TIDMKADA
RNS Number : 2557N
Kada Technology Holdings
27 September 2012
Press Release 27 September 2012
Kada Technology Holdings Limited
("Kada" or the "Group")
Interim Results
Kada Technology Holdings Limited (AIM:KADA), the China-based
provider of components and devices for the IT industry and consumer
electronics, today announces its unaudited results for the six
months ended 30 June 2012.
Highlights
Kada successfully joined AIM on 5 July 2012
--
Revenues increased by 51% to US$64.4 million (H1 2011: US$42.7
-- million)
Profit before tax rose by 7% to US$8.0 million (H1 2011:
-- US$7.4 million)
Net cash US$1.5 million at 30 June 2012 (30 June 2011: US$5.8
-- million)
Earnings per share of US$0.11 (H1 2011: US$0.18)
--
Net assets US$26.4 million at 30 June 2012 (30 June 2011:
-- US$33.9 million)
Commenting on the Interim Results, He Xuebo, Chief Executive
Officer of Kada, said: "I am pleased that Kada was able to maintain
growth momentum in both revenue and profit for H1 2012 as we
continue to expand our customer base. Despite the slow down in
export-driven demand, due largely to the macro-economic turmoil in
the USA and Europe, Kada continues to grow its business thanks to
the resilience of our domestic customers."
- Ends -
For further information:
Kada Technology Holdings Limited
Paul He Xuebo, Chief Executive Officer Tel: +44 (0) 20 7398
7719
Lee Kheng Yam, Chief Financial Officer www.kada-ir.com
finnCap Limited
Geoff Nash / Christopher Raggett Tel: +44 (0) 20 7220
0500
www.finncap.com
Media enquiries:
Abchurch Communications Limited
Henry Harrison-Topham / Joanne Shears / Jamie Tel: +44 (0) 20 7398
Hooper 7719
joanne.shears@abchurch-group.com www.abchurch-group.com
Notes to Editors
Kada was founded in 2004 and provides solutions for electronic
devices, systems and media platforms (the "Solution Packages
Business"). The Group also distributes and sells electronic
components and provides technical support (the "Electronic
Component Business"). Kada is headquartered in Shenzhen with
offices in Hong Kong, Beijing, Shanghai, Zhuzhou and Mianyang in
China, as well as Kuala Lumpur in Malaysia.
Kada's Distributorship Division distributes and trades a
multitude of electronic components, predominantly Integrated
Circuits ("ICs"). Kada sources electronic components from a number
of suppliers that are based locally as well as from countries
including Taiwan, Hong Kong and the USA. Many of Kada's electronic
components are used in the manufacture of consumer electronics,
internet terminals and routers as well as communication devices and
media players.
The Company's Solutions Business involves the design,
development and sale of solutions packages for electronic devices
(such as netbooks, Netbox, handheld/tablet PC). Solutions packages
include product definition, structural, mechanical, visual and
circuitry design, prototype testing, underlying software
development, pilot production and production support. Solutions
packages are either commissioned by customers or conceptualised
in-house. The solutions packages offered by the Company are
flexible ranging from designs of motherboard, to the development of
a complete electronic device. Kada is currently expanding
downstream into the provision and operation of a wireless media
solution that incorporate small display terminals, mounted on a
taxi's front passenger headrest that disseminates multimedia
information and advertising programs for passengers. Taxis on the
road will receive uploads of real-time information and data (for
example local attractions, history, news highlights, public
services information and simple interactive games and animations),
via 3G or WiFi network, which are automatically displayed to the
taxi passengers. Kada has rolled out the wireless taxi media
solution in Mianyang city, Sichuan Province, PRCin late 2011, as a
marketing showcase to demonstrate its wireless media technology
capability.
For the year ended 31 December 2011, Kada reported audited
revenue and profit before tax of US$82.4million and US$13.6 million
respectively.
For further information on the Group, please visit Kada's
investor relations website at www.kada-ir.com.
