) / / Impairment in value of investments / - / - / NA
2.(b)(vi) / / Foreign exchange (loss)/gain / (648) / 792 / NM
2.(b)(vii) / / Profit on sale of fixed assets / 100 / 178 / (43.8)
2.(c) / / Exceptional items (provide separate disclosure of items) / 2,875 / 10,821 / (73.4)
2.(d) / / Operating (loss)/profit before income tax, minority interests and extraordinary items but after interest on borrowings, depreciation and amortisation, bad debts, stock written off, foreign exchange gain/(loss), profit/loss on sale of investments, fixed assets and exceptional items / (1,689) / 5,149 / NM
2.(e) / / Income derived from associated companies / (3) / 36 / NM
2.(f) / / Operating (loss)/profit before income tax / (1,692) / 5,185 / NM
2.(g) / / Less income tax / (47) / (282) / (83.3)
2.(g)(i) / / Adjustment for over/(under) provision of tax in respect of prior years / 38 / (210) / NM
2.(g)(ii) / / Operating (loss)/profit after tax before deducting minority interests / (1,701) / 4,693 / NM
2.(g)(iii) / / Less minority interests / 316 / 393 / (19.6)
2.(h) / / Operating (loss)/profit after tax attributable to members of the company / (1,385) / 5,086 / NM
2.(i)(i) / / Extraordinary items (provide separate disclosure of items) / - / - / NA
2.(i)(ii) / / Less minority interests / - / - / NA
2.(i)(iii) / / Extraordinary items attributable to members of the company / - / - / NA
2.(i)(iv) / / Transfer to/from Exchange Reserve / - / - / NA
2.(i)(v) / / Transfer to Capital Reserve / - / - / NA
2.(j) / / Operating (loss)/profit after tax and extraordinary items attributable to members of the company / (1,385) / 5,086 / NM
(2c) Exceptional items relates to:
S$'000 / 2001
S$'000
(Provision)/write back for diminution in value of other investments / (1,968) / 2,428
Write back amount resulting from final claim settlement / - / 6,726
Provision for other debtors arising from restructuring / (206) / (412)
Accrual for Disputed claims / - / (251)
Write back for diminution of value in investment property / - / 2,215
Gain on acquisition of shares from minority interests / - / 115
Profit arising from dilution of shareholding in ThinSoft (Holdings) Inc's IPO / 5,254 / -
Loss on Share Capital Reduction (Note) / (101) / -
Loss on buyout of minority interest (Note) / (59) / -
Professional fees on debt restructuring / (45) / -
Total / 2,875 / 10,821
Note:
Through a capital reduction exercise, Shanghai Shared Data Network Co Ltd is now 100%-owned subsidiary.
The factors that contributed the following:
1. Cost of Sales (increased 145.2%)
The increase was in tandem with the 236.1% increase in turnover and from different product mix.
2. Other income including interest income (decreased 55.4%)
The decrease was mainly due to the lower interest rate earned from 4% to 5% in 2001 compared with 0.1% to 1.5% in 2002, and the lost of the rental income from unused space at corporate building in 2002.
3. Depreciation and amortization (decreased 40%)
The decrease was due to some of the fixed assets being fully depreciated
4. Foreign exchange loss
The Group does not hedge its forex exposures. The foreign exchange loss or gain related to recorded monetary balance denominated in foreign currencies that were adjusted to reflect the rates at balance sheet date. The foreign exchange loss was mainly unrealised, and due to the weakening of the United States Dollars against Singapore Dollars during the year 2002.
