Financials
Full Year Financial Statement And Dividend Announcement
Financials Archive
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Full Year Financial Statement and Dividend Announcement For The Year Ended 31 December 2009
Profit & Loss
Review of Performance
Review of Group Performance
On 8 June 2009, Sapphire raised its equity interest in Neijiang Chuanwei Special Steel Co, Ltd ("Special Steel") via Lucky Art Holdings Limited (" Lucky Art") from 11.2% to 51.0% - converting Special Steel into Sapphire's core business subsidiary. Accordingly, the Group's consolidated financial results included the results of Special Steel.
4Q2009 versus 4Q2008
Revenue for 4Q2009 increased by $69.3 million from $8.8 million in 4Q2008 to $78.1 million mainly due to the sale of steel and vanadium products by Special Steel.
Cost of sales for 4Q2009 increased by $59.9 million from $9.0 million in 4Q2008 to $68.9 milIion mainly due to the corresponding increase in cost arising from the sale of steel and vanadium products by Special Steel.
Other income for 4Q2009 increased by $5.8 million from $3.4 million in 4Q2008 to $9.2 million mainly due to the recognition of negative goodwill amounting to $6.1 million as a result of a purchase price allocation exercise done to identify the fair value of the net identifiable assets of Lucky Art.
Distribution costs for 4Q2009 increased by $715,000 from $3,000 in 4Q2008 to $718,000 mainly due to distribution expenses incurred in relation to the sale of steel and vanadium products by Special Steel.
Administrative and other operatiag expenses for 4Q2009 increased by $5.6 million from $1.9 million in 4Q2008 to $7.5 million mainly due to the impairment of other receivables of 3.9 million and commission relating to the convertible bonds amounting to $2.2 million.
Finance cost for 4Q2009 was only $1,000 as compared to $393,000 in 4Q2008 mainly due to the cessation of interest expense upon conversion of the convertible bonds.
Share of profits from associates for 4Q2009 increased by $27.4 million from negative $332,000 in 4Q2008 to $27.7 million mainly due to the recognition of a gain of S$26.2 million from the listing of CVT, a subsidiary company of Trisonic International Limited ("TIL") on the Mainboard of The Stock Exchange of Hong Kong Limited.
FY 2009 versus FY2008
Revenue for FY2009 increased by $123.3 million from $10.5 million in FY2008 to $133.8 million mainly due to the sale of steel and vanadium products by Special Steel.
Cost of sales for FY2009 increased by $105.2 million from $11.1 million in FY2008 to $116.3 million mainly due to the corresponding increase in cost arising from the sale of steel and vanadium products by Special Steel.
Other income for FY2009 increased by $6.0 million from $4.6 million in FY2008 to $10.6 million mainly due to the recognition of negative goodwill amounting to $6.1 million as a result of purchase price allocation exercise done to identify the fair value of the net identifiable assets of Lucky Art.
Administrative and other operating expenses for FY2009 increased by $7.4 million from $8.0 million in FY2008 to $15.4 million mainly due to the consolidation of operating expenses of Special Steel of approximately $2.1 million, one time commission fee of $2.2 million relating to the convertible bonds and the impairment of other receivables of $4.0 million.
Finance costs for FY2009 decreased by $1.43 million mainly due to the cessation of interest expense upon conversion of the convertible bonds.
Share of profits from associates for FY2009 increased by $27.4 million from $6.4 million in FY2008 to $33.8 million mainly due to the recognition of a gain of S$26.2 million from the listing of CVT, a subsidiary company of TIL on the Mainboard of The Stock Exchange of Hong Kong Limited.
Review of Balance sheet
Interests in associates
Interests in associates increased by $30.7 million from $67.8 million as at 31.12.2008 to $98.5 million mainly due to share of profits from associates which included dilution gain of S$26.2 million from the listing of CVT, a subsidiary companu of TIL on the Mainboard of The Stock Exchange of Hong Kong Limited.
Term loan receivable
Pursuant to a shareholder agreement dated 28 March 2008, the Company extended a loan of US$10.0 million to its associate, Trisonic International Limited ("TIL") on 2 April 2008. The principal sum is repayable annually over 3 years and interest is charged at a rate of 8% per annum. On 5 June 2009, 10 September 2009 and 23 December 2009, the Company extended three loans amounting to S$20.2 million ('Loan II") to TIL. The principal sum of S$20.2 million is repayable annually over 3 years and interest is charged at a rate of 6.5% per annum. These loans are secured with TIL shares owned by a shareholder of TIL.
Inventories
This is in respect of the raw materials, work in progress and finished goods of steel products and vanadium products of Special Steel.
Trade and other receivables
The trade and other receivables increased by $53.9 million from $19.0 million as at 31.12.2008 to $72.9 million as at 31.12.2009 mainly due the consolidation of Special Steel. Included in the other receivables of Special Steel, was a deposit of $53.3 million placed with its supplier, a related party, to secure the supply of raw materials at preferential rates.
Cash and cash equivalents
Cash and cash equivalents decreased by $12.8 million from $21.2 million as at 31.12.2008 to $8.3 million as at 31.12.2009 mainly due to cash at bank from the consolidation of Special Steel offset by the loans extended to TIL.
Notes Payables
The notes were issued by Special Steel to a related party for the purchase of raw materials. This was secured by cash at bank of S$2.7 million.
Trade and other payables
Trade and other payables increased by $37.9 million from $4.8 million as at 31.12.2008 to $42.7 million as at 31.12.2009 mainly due to the consolidation of Special Steel and $15.0 million due to TIL arising from the Restructuring Exercise pursuant to the acquisition of Lucky Art.
Financial liabilities
This is in respect of finance lease liabilities of $47,000 and financial derivative of $754,000 arising from the application of hedge accounting.
Share Capital and reserves
Share capital increased by $89.9 million from $162.6 million as at 31.12.2008 to $252.5 million as at 31.12.2009 due to the issuance of new shares.
Other reserves are in respect of translation reserve, hedging reserve, merger reserve, capital reserve, otlier reserves and accumulated profit/losses of the Group. Other reserves decreased by $27.8 million from a negative of $71.2 million to $43.4 million.
Commentary
The Group remains confident about the long term potential of the PRC steel industry as continued introduction of comprehensive economic policies by the PRC authorities will serve to encourage the sustained development of the PRC economy and bodes well for steel demand which is a key component of infrastructure development. In particular changes in regulatory policies encouraging the use of higher tensile strength vanadium steel products will benefit Special Steel who is a major domestic producer.
The Group will continue to seek alternatives and opportunities for the property development in Malacca.
Balance Sheet