Chairman's Statement
On behalf of Kada Technology Holdings, a well established
Chinese provider of components and devices for the IT industry and
consumer electronics, I am delighted to present our maiden interim
results since the Group joined AIM on 5 July 2012.
Overall, the Group's revenue continued to grow and was
approximately 51% higher than the corresponding period in 2011. The
Electronic Components distributorship business particularly has
continued to show strong growth in both revenues and operating
profit. The Solution Packages business had been impacted by the
seasonal cycle and also by a technological change in which there is
a preference to utilise tablet computers over netbooks, which has
affected the Group's Printed Circuit Board Assembly ("PCBA") and
netbook solutions addressable market. The downstream segment that
Kada is entering for its Solution Packages business, including the
wireless Media Platform business, requires more time to mature and
accordingly the revenue and profit from this division is less than
was expected. Nonetheless, the Board is pleased to note that the
strong growth in both revenue and operating profit in the
Electronic Components distributorship business was more than enough
to offset decreasing revenue in the solution packages business.
However, as this part of the business operates at a lower margin
than the Solutions Packages business, the increase in revenue has
not fed through to profit before tax as the Board would have
anticipated.
Financial Review
During the six months ended 30 June 2012, the Group recorded a
turnover of approximately US$64.4 million representing an increase
of 51% as compared to US$42.7 million for the same period last
year. Gross profit for the period increased to US$9.2million (H1
2011: US$8.8 million). The results of the Group attributable to the
equity shareholders of the Company for the period was a profit of
approximately US$7.0 million (H1 2011: US$5.5 million).
During the period under review, revenue from the Electronic
Component business increased 92% to US$58.4 million (H1 2011:
US$30.5million) as a result of an increase in overall client
numbers having a commensurate impact on sales volume. The
Electronic Components business generated an operating profit of
US$4.2 million for the six months ended 30 June 2012 compared to a
slight loss of US$0.3 million for the corresponding period last
year. The increase in revenue coupled with better cost control,
resulted in improvement in operational profit.
During the period under review, the revenue from the Group's
Solution Packages business decreased 49% to US$6.0 million from
US$12.2 million recorded as at 30 June 2011. Revenue from the
Solution Packages business has been impacted by the seasonal cycle
of sales orders from customers, which necessitated postponement of
solution packages delivery beyond the first half of 2012. In
particular, the Chinese New Year fell in Q1 for Kada resulting in
purchasing delay or diversion by customers. Correspondingly,
operating profit recorded for the period ended 30 June 2012 was
US$3.9 million, 50% lower than US$7.7 million recorded for the same
period last year.
Selling and distribution expenses increased to US$0.4 million
from US$0.2 million which is consistent with the growth in
turnover. Administrative expenses dropped slightly to US$1.0
million (H1 2011: US$1.1 million) through continued effective cost
control.
The Group's cash balance decreased slightly by 1% to US$9.2
million from 31 December 2011, despite a dividend payment of US$4.5
million in the first half of 2012, prior to admission to AIM. Net
cash was US$1.5 million at 30 June 2012, a decrease of 44% from
US$2.7 million at 31 December 2011, due to increased drawdown of a
banking facility.
Outlook
Following the GBP1.3 million (gross) fundraising completed in
July 2012, Kada has maintained prudent cost controls and allocation
of resources as the Group pursues more business opportunities in
both the Electronic Components distributorship and Solution
Packages businesses.
The Board believes that the Group's current commercial
partnerships will continue to develop strongly in the area of
distributorship. Existing distributorship agreements are expected
to be renewed on a rolling contract basis, while Kada seeks to
secure more electronic component distributorship deals.