1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year
Balance Sheet as at 31 December
/ / 2002 / / 2001 / / 2002 / / 2001
/ / S$'000 / / S$'000 / / S$'000 / / S$'000
ASSETS LESS LIABILITIES / / / / / / / /
Non-current assets / / / / / / / /
Intangible assets, net / / 4,017 / / 1,042 / / 205 / / 410
Property, plant and equipment, net / / 14,553 / / 17,784 / / 8,863 / / 9,012
Investment / / 66,950 / / 96,394 / / 20,910 / / 22,878
Total non-current assets / / 85,520 / / 115,220 / / 29,978 / / 32,300
Current assets / / / / / / / /
Development properties / / 59,152 / / 24,938 / / - / / -
Receivables / / 8,390 / / 3,566 / / 111,972 / / 111,951
Stocks / / 67 / / 144 / / - / / -
Cash at bank and in hand / / 14,924 / / 19,789 / / 1,154 / / 3,537
Total current assets / / 82,533 / / 48,437 / / 113,126 / / 115,488
Payables: amounts falling due within one year / / / / / / / /
Trade payables / / 6,157 / / 7,068 / / 143 / / 986
Other payables / / 13,404 / / 8,723 / / 5,205 / / 5,545
Amounts due to subsidiary companies / / - / / - / / 164 / / 180
Amounts due to associated companies / / 662 / / 663 / / - / / -
Amounts due to Bankers / / 3,696 / / - / / - / / -
Provision for taxation / / 459 / / 893 / / 67 / / 67
Total current liabilities / / 24,378 / / 17,347 / / 5,579 / / 6,778
Net current assets / / 58,155 / / 31,090 / / 107,547 / / 108,710
Non-current liability / / / / / / / /
Deferred taxation / / - / / (28) / / - / / -
Net assets / / 143,675 / / 146,282 / / 137,525 / / 141,010
EQUITY / / / / / / / /
Share capital / / 105,723 / / 105,723 / / 105,723 / / 105,723
Reserves / / 35,650 / / 36,805 / / 31,802 / / 35,287
Share capital and reserves / / 141,373 / / 142,528 / / 137,525 / / 141,010
Minority interests / / 2,302 / / 3,754 / / - / / -
Total equity / / 143,675 / / 146,282 / / 137,525 / / 141,010
1(b)(ii) Aggregate amount of group's borrowings and debt securities
Amount repayable in one year or less, or on demand
Secured / Unsecured / Secured / Unsecured
S$'000
3,696 / S$'000
Nil / S$'000
Nil / S$'000
Nil
Amount repayable after one year
Secured / Unsecured / Secured / Unsecured
S$'000
Nil / S$'000
Nil / S$'000
Nil / S$'000
Nil
Details of any collateral
Secured against certain of the Company subsidiary's properties held for sale and standby Letter of Credits granted by fellow subsidiary.
1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year
GROUP CASHFLOW STATEMENT
/ S$'000 / S$'000
Cashflow from operating activities: / /
(Loss)/Profit before taxation / (1,692) / 5,185
Adjustments for non-cash items / (846) / (5,420)
Operating loss before reinvestment in working capital / (2,538) / (235)
Working capital changes, excluding changes relating to cash / 2,842 / (2,276)
Cash generated from/(used in) operations / 304 / (2,511)
Net interest, income tax and dividend paid / (360) / 113
Net cash used in operating activities / (56) / (2,398)
Cash flow from investing activities / /
Purchase of property, plant and equipment / (288) / (655)
Proceeds from disposal of property, plant and equipment / 2,132 / 387
Net increase in investment/development properties / (3,606) / (7,652)
Deferred expenditure paid / (4,305) / -
IPO expenses in Thinsoft (Holdings) Inc / (3,872) / -
Investment in fund management / (3,135) / -
Buyout/capital reduction in subsidiary company from minority shareholders / (3,363) / -
Purchase of shares in a subsidiary company from minority shareholders / - / (1,900)
Net cash used in investing activities / (16,437) / (9,820)
Cash flow from financing activities: / /
Proceeds from issuance of share capital / - / 5,281
Proceeds from subsidiary company's return on investment / - / 638
Proceeds from dilution of 25% of Thinsoft (Holdings) Inc / 11,628 / -
Net cash generated from financing activities / 11,628 / 5,919
Net decrease in cash and cash equivalents / (4,865) / (6,299)
Cash and cash equivalents at beginning of year / 19,789 / 26,088
Cash and cash equivalents at end of year / 14,924 / 19,789
