Chairman's Statement
Extracted from Annual Report 2013
DEAR SHAREHOLDERS,
On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Financial Statements of Lion Asiapac Limited for the financial year ended 30 June 2013 ("FY 2013").
Given the numerous economic uncertainties and financial issues the world economy has been facing during the year, the core business segments of the Group have been adversely aff ected as reflected in the Group's overall financial performance during the financial year under review.
TAPPING ON EMERGING OPPORTUNITIES
During the year, amid challenging business environment, the Group's revenue was aff ected by slower sales due to contraction in market demand for quicklime. Towards the end of first half of this financial year, the Group won the tender for a plot of land in Yangzhou ("Yangzhou Land") and proceeded to establish Yangzhou Lion Property Development Co Ltd to undertake property development. This initial venture into property development is in consonance with the Group's strategy to undertake new investment projects that will broaden the Group's asset and earnings bases, as well as to provide an alternative source of income and earnings.
SURPASSING A CHALLENGING YEAR
During FY 2013, the Group's revenue decreased by 16% to S$30.8 million, from S$36.7 million in last financial year ended 30 June 2012 ("FY 2012"). This was due to lower sales volume encountered by our quicklime supply business, despite an increase in scrap metal sales.
Consequently, the reduced turnover resulted in lower Group's earnings from business operations by 38% to S$1.81 million, as compared to S$2.94 million in FY 2012. The decrease in earnings was attributable to lower quicklime earnings as a result of higher raw material and processing costs, and an impairment loss on an investment, notwithstanding the increased earnings gained by scrap metal trading.
Other expenses of the Group dropped by 78% to S$4.2 million during the financial year, compared to previous financial year's S$18.8 million that included impairment losses of S$12.3 million. Also, the Group's total expenses decreased by 35% from S$47.5 million to S$30.7 million, as a result of lower overhead costs incurred. If the impairment loss of S$0.38 million was not incurred, the Group's net earnings for FY 2013 would have been S$2.2 million.
The Group's financial position remained healthy, with a working capital of S$61.0 million as at 30 June 2013, compared with S$93.4 million as at 30 June 2012. Cash balance of the Group dropped from S$82.5 million as at 30 June 2012, to S$66.4 million as at 30 June 2013, mainly due to S$18.4 million in partial payment made for Yangzhou Land. Such payment, together with the balance land cost relating to Yangzhou Land of S$17.3 million, resulted in other current assets increasing from S$0.3 million to S$36.1 million.
Trade and other receivables of the Group reduced from S$11.5 million as at 30 June 2012 to S$11.1 million as at 30 June 2013, but inventories went up from S$4.4 million to S$5.3 million as a result of purchases of raw materials and consumables at year end. Trade and other payables increased from S$5.1 million to S$21.9 million, largely comprised the abovementioned balance land cost. As at 30 June 2013, the Group's available-for-sale financial assets rose from S$4.2 million to S$5.3 million, mostly attributable to an increase in the fair value of shares in Mindax Limited.
DELIVERING SHAREHOLDER VALUE
As at 30 June 2013, the net asset value per ordinary share of the Group increased to 30.08 cents, from 29.64 cents as at 30 June 2012.
The Board is pleased to propose a first and final dividend of 0.1 cent per ordinary share (tax exempt one tier) for FY 2013, subject to shareholders' approval at the upcoming Annual General Meeting.
GEARING UP FOR A CHALLENGING YEAR AHEAD
While the global economic environment remains troubled with uncertainties particularly aff ecting the industries where we operate in, some trends and developments beyond our existing core business segments are posing opportunities for us to explore. These include the opportunity to embark on property development business in Yangzhou.
Given the continuing events of slow demand and cost pressure, the Group anticipates difficult market conditions and tough challenges ahead. Moving forward, the Group will continue to tread on cautious grounds, while fortifying our fundamentals.
ACKNOWLEDGING EVERYONE'S CONTRIBUTION
On behalf of the Board, I would like to express my heartfelt gratitude to our management and staff for their steadfast eff orts to withstand the challenges that we have together surpassed during FY 2013. Your hard work and dedication are greatly appreciated.
My appreciation is also extended to our customers, business associates, suppliers, shareholders, and fellow directors for your support and advice. I look forward to everyone's support as we continue to overcome challenges, tap into emerging opportunities, and ultimately create greater value for all shareholders.