Negotiations to secure sales orders for the Solution Packages
business, particularly the newer version of PC-based solutions,
will be diligently pursued, despite the challenge posed by
technology trend towards tablet devices. The Group continues to
allocate R&D resources to the development of other solutions,
particularly media technology solutions, to reduce its dependence
on PC-based solutions such as the netbook and PCBA. The Group's
taxi media business which was rolled out in Mianyang City, China,
was a product showcase and contribution is expected to remain small
for the rest of the financial year. Kada continues to prudently
evaluate business propositions that would require investment of
resources and capital in the area of collaboration with potential
partners.
Ivor Shrago
Chairman
27 September 2012
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2012
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2012 2011 2011
USD'000 USD'000 USD'000
Unaudited Unaudited Audited
Revenue 64,417 42,685 82,398
Cost of sales (55,172) (33,912) (63,303)
---------- ---------- ----------
Gross profit 9,245 8,773 19,095
Other income 275 43 483
Selling and distribution expenses (356) (222) (557)
Administrative expenses (959) (1,047) (5,188)
Finance costs (220) (102) (221)
---------- ---------- ----------
Profit before taxation 7,985 7,445 13,612
Income tax expenses (1,103) (1,978) (3,268)
---------- ---------- ----------
Profit for the period 6,882 5,467 10,344
Other comprehensive income
Exchange differences on translation
of foreign operations 82 18 77
---------- ---------- ----------
Total comprehensive income for the
period 6,964 5,485 10,421
========== ========== ==========
Attributable to:
Equity Shareholders of the Company 6,995 5,485 10,434
Minority Interests (31) - (13)
---------- ---------- ----------
6,964 5,485 10,421
========== ========== ==========
Earnings per ordinary share
Basic 0.11 0.09 0.18
Condensed consolidated statement of financial position
as at 30 June 2012
30 Jun 30 Jun 31 Dec
2012 2011 2011
Unaudited Unaudited Audited
USD'000 USD'000 USD'000
ASSETS
Non current asset
Plant and equipment 184 147 225
Intangible assets 39 51 45
Deferred tax 358 214 345
---------- ---------- --------
581 412 615
Current assets
Inventories 1,054 1,293 1,449
Other current assets 8 681 -
Trade and other receivables 40,970 40,581 37,537
Derivative financial assets - - 163
Cash and cash equivalents 9,235 13,099 9,365
---------- ---------- --------
51,267 55,654 48,514
---------- ---------- --------
Total assets 51,848 56,066 49,129
========== ========== ========
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 5,721 -* -*
Other reserves (4,388) 1,753 1,333
Statutory and translation reserves 359 103 277
Retained earnings 24,752 32,044 17,839
---------- ---------- --------
Equity attributable to owners 26,444 33,900 19,449
Minority Interest 19 - 50
---------- ---------- --------
Total equity 26,463 33,900 19,499
---------- ---------- --------
Liabilities
Non-current
Deferred tax liabilities 50 50 50
Borrowings 1,550 1,551 1,320
---------- ---------- --------
1,600 1,601 1,370
---------- ---------- --------
Current
Borrowings 6,194 5,713 5,372
Trade and other payables 8,437 12,620 10,239
Corporate income tax payable 9,120 2,232 8,084
Dividends payable 34 - 4,565
---------- ---------- --------
23,785 20,565 28,260
---------- ---------- --------
Total equity and liabilities 51,848 56,066 49,129
========== ========== ========
*Amount is less than US$1,000
Condensed consolidated statement of cash flow
for the six months ended 30 June 2012
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2012 2011 2011
USD'000 USD'000 USD'000
Unaudited Unaudited Audited
Profit before income tax 7,985 7,445 13,612
Adjustments for:
Interest expenses 220 102 221
Interest income (185) (24) (157)
Depreciation of property, plant
and equipment 38 20 54
Amortisation of intangible assets 7 6 11
Derivative financial assets 38 - (163)
---------- ---------- ----------