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (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
STATEMENT OF CHANGES IN EQUITY - GROUP / Share Capital / Share Premium / Asset revaluation reserve / Foreign currency translation reserve / Accumulated losses / Total/ S$'000 / S$'000 / S$'000 / S$'000 / S$'000 / S$'000
Balance as at 1 January 2002 / 105,723 / 355,111 / 2,279 / (6,942) / (313,643) / 142,528
Opening balance restated merger accounting adopted by ThinSoft (Holdings) Inc / --- / --- / --- / --- / (79) / (79)
Balance as at 1 January 2002 restated / 105,723 / 355,111 / 2,279 / (6,942) / (313,722) / 142,449
Loss for the financial year / --- / --- / --- / --- / (1,385) / (1,385)
Translation adjustment for the financial year / --- / --- / --- / 309 / --- / 309
Balance as at 31 December 2002 / 105,723 / 355,111 / 2,279 / (6,633) / (315,107) / 141,373
STATEMENT OF CHANGES IN EQUITY - COMPANY / Share Capital / Share Premium / Asset revaluation reserve / Foreign currency translation reserve / Accumulated losses / Total
/ S$'000 / S$'000 / S$'000 / S$'000 / S$'000 / S$'000
Balance as at 1 January 2002 / 105,723 / 354,971 / 2,279 / --- / (321,963) / 141,010
Loss for the financial year / --- / --- / --- / --- / (3,485) / (3,485)
Balance as at 31 December 2002 / 105,723 / 354,971 / 2,279 / --- / (325,448) / 137,525
STATEMENT OF CHANGES IN EQUITY - GROUP / Share Capital / Share Premium / Asset revaluation reserve / Foreign currency translation reserve / Accumulated losses / Total
S$'000 / S$'000 / S$'000 / S$'000 / S$'000 / S$'000
Balance as at 1 January 2001 / 102,935 / 352,618 / 2,279 / (12,116) / (318,729) / 126,987
Additions during the year / 2,788 / 2,493 / --- / --- / --- / 5,281
Profit for the financial year / --- / --- / --- / --- / 5,086 / 5,086
Translation adjustment for the financial year / --- / --- / --- / 5,174 / --- / 5,174
Balance as at 31 December 2001 / 105,723 / 355,111 / 2,279 / (6,942) / (313,643) / 142,528
STATEMENT OF CHANGES IN EQUITY - COMPANY / Share Capital / Share Premium / Asset revaluation reserve / Foreign currency translation reserve / Accumulated losses / Total
S$'000 / S$'000 / S$'000 / S$'000 / S$'000 / S$'000
Balance as at 1 January 2001 / 102,935 / 352,478 / 2,279 / --- / (326,750) / 130,942
Additions during the financial year / 2,788 / 2,493 / --- / --- / --- / 5,281
Profit for the financial year / --- / --- / --- / --- / 4,787 / 4,787
Balance as at 31 December 2001 / 105,723 / 354,971 / 2,279 / --- / (321,963) / 141,010
1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or 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
SHARE OPTIONS AS AT 31 DECEMBER 2002
ESOS Grant 1997 / 1,217,000 / - / (1,217,000) / -
ESOS Grant 1998 / 791,000 / - / (783,000) / 8,000
ESOS Grant 1999 / 1,404,000 / - / (182,000) / 1,222,000
ESOS Grant 2001 / 900,000 / - / - / 900,000
ESOS Grant 2002 / - / 8,800,000 / - / 8,800,000
TOTAL / 4,312,000 / 8,800,000 / (2,182,000) / 10,930,000
The options under the ESOS Grant 2002 were granted at S$0.068 nett per share after a 20% discount.
The option period of ESOS Grant 2002 is from 11 March 2002 to 10 March 2007.
SHARE OPTIONS AS AT 31 DECEMBER 2001
options
ESOS Grant 1997 / 1,217,000 / - / - / 1,217,000
ESOS Grant 1998 / 791,000 / - / - / 791,000
ESOS Grant 1999 / 1,404,000 / - / - / 1,404,000
ESOS Grant 2001 / - / 900,000 / - / 900,000
TOTAL / 3,412,000 / 900,000 / - / 4,312,000
2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. the Singapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalent standard)
The figures have not been audited or reviewed.
3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter)
Not Applicable.
4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied
Except as disclosed in paragraph 5 below, the same accounting policies and methods of computations are followed in the financial statements as compares with the audited financial statements as at 31 December 2001.
