MD's Report Operating Results for the Q4 and Year 2007
February 28, 2008
Managing Director's Report
Operating Results for the 4th Quarter and Year End 2007
SVI posted highest consolidated quarterly revenue for the 4th Quarter 2007 at USD 48 Million or Baht 1,626 Million, 20% higher than the same quarter last year and an increase of 5.5% as compared to the previous Quarter this year, in term of USD. Total year revenue was USD 169 Million or Baht 5,820 Million, compared with last year at USD 135 Million or Baht 5,104 Million, an increase of 25%. The revenue growth in "Baht" was 14% as compared with that of last year, due to strengthen of Baht, 9% year on year (Average 2006: Baht 37.71 vs Average 2007 : Baht 34.38 / USD 1). The revenue growth was driven by strong seasonal demand and continual growth in European market. The company also had added capacity to meet this growth.
Total Consolidated Gross Profit for the 4th.quarter 2007 was Baht 184 Million or 11% of revenue, higher than the same quarter last year by Baht 26 Million. Total year Consolidated Gross Profit was Baht 634.5 Million, higher than last year by Baht 137 Million or 29%. This was due to higher revenue and better fixed overhead costs utilization. There was no significant difference of the company's and consolidation's Gross Profit because Tianjin's plant was not operating in full capacity.
Selling and Administrative expenses of the company and consolidated expenses for this quarter were Baht 71 Million and Baht 82 Million or 4% and 5% of revenue respectively. The consolidated Selling and Administrative expenses was higher than the same period of last year by Baht 4.6 Millions. Total year expenses of the company were Baht 284.8 Million, and consolidated expenses were Baht 308.8 Million, compared to last year expenses at Baht 222 Million and Baht 242.2 Millions respectively. The increase of Baht 62.8 Millions and 66.6 Millions was mainly a result of additional personnel to support new product and business development team, couple with the additional reserve of obsolescence materials, account receivable and impairment of machine.
SVI posted the 4th quarter Net Profit, before subsidiaries consolidation, of Baht 124.4 millions, an increase of Baht 26 millions or 27% as compare to the 4th Quarter 2006. Total year net Profit of the company was achieved at Baht 438.9 Million, an increase of Baht 114.7 Million from previous year. This was mainly due to higher revenue and gain on the inter company sales of equipment couple with better cost management. The consolidated net profit this quarter was Baht 120.7 millions higher than the previous quarter and the same quarter of last year at Baht 15 Millions and Baht 33.7 Millions. Total year consolidated net profit was Baht 384 millions, higher than that of last year by Baht 89 millions, an improvement of 30%, mainly related to higher revenue.
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 Q3'05 to Q4'06, amounted to Baht 33 millions, resulted in the net increase of the company's retained earning of Baht 31 millions. The company has reserved for impairment cost of Baht 7 millions related to the losses generated by subsidiaries.
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.
The consolidated EBIT and EBITDA of year 2007 were Baht 325.7 millions and Baht 582.6 millions, an improvement of 27.5% for EBIT and 39% for EBITDA as compared to the previous year.
Profit & Loss Comparison Table - Year'07 vs Year'06
|
Unit : "Mil"Baht |
Consolidated |
The company |
% Variance | ||
|
Year'07 (a) |
Year'06 (b) |
Year'07 (c) |
Year'06 (d) |
= [(a)-(b)]/ (b) | |
| Net Sales |
5,820 |
5,104 |
5,785 |
5,137 |
14% |
| Total Costs of Sales |
5,185 |
4,611 |
5,155 |
4,640 |
12% |
| Gross Profit |
635 |
493 |
630 |
497 |
29% |
| Total Selling & Admin Expenses |
(309) |
(238) |
(285) |
(222) |
30% |
| Operating Profit |
326 |
255 |
345 |
275 |
28% |
| Interest Income (Expense) |
4 |
(4) |
8 |
(1) |
N/A |
| Exchange Gain (Losses) |
32 |
20 |
31 |
20 |
600% |
| Other Non-Operation Income (Expense) |
35 |
31 |
68 |
37 |
13% |
| Net Income Before Tax |
397 |
302 |
452 |
331 |
31% |
| Corporation Tax |
(13) |
(7) |
(13) |
(7) |
86% |
| Net Income after Tax |
384 |
295 |
439 |
324 |
30% |
Comparison of Balance Sheet as at year end 2007 with year end 2006 as follow:
| Unit : "Million" Baht |
Consolidated |
The Company | ||
|
31 Dec' 07 |
31 Dec' 06 |
31 Dec' 07 |
31 Dec'06 | |
| Current Assets | ||||
| Cash and current investment |
559 |
39 |
521 |
31 |
| Accounts Receivable |
1,099 |
1,079 |
1,094 |
1,071 |
| AR - Subsidiaries |
0 |
0 |
24 |
38 |
| Inventories |
1,155 |
1,295 |
1,133 |
1,259 |
| Other Current Assets |
22 |
25 |
19 |
25 |
| Total Current Assets |
2,835 |
2,438 |
2,791 |
2,424 |
| Current Liabilities | ||||
| Short term loans |
0 |
67 |
0 |
66 |
| Accounts Payable |
869 |
768 |
859 |
766 |
| AP - Subsidiaries |
148 |
0 |
156 |
3 |
| Other Current Liabilities /Accruals |
128 |
114 |
115 |
109 |
| Total Current Liabilities |
1,145 |
949 |
1,130 |
944 |
| Working Capital |
1,690 |
1,489 |
1,661 |
1,480 |
| Property, Plant, Equipment and other assets |
791 |
688 |
899 |
726 |
| Total Net Assets |
2,481 |
2,177 |
2,560 |
2,206 |
| Financed by : | ||||
| Long-term Debt |
3 |
21 |
3 |
21 |
| Net equity |
2,478 |
2,156 |
2,557 |
2,185 |
| Total Long-term Financed |
2,481 |
2,177 |
2,560 |
2,206 |
The Company and consolidated financial status as of 31 December 2007 showed total current assets of Baht 2,791 Millions and Baht 2,835 Millions respectively. This represents an increase of Baht 367 Millions and Baht 397 Millions as compare to 31st December 2006. The increase of the company and consolidated current assets was mainly due to Cash and ST investment amounted to Baht 490 Millions and Baht 520 Millions respectively, which was partially offset with the decrease of the company and consolidated inventory of Baht 126 Millions and Baht 140 Million, due to effective supply chain management.
Cash flow continued to be strong both operational cash flow and free cash flow. At the end of this year, the company and consolidated operational cash flow were Baht 785 Millions and 773 Millions respectively. Free cash flow was Baht 601 Millions and 624 Millions.
Total liabilities for the Company and Consolidated Financial Statement were recorded at Baht 1,133 Millions and Baht 1,147 Millions respectively. The consolidated total liabilities were increased by Baht 177 Millions from 31st December 2006. This was mainly due to payment of short term and long term loan in the amount of Baht 20 Millions and Baht 60 Millions respectively, partially offset by the increase of Trade Payable of Baht 249 Millions, related to more purchase of materials and equipment to support the increase of revenue.
The consolidated Shareholder's equity at the end of 2007 was Baht 2,479 Millions, an increase of Baht 323 Millions from the end of last year, mainly due to an increase in retained earnings derived from net profit of Baht 384 Millions, and the exercise of ESOP1 and 4 of Baht 20 Million, partially offset with the dividend payment of Baht 87 millions in second quarter. The Company Shareholder's equity were Baht 2,557 Millions, an increase of Baht 372 Millions compared with that at the end of last year, as a result of net profit of Baht 439 Millions generated by Thailand plant, offsetting with dividend payment this year.
_____________________
Mr. Pongsak Lothongkam
Managing Director
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