Operating profit before working
capital changes 8,103 7,549 13,578
Decrease in inventories 395 156 -
Increase in trade and other receivables (3,433) (10,247) (11,352)
(Increase)/decrease in other current
assets (8) (366) 315
Increase/(decrease) in trade and
other payables (1,802) 4,690 2,309
---------- ---------- ----------
Cash generated from operations 3,255 1,782 4,850
Interest received 185 24 157
Tax paid - (146) (555)
---------- ---------- ----------
Net cash generated from operating
activities 3,440 1,660 4,452
Investing activities
Purchase of property, plant and
equipment (2) (38) (146)
Purchase of intangible assets (1) - (2)
Proceeds from sale of derivative 125 - -
financial assets
Minority interest shares - - 63
---------- ---------- ----------
Net cash from/(used in) investing
activities 122 (38) (85)
Financing activities
Dividend paid (4,531) - (5,435)
Interest paid (220) (102) (221)
Borrowings 1,052 1,907 1,335
Share redemption - - (420)
---------- ---------- ----------
Net cash inflow/(outflow) from financing
activities (3,699) 1,805 (4,741)
Net (decrease)/increase in cash
and cash equivalents (137) 3,427 (374)
Cash and cash equivalents at beginning
of period 9,365 9,663 9,663
Effect of foreign exchange rate
changes 7 (81) 76
---------- ---------- ----------
Cash and cash equivalents at end
of period 9,235 13,009 9,365
========== ========== ==========
Condensed consolidated statement of changes in equity
for the period ended 30 June 2012
Share Translation Statutory Retained
capital Other reserves reserve reserve earnings Total equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2011 - 1,753 36 47 26,579 28,415
Profit for the period - - - - 5,467 5,467
Other comprehensive
income - - 18 - - 18
Transfer to statutory
reserve - - - 2 (2) -
-------- -------------- ----------- --------- --------- ------------
At 30 June 2011 1,753 54 49 32,044 33,900
Redemption - (420) - - - (420)
Profit for the period - - - - (4,090) (4,090)
Other comprehensive
income - - 59 - - 59
Transfer to statutory
reserve - - - 115 (115) -
Dividends - - - - (10,000) (10,000)
-------- -------------- ----------- --------- --------- ------------
At 31 December 2011 - 1,333 113 164 17,839 19,449
Profit for the period - - - - 6,913 6,913
Other comprehensive
income - - 82 - - 82
Reorganisation 5,721 (5,721) - - - -
-------- -------------- ----------- --------- --------- ------------
At 30 June 2012 5,721 (4,388) 195 164 24,752 26,444
-------- -------------- ----------- --------- --------- ------------
Attributable to Minority
Interest
Shares Retained Total minority
in subsidiary earnings interest
USD'000 USD'000 USD'000
Balance at 1 July - -
2011 -
Shares in Sichuan
Xianfan 63 - 63
Losses for the period - (13) (13)
-------------- --------- --------------
Balance at 30 December
2011 63 (13) 50
Losses for the period - (31) (31)
Balance at 30 June
2012 63 (44) 19
============== ========= ==============
Notes to the condensed consolidated financial statement
30 June 2012
1. General information
Kada is a company incorporated under the law of Bermuda. The
address of the registered office is Claredon House, 2 Church
Street, Hamilton, HM11, Bermuda.
The principal activity of Kada and its subsidiaries (the
"Group") is the development and provision of solutions for
electronic devices, systems and media platforms. The Group also
distributes and sells electronic components for which it provides
technical support. Recently, the Group has ventured into the
provision and operation of its own bespoke media platform. The
principal place of business of the Group's operation is at Room
505, Building C, Huashan Science and Technology Building, Langshan
Road, Nanshan District, Shenzhen.
These condensed financial statements are presented in the
nearest thousands and US dollars, the presentation currency of the
group. The functional currencies of the principal subsidiaries are
Renminbi ("RMB") of the PRC and Hong Kong Dollar ("HKD").
The exchange rate used is USD 1: RMB 6.3089 and USD 1: HKD
7.757.
2. Basis of preparationand accounting policies
The Group's interim financial information for the six months
ended 30 June 2012, including comparative financial information,
has been prepared on the basis of the accounting policies set out
in the last audited consolidated financial statements, which are
based upon the International Financial Reporting Standards ("IFRS")
and interpretations as adopted by the EU. This interim report has
been prepared in accordance with the AIM Rules for Companies and
not in accordance with IAS34 'Interim financial reporting', as
issued by the International Accounting Standards Board and adopted
by the European Union.
These condensed financial statements have been prepared under
the historical cost basis except for certain financial instruments.
Historical cost is generally based on the fair value of the
consideration given in exchange of assets.
The Group's interim results for the six month period ended 30
June 2012 are unaudited and were approved by the Board of Directors
on 21 September 2012.
The Group has been formed piecemeal since April 2008 when Yoho
King Limited acquired all the ordinary shares of Kada Technical
Innovation Company Limited. The Company acquired all the shares in
Yoho King Limited on 25 June 2012, pursuant to a re-organisation
exercise of the corporate structure of the Group that was
undertaken as part of the initial public offering of the
Company.
The Group is regarded as a continuing entity under common
control during these periods until 30 June 2012. Accordingly the
unaudited interim financial information for the six months ended 30
June 2012 have been presented on the basis of merger accounting as
if the Group had been in existence throughout the reporting
period.
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may subsequently differ from those estimates.
In preparing the interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same,
in all material respects, as those applied to the audited
consolidated financial statements for the year ended 31 December
2011.
3. Segmental analysis
Solution Electronic
package Component Total
USD'000 USD'000 USD'000
6 months ended 30 June 2012
Revenue 5,984 58,433 64,417
========= =========== ========
Segment results 3,856 4,237 8,093
========= =========== ========
Unallocated loss (108)
Profit before income tax 7,985
Year ended 31 December 2011
Revenue 16,143 66,255 82,398
========= =========== ========
Segment results 10,405 3,970 14,375
========= =========== ========
Unallocated loss (763)
Profit before income tax 13,612
6 months ended 30 June 2011
Revenue 12,185 30,500 42,685
========= =========== ========
Segment results 7,705 (260) 7,445
========= =========== ========
Unallocated loss -
Profit before income tax 7,445
4. Taxation
The group operates in Hong Kong and the PRC and disclosed the
corporate income tax rate applicable in the jurisdiction in which
the principal subsidiary domiciled which is in Hong Kong.
Kada is regarded as resident for the tax purposes in Bermuda.
There are no applicable taxes in Bermuda for the Company.
The taxation charge is based upon the expected effective rate
for the period ended 30 June 2012.
5. Earnings per share
Historic, basic and diluted earnings per share information is
not meaningful given there was only 1 share in issue for Kada
Technology Holdings Limited to 31 December 2011 and it was
converted to 10 shares on 21 June 2012.
Pro-forma earnings per share information based upon the 10
shares in issue plus the 57,210,740 reorganisation shares issued
and 746,090 new Subscription is as follows:
6 months 6 months Year
to to to
30 Jun 30 Jun 31 Dec
2012 2011 2011
USD USD USD
Earnings per share: 0.11 0.09 0.18
===== ===== =====
The above calculated on the profit for the financial periods
attributable to the Equity shareholders of Kada Technology and
assumes the 57,956,840 Ordinary Shares of US$0.10 each existed
throughout the period ended 30 June 2012 and 30 June 2011, and year
ended 31 December 2011.
6. Borrowings
During the period, the Group obtained an additional new trust
receipt loan in the amount of USD 1.05 million from its existing
bank, for the purpose of trade financing. The loan bears interest
at fixed rates and is repayable within 90 days.
7. Share capital
The issued share capital of the company as at 30 June 2012 is
USD 5,721,740 fully paid.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the company. All shares rank equally with
regards to the company's residual assets.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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