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
With effect from 1st January 2002, the Group adopted the revised Singapore Statement of Accounting Standard 12 on Income Taxes. There is no effect on the previous years' comparatives as a result of the above change in accounting policy.
6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends
/ / / GROUP/ / / December 2002 / December 2001
6(a) / / Earnings per ordinary share of the group for the financial year, after deducting any provision for preference dividends:- / /
6(a) / (i) / Based on the weighted average number of ordinary shares on issue (in cents) / (0.07) / 0.24
6(a) / (ii) / On a fully diluted basis (in cents) / (0.07) / 0.24
Explanatory Notes for Item 6(a)
6(a)(ii) / The diluted earnings per share ("EPS") calculation as at 31 December 2002 is based on weighted average number of shares of 2,125,385,153 (December 2001: 2,117,424,844) that included the share option of 10,930,000 (December 2001: 4,312,000).
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 period reported on and (b) immediately preceding financial year
/ GROUP / COMPANY/ December 2002 / December 2001 / December 2002 / December 2001
Net asset value per ordinary share based on issued share capital of the issuer at the end of the financial year / 6.50 cents / 6.69 cents / 6.49 cents / 6.65 cents
Number of existing issued share capital at end of period / 2,114,455,153 / 2,114,455,153 / 2,114,455,153 / 2,114,455,153
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. The review must discuss 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. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on
In FY' 2002, the Group registered 145.2 per cent increase in turnover to S$17.162 million when compared to S$6.999 million recorded in the previous year.
Turnover comprised revenue derived from the IT core businesses of Infocomm Products & Broadband Systems Integration and Thin Computing with approximately 24 per cent and 20 per cent contributions respectively.
Revenue contribution from the property development project in Zhuhai, PRC, was approximately 56 per cent.
The increase in Group turnover was principally a result of an approximately 108 per cent increase in revenue in the Infocomm Products & Broadband Systems Integration core business. The increase was weighed down marginally by a 18 per cent decrease in revenue of the Thin Computing core business.
Group turnover was additionally boosted from the sales of the commercialised residential houses and apartments of the Zhuhai property development project.
In the year under review, operating loss before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, bad debts, stock write-off, foreign exchange gain/loss, profit/loss on sales of investments, fixed assets and exceptional items was S$3.103 million, a decrease of 37.6 per cent when compared to S$4.969 million in FY' 2001.
The improved operating results is attributed to an increase of 37.9 per cent in gross profit to S$4.428 million in FY' 2002 when compared to S$3.210 million recorded in the previous year mainly from the IT core businesses.
In the year under review, the Group recorded a net exceptional income of S$2.875 million which was primarily derived from the profit of S$5.254 million arising from the dilution of shareholding in the ThinSoft (Holdings) Inc IPO and the diminution in value of investments of S$1.968 million in VCON Communications. VCON Communications is listed on the 2nd board of the French Stock Exchange.
Consequently, the Group recorded a loss (after tax and extraordinary items) attributable to shareholders of S$1.385 million in FY 2002 as compared to a profit of S$5.086 million in the previous year.
The reduction of approximately S$30 million of the non-current assets under the category of Investment, was a result of the reclassification into current assets due to the change from investments to the development and commercialisation of the Zhuhai property development project.
The increase in receivables and payables, and the short-term bank loan of approximately S$4 million, were associated with the development and commercialisation of the Zhuhai property development project.
Despite deteriorating economic conditions in countries where the Group operates in, the Group registered optimal revenue performance of S$17.162 million in FY' 2002. Although this has not translated into profitability, the Group however has significantly reduced the operating loss by 37.6 per cent when compared to the previous year.
The worsening market conditions in the second half of the year under review exacerbated the weak global IT investment trend leading to increasingly tighter and restrained IT spending. This has negatively impacted the performance of the IT core businesses in the second half of the year and consequently affected Group profitability.
In FY' 2002, the Group successfully listed the subsidiary ThinSoft (Holdings) Inc on the Growth Enterprise market (GEM) of The Stock Exchange of Hong Kong Limited on 27 February 2002.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results
No forecast or prospect statement had been previously disclosed to shareholders.
