Financials
For the Year ended 31 December 2007
Income Statement
Group |
|||
| Year Ended 31-Dec-07 $'000 |
Year Ended 31-Dec-06 $'000 |
Increase/(Decrease) % |
|
| Revenue | 18,607 | 2,703 | 588 |
| Cost of Sales | (14,634) | (1,836) | 697 |
| Gross Profit | 3,973 | 867 | 358 |
| Other income | 215 | 183 | 17 |
| General and Administrative Costs | (6,150) | (3,290) | 87 |
| Other Operating (Expenses)/Income | (2,595) | (769) | 238 |
| Operating Loss | (4,557) | (3,009) | 51 |
| Finance Costs | (216) | (26) | 732 |
| Loss before taxation | (4,773) | (3,035) | 57 |
| Taxation | (77) | 219 | N.M. |
| Loss after taxation | (4,850) | (2,816) | 72 |
N.M. denotes Not Meaningful
Profit / (Loss) after taxation is determined after (charging) / crediting the following:
Group |
||
| Year Ended 31-Dec-07 $'000 |
Year Ended 31-Dec-06 $'000 |
|
| Depreciation expenses | (527) | ( 100) |
| Gain from disposal of property, plant and equipment | 48 | - |
| Write-down of inventories | (131) | (83) |
| Allowance for doubtful trade receivables, net | - | ( 445) |
| Impairment of non-trade receivables, net | ( 1) | ( 116) |
| Amortisation of intangible assets | (4) | ( 3) |
| Impairment loss on property, plant and equipment | (39) | (12) |
| Gain/(Loss) on disposal of short-term investments | 115 | ( 1,431) |
| (Impairment of)/write back of short-term investment | (1,195) | 1,366 |
| Interest income on bank deposits | 8 | 5 |
| Dividends received from quoted investments | 51 | 67 |
| Other miscellaneous income | 39 | 11 |
| Investment related expenses | (14) | (33) |
| Bank charges | (61) | ( 21) |
| Net foreign exchange (loss)/gain | (125) | 21 |
| Forefeiture of deposit related to a proposed acquisition | (500) | - |
Click here for the complete Full Year 2007 Financials
Click here for the Half Year 2007 Financials
Review of Performance
(a) Turnover and Profit/Loss
Turnover for the group increased significantly by 588% to $18.6 million. This was largely due to the consolidation of the accounts of subsidiary, CarrierNet, into the group after completion of acquistion on 15 March 2007. Revenue from CarrierNet’s business reported at $16.5 million was derived from wholesale, retail calling cards and IDD services, representing about 88.7% of the group’s total revenue. The Electronics division contributed $2.1 million or 12.3% of the group’s total revenue. The decrease in revenue from the Electronics division was due to keen competition and rising cost of production in the LCD industry.
In line with the increase in revenue, the cost of sales also increased by 697% to $14.6 million while the gross profit increased by 358% to $3.97 million.
General and administrative expenses increased by 87% mainly because of the consolidation of CarrierNet.
For FY2007, the group made a loss after tax of $4.85 million, a 72% increase from the previous financial year. This loss was mainly due to a loss in short term investment, a forfeiture of deposit in an aborted proposed acquisition, and also the expenses incurred in relation to fund raising. The consolidation of CarrierNet in the group's accounts had a positive impact as the company was profitable in FY2007.
(b) Balance Sheet and Cash Flow
The Group's fixed assets increased by $3.335 million, while current asset increased by $3.6 million was due mainly to the addition of CarrierNet's assets. Trade receivables, other receivables, trade payables and accruals, and other payables including interest-bearing loans and borrowings were significantly higher compared to the preceding year as a result of the acquisition of CarrierNet.
The Group's acquisition of CarrierNet has to be accounted for in accordance with FRS 103, Business Combinations. A Purchase Price Allocation exercise is currently being carried out which will determine fair values of CarrierNet's identifiable assets, liabilities, contingent liabilities and goodwill at the date of acquisition. The intangible assets, which may include intellectual property rights and goodwill, are subject to impairment reviews and accordingly the carrying value of the intangible assets may differ significantly from the amounts reflected in the balance sheet.
The decrease in trade and other receivables give rise to decrease in outflow of cash from operations from $2.409 million to $1.579 million. A net cash outflow of $4.7 million on investing activities arose mainly from the acquisition of CarrierNet. In the prior year, investing activities of $1.2 million inflow was due largely to the disposal of short term investment.
From its financing activities, the Group raised a net cash of $6.375 million from issues of new shares and conversion of warrants.
Commentary On Current Year Prospects
In FY2007 the group continued its expansion into the telecommunication industry through the completion of the acquisition of CarrierNet on 15 March 2007. The telecommunication industry is expected to remain competitive. CarrierNet aims to maintain a high market penetration rate in the retail sector in countries with a high number of immigrant workers, such as Australia, China, Hong Kong, and Singapore.
CarrierNet’s wholesale business remains the backbone of the company’s revenue model, with its ability to obtain lower cost through the economies of scale. CarrierNet is expected to continue to grow and build new markets in countries such as Africa, Bangladesh, Europe, India, Indonesia, Middle East and Vietnam.
The recent acquisition of Uni3 Pte Ltd, a leading distributor of prepaid calling cards and telephony services in Singapore, will enable the group to further strengthen its position in the telecommunication industry in Singapore. This acquisition is expected to further improve the group’s revenue stream, especially when there is a surge in both immigrant workers and tourists to Singapore.
In recent years, the Electronics division was able to carve out a niche market in the LCD industry to manufacture and assemble specialty projects. The Electronics division will increase its efforts to further establish itself in the niche LCD market.
Despite keen competition, the outlook in the telecommunication sector remains positive. The Group expects both CarrierNet and Uni3 to become significant contributors in the next 12 months. ArianeCorp will continue to actively seek out new opportunities in the telecoms industry as we work to realize our vision of being an independent telecommunications service provider in the region.
Balance Sheet
| Group
31-Dec-07 S$'000 |
Group (Audited) 31-Dec-06 S$'000 |
|
| Non-current assets | ||
| Fixed assets | 44,325 | 40,990 |
| Intangible assets | 14,730 | 14 |
| Investment in subsidiary companies | - | - |
| Other investments | 306 | 306 |
| 59,361 | 41,310 | |
| Current assets | ||
| Stocks | 368 | 578 |
| Trade receivables | 3,600 | 255 |
| Other receivables | 1,114 | 1,094 |
| Short-term investments | 980 | 626 |
| Amount due from subsidiary companies | - | - |
| Cash and cash equivalents | 2,650 | 479 |
| 6,632 | 3,032 | |
| Current liabilities | ||
| Trade Payables and accruals | 4,962 | 803 |
| Other payables | 826 | - |
| Amount due to subsidiary companies | - | - |
| Interest-bearing loans and borrowings | 2,650 | 166 |
| Lease creditor | 308 | 34 |
| Provision for taxation | 179 | 195 |
| 8,925 | 1,647 | |
| Net current (liabilities)/assets | 2,293 | 1,385 |
| Non-current liabilities | ||
| Other payables | 10,915 | 10,915 |
| Interest-bearing loans and borrowings | 220 | - |
| Lease creditor | 363 | 128 |
| Deferred Taxation | 336 | - |
| 11,834 | 11,043 | |
| 45,234 | 31,652 | |
| Capital and reserves | ||
| Share capital | 59,232 | 40,715 |
| Foreign currency translation reserve | (11,191) | (11,135) |
| Revenue reserve/(accumulated losses) | (2,807) | 2,072 |
| 45,234 | 31,652 |