Annual Report 2010 - Leeden Limited

Leeden Limited Annual Report 2010FinancialReviewIncome StatementEmerging from a difficult operating environment in 2009,the Group reported a satisfactory 2.9% growth in revenue toS$191.5 million for the financial year ended 31 December2010 (“FY2010”) from S$186.1 million in FY2009.Revenue from Industrial Business grew 4.8% to S$177.1million, primarily driven by improvement in the Weldingdivision under Industrial Business. Property and OtherSegments, however, saw a decline in revenue by 16.0%to S$14.4 million due to near completion of the PatersonLinc project.Gross profit declined 3.0% to S$52.4 million in FY2010as compared to S$54.0 million in FY2009, while grossprofit margin reduced marginally to 27.4% in FY2010 from29.0% in FY2009. The reduction was mainly attributableto a lower contribution from the Property Segment and theGroup’s efforts in maintaining market share in midst ofkeen competition during the year.To fuel the Group’s expansion into the region, investmentsin human capital were made during the year, therebyincreasing the distribution costs and administrativecosts to S$26.7 million and S$11.9 million respectivelyin FY2010. Notably, the aggregate operating expenses(including distribution costs and administrative costs)remained constant at approximately 20% of total revenuefor both FY2009 and FY2010.Dedicated efforts in inventory and working capitalmanagement resulted in lower provisions required forstock obsolescence and doubtful debts, hence other costsdecreased 62.4% to S$1.3 million in FY2010.Finance costs trimmed down by 4.7% to S$1.9 million inFY2010, which was in line with management’s intentionto shift from short-term loans to trade financing in fundingworking capital.To sum it up, the Group registered S$15.1 million of profitbefore taxation and S$7.6 million of net profit attributableto shareholders, with a basic earnings per share of 4.37Singapore cents in FY2010 (FY2009: 5.12 Singaporecents).Balance SheetNon-current assets increased S$10.2 million to S$83.8million as at 31 December 2010, mainly due to theGroup’s facility expansion plans in relation to the IndustrialBusiness in Malaysia.Total current assets decreased S$2.6 million to S$124.1million as at 31 December 2010, largely due to theincrease in inventory partially offset by reduction in tradedebtors. Trade debtors was reduced by S$5.8 millionwhich is consistent with the management’s efforts intightening receivables collection while trade debtors’turnover improved from 108 days in 2009 to 95 days as at31 December 2010. The Group procured more stocks tomeet increasing sales during the year and hence increasedstock level as at 31 December 2010 to S$43.0 million.Correspondingly, stock turnover increased to 127 days inFY2010 as compared to 115 days in 2009.Total liabilities decreased S$2.3 million to S$100.2 millionas at 31 December 2010, represented by S$3.5 millionreduction in current liabilities and S$1.2 million increasein non-current liabilities. Lower level of current liabilitiesarose due to management’s plans to utilize trust receiptsfacilities effectively to repay trade creditors during theyear as well as repayment of short-term loans. The Grouphas drawn down more term loan facilities to fund capitalexpenditure and business expansions in 2010 and therebygiving rise to a higher long term borrowing balance ofS$13.6 million as at 31 December 2010.The Group’s leverage ratio has improved from 0.47 timeas at 31 December 2009 to 0.40 time as at 31 December2010.Shareholders’ equity grew S$5.2 million to S$75.5million while total equity strengthened by S$9.9 million toS$107.7 million as at 31 December 2010. As a result, netasset value per share rose to 43.2 Singapore cents as at31 December 2010 from 40.4 Singapore cents as at 31December 2009.17