10. A commentary at the date of the announcement of the 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
In the current year's perceptibly lingering fragile global economy, the Group will prudently continue to focus on implementing strategies that bolsters the Group's ability to propel mid-to-long term growth by further enriching the product spectrum, expanding the global distribution network, increasing vertical market penetration, enhancing the online presence and accelerating market growth through strategic business alliances of its IT core businesses.
In addition, the Group will continue to execute the completion and divestiture of the residential property of the Zhuhai property development project.
At the backdrop of the uncertain economic conditions being experienced worldwide, the Group expects a challenging year.
11. Dividend
(a) Current Financial Period Reported On
Any dividend declared for the current financial period reported on? None
(b) Corresponding Period of the Immediately Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year? None
(c) Date payable
Not Applicable.
(d) Books closure date
Not Applicable.
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
/ Thin Computing / Infocomm Product and Broadband Systems Integration / Properties / Eliminations / Consolidated2002
S$'000 / 2001
S$'000 / 2002
S$’000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000
Sales to external customer / 3,444 / 4,223 / 4,094 / 1,968 / 9,624 / 808 / - / - / 17,162 / 6,999
Intersegment sales / 99 / - / 18 / 288 / - / - / (117) / (288) / - / -
Unallocated revenue / 209 / 257 / 353 / 959 / 2 / 3 / - / - / 564 / 1,219
Total revenue / 3,752 / 4,480 / 4,465 / 3,215 / 9,626 / 811 / (117) / (288) / 17,726 / 8,218
Segment result/Operating (loss)/profit / (1,946) / 1,096 / (2,310) / (6,626) / (305) / (128) / - / - / (4,561) / (5,658)
Finance costs / / / / / / / / / (3) / (14)
Exceptional items / / / / / / / / / 2,875 / 10,821
(Loss)/Profit before tax / / / / / / / / / (1,689) / 5,149
Share of (loss)/profit of unconsolidated associates companies / / / / / / / / / (3) / 36
Tax expenses / / / / / / / / / (9) / (492)
Minority interest, net of taxes / / / / / / / / / 316 / 393
(Loss)/profit from ordinary activities / / / / / / / / / (1,385) / 5,086
Business Segment / Thin Computing / Infocomm Product and Broadband Systems Integration / Properties / Eliminations / Consolidated
/ 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000
Segment assets (Note i) / 9,782 / 3,508 / 33,809 / 44,503 / 145,865 / 148,797 / (21,484) / (33,235) / 167,972 / 163,573
Investment in associated companies / - / - / 81 / 84 / - / - / - / - / 81 / 84
Total assets / 9,782 / 3,508 / 33,890 / 44,587 / 145,865 / 148,797 / (21,484) / (33,235) / 168,053 / 163,657
Segment liabilities (Note iii) / 1,465 / 531 / 12,404 / 14,373 / 10,107 / 1,328 / 523 / 1,143 / 24,499 / 17,375
Total liabilities / 1,465 / 531 / 12,404 / 14,373 / 10,107 / 1,328 / 523 / 1,143 / 24,499 / 17,375
Capital expenditures / 77 / 4 / 132 / 552 / 79 / 99 / - / - / 288 / 655
Depreciation / 21 / 34 / 660 / 1,227 / 97 / 93 / - / - / 778 / 1,354
Amortisation / - / 89 / 247 / 248 / - / 17 / - / - / 247 / 354
Impairment losses / - / - / 1,968 / - / - / - / - / - / 1,968 / -
Geographical segments / Asia pacific / America / Europe / Others / Eliminations / Consolidated
/ 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000 / 2002
S$'000 / 2001
S$'000
Sales to external customers / 15,290 / 3,917 / 748 / 889 / 642 / 1,581 / 482 / 612 / - / - / 17,162 / 6,999
Intersegment sales / 117 / 288 / - / - / - / - / - / - / (117) / (288) / - / -
Unallocated revenue / 564 / 1,219 / - / - / - / - / - / - / - / - / 564 / 1,219
Total revenue / 15,971 / 5,424 / 748 / 889 / 642 / 1581 / 482 / 612 / (117) / (288) / 17,726 / 8,218
Other geographical information: