MD's report Operating Results for Q1/2007
May 4, 2007
Managing Director's Report
Operating Results for the 1st. Quarter 2007
SVI posted quarterly consolidated revenue for the 1st. Quarter 2007 USD 35.8 Million or Baht 1,270 Million, 41% higher than the same quarter last year and a decrease of 10.5% as compared to Q4 last year, in term of USD. The revenue growth in "Baht" was 27% as compared with the same quarter last year, due to strengthen of Baht, 10% year on year (Average Q1'06: Baht 39.28 vs Average Q1'07 : Baht 35.46 / USD 1). The revenue growth, as compared to Q1 last year was driven by new customers that started the business in 2005. The sales decrease the quarter as compared to the 4th Quarter last year was related to seasonal demand, couple with the strengthen of Baht, 2.7% quarter on quarter.(Average Q4'06: Baht 36.44 vs Average Q1'07 : Baht 35.46 / USD 1).
Total Gross Profit of the company this quarter was Baht 138 Million or 10.8% of revenue, representing an increase of 2.5% as compared to Gross Profit at 8.3% of revenue for the same quarter last year, close to the previous quarter, mainly due to an effective cost management on labor and overhead as compared to the same quarter last year. The consolidated gross profit was reported at Baht 137 Million due to less volume built at Tianjin plant caused by new projects for existing and new customers being under qualification.
Selling and Administrative expenses of the company and consolidated expenses for this quarter were Baht 69 Million and Baht 73 Million or 5.39% and 5.76% of revenue respectively. The company and consolidated expenses were higher than the same period of last year by Baht 26 Millions. The increase was mainly a result of additional personnel to support new product and business development team, and the reserve of obsolescence materials. As compared to previous quarter, both the company and consolidated expenses were lower by Baht 6 Million and Baht 4 Million respectively.
SVI posted Net Profit, before subsidiaries consolidation, for the 1st. Quarter 2007 of Baht 82 Million, an increase of Baht 26 Million or 46% as compared with the 1st. Quarter 2006, or improved from 5.58% to 6.43% of revenue. This mainly resulted by higher revenue and gross profit margin as mentioned above. The losses of Baht 5 Million (0.04 Baht/Share) and Baht 7 Million (0.05 Baht/Share) generated by subsidiaries in Q1'06 and Q1'07 were not included in the company's result this quarter. The company's consolidated net profit was Baht 75 Million, higher than the same quarter last year by Baht 25 Million and improvement of 50%. The consolidated net profit this quarter as to previous quarter was Baht 12 Million lower, mainly related to lower revenue driven by seasonal demand.
In compliance with the notification No. 26/2006 issued by the Federation of Accounting Professions regarding Accounting Standard No. 44, the company has changed the accounting policy in fiscal year 2550, for recording the investment in subsidiary from the equity method to the cost method. Thus the company restated its Financial Statement to assume the carrying amount as the cost of an investment in a subsidiary, by retroactive adjustment the losses from subsidiaries of prior years, from Q3'5 to Q4'06, amounted to Baht 33 Million, and the reserve of impairment cost of Baht 2 Million related to the losses generated by subsidiaries, resulted in the net increase of the company's retained earning of Baht 31 Million.
However, the change of accounting policy affects only the company Financial Statement, there is no change or effect to the consolidated Financial Statement or business fundamentals. Thus, there is no change to the company's dividend policy that is normally paid approximately at 30% of Net Profit and based on the company's financial condition, investment plan, the company's and Subsidiaries' operating results.
Profit & Loss Comparison Table-Q1'07 vs Q1'06
|
Unit : "Mil" Baht |
Consolidated
|
The Company |
% | ||
|
Q1-2007 (a) |
Q1-2006 (b) |
Q1-2007 (c) |
Q1-2006 (d) |
Variance = (a)-(b) (b) | |
| Net Sales |
1,270 |
997 |
1,272 |
997 |
27% |
| Total Costs of Sales |
1,133 |
913 |
1,134 |
914 |
24% |
| Gross Profit |
137 |
84 |
138 |
83 |
63% |
| Total Operating Expenses |
(73) |
(47) |
(69) |
(42) |
55% |
| Operating Profit |
64 |
37 |
69 |
41 |
73% |
| Interest Income (Expense) |
(1) |
0.2 |
(0) |
0.2 |
600% |
| Exchange Gain (Losses) |
4 |
4 |
4 |
4 |
0% |
| Gain (Losses) from subsidiaries |
0 |
0 |
0 |
0 |
0% |
| Other Non-Operation Income (Expense) |
9 |
9 |
10 |
11 |
0% |
| Net Income Before Tax |
76 |
50 |
83 |
56 |
51% |
| Corporation Tax |
(1) |
(0.1) |
(1) |
(0.1) |
900% |
| Net Income after Tax |
75 |
50 |
82 |
56 |
50% |
Comparison of Balance Sheet as at 31 March 2007 with year end 2006 as follow:
| Unit : "Million" Baht |
Consolidated |
The Company | ||
|
31 Mar' 07 |
31 Dec'06 |
31 Mar'07 |
31 Dec'06 | |
| Current Assets | ||||
| Cash and current investment |
183 |
39 |
178 |
31 |
| Accounts Receivable |
932 |
1,079 |
930 |
1,071 |
| AR - Subsidiaries |
0 |
0 |
64 |
61 |
| Inventories |
1,335 |
1,295 |
1,295 |
1,259 |
| Other Current Assets |
68 |
25 |
66 |
24 |
| Total Current Assets |
2,518 |
2,438 |
2,533 |
2,446 |
| Current Liabilities | ||||
| Short term loans |
45 |
67 |
44 |
66 |
| Accounts Payable |
767 |
768 |
766 |
766 |
| AP - Subsidiaries |
0 |
0 |
2 |
3 |
| Other Current Liabilities /Accruals |
138 |
114 |
133 |
109 |
| Total Current Liabilities |
950 |
949 |
945 |
944 |
| Working Capital |
1,568 |
1,489 |
1,588 |
1,502 |
| Property, Plant, Equipment and other assets |
674 |
688 |
689 |
704 |
| Total Net Assets |
2,242 |
2,177 |
2,277 |
2,206 |
| Financed by : | ||||
| Long-term Debt |
10 |
21 |
10 |
21 |
| Net equity |
2,232 |
2,156 |
2,267 |
2,185 |
| Total Long-term Financed |
2,242 |
2,177 |
2,277 |
2,206 |
The Company and consolidated financial status as of 31 March 2007 showed total current assets of Baht 2,533 Million and Baht 2,518 Million respectively. This represented an increase of Baht 87 Million and Baht 80 Million as compared to 31st December 2006. The increase of consolidated current assets was mainly due to an increase of cash of Baht 144 Million, inventory of Baht 40 Million and other current assets of Baht 43 Million, partially offset with the decrease of account receivable of Baht 147 Million resulted by an efficient collection .
Total liabilities for the Company and Consolidated Financial Statement recorded at Baht 956 Million and Baht 960 Million respectively. The consolidated total liabilities were decreased by Baht 10 Million from December 2006. This was mainly due to payment of short term and long term loan in the amount of Baht 20 Million and Baht 13 Million respectively, partially offset with the increase of accrued corporate income tax and other expenses.
The consolidated Shareholder's equity as at the end of 1st. Quarter 2007 was Baht 2,232 Million, an increase of Baht 76 Millions from the end of last year, mainly due to an increase in retained earnings derived from net profit of Baht 75 Million and translation gain of Baht 1 Million upon consolidation of subsidiaries'accounts this quarter . The Company Shareholder's equity were Baht 2,267 Million, an increase of Baht 82 Million compared with that the end of last year, resulted by net profit generated this quarter by Thailand plant.
_____________________
Mr. Pongsak Lothongkam
Managing Director
