TIDMKADA
RNS Number : 2829P
Kada Technology Holdings
30 September 2013
30 September 2013
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 2013.
Highlights
- Revenues of US$46.7 million (H1 2011: US$64.4 million)
- Profit before tax of US$1.7 million (H1 2012: US$8.0 million)
- Earnings per share of US$0.03 (H1 2012: US$0.11)
- Net assets US$29.6 million at 30 June 2013 (30 June 2012:
US$28.1 million)
Commenting on the Interim Results, Ivor Shrago, Chairman of
Kada, said: "The first six months of 2013 have proved to be a
period of significant strategic change for Kada. Our Solutions
Package business has continued to struggle as demand in China has
cooled as use of smartphones and tablets has increased. Margins in
our Electronic Components business have again been squeezed through
increased competition and a deteriorating economic climate in
China. The Company continues to focus on winning larger more
established clients to improve its cashflow and offset inventory
and accounts receivable risk. The Board believes that 2013 is a
year to consolidate our trading business and develop our hardware
and software solutions (i.e. media kiosk project) with potential
clients so that they will be delivering material revenues in
2014."
- Ends -
For further information:
Kada Technology Holdings Limited
Paul He Xuebo, Chief Executive Officer Tel: +44 (0) 20 7398
7719
www.kada-ir.com
finnCap Limited
Geoff Nash / Christopher Raggett Tel: +44 (0) 20 7220
0500
www.finncap.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, (Kada is now mainly trading
LCD, LCM and PCBA). 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 further information on the Group, please visit Kada's
investor relations website at www.kada-ir.com.
Business Review
Both of our divisions have suffered as the Chinese economy
slowed during the first half of the year. This has been compounded
by the newly elected Government officials not taking their seats
till April which has seen many state owned enterprises ("SOE")in
China delay any spending decisions until later in 2013. During 2012
in our Electronic Components division, we had seen demand for our
products from overseas fall but were pleased that we managed to win
some domestic blue chip business (e.g. Putian). In 2013, we have
seen domestic demand fall back but we continue to see good demand
for LCD screens, albeit at increasingly tighter margins. The Board
believe that given the changing economic climate its strategy of
focusing on large SOE clients to limit any accounts receivable risk
is a prudent one. We believe that now is the right time to
consolidate our trading business, starting with our clients, so
that the Company has a solid base from which to grow and add new
revenue streams in 2014 and beyond.
As set out in our 2012 annual accounts we had seen a decline in
revenues in our Solution Packages division as demand fell because
of our customers continued focus on netbooks, smartphones and
handheld PC's. This trend has continued to gather pace in the first
half of 2013 meaning our revenues from this division are materially
down. The Board had hoped that any slack in the Solution Packages
business would be picked up by revenues from new products such as
City Service Media Kiosk / Airport Trolley Media System / Wireless
Taxi Media. However, although we are still excited about the
potential of these new products we believe that any meaningful
revenues from them will be first seen in 2014.
Financial Review
For the six months ended June 2013, turnover was USD46.7m (H1
2012: USD64.4m). Turnover for the electronic components division
was USD46.0m(H1 2012: USD58.4m), and accounted for approximately
98.6% (H1 2012: 90.7%) of the Company's turnover. Turnover from
solution packages business was USD0.65m (H1 2012: USD6.0)
representing around 1.4% (H1 2012 9.3%) of the Company's turnover.
Due to the drop in margin from electronic components division, the
Company has an overall gross profit margin of around 4.96% in the
first half of 2013 compared to 14.4% margin in the corresponding
period in last year. The Company achieved a net profit of USD1.45m
(H1 2012: 6.9m) for the period.
The drop in revenue in the Company's electronic components
division was due to a drop in demand from our domestic clients.
This was coupled with the increasing competitive Information and
Communications Technology ("ICT") industry that has caused the
Company to focus on more established but lower margin clients.
Due to the slowing economic environment there has been a slight
increase in the amount of trade receivables outstanding compared to
y/e 2012 as seen in the table below.
At At
30 June 2013 31 December 2012
USD'000 USD'000
(unaudited) (audited)
Trade receivables 45,391 41,272
Prepayments to suppliers 10,212 5,709
Other receivables 536 611
56,139 47,592
-------------- ------------------
The Board believe that all trade receivables will be collected
during the normal course of business and none should be considered
bad debt.
Outlook
We believe that the second half of the year will see a similar
level of performance to the first half. The Company continues to
focus on winning new clients and particularly larger key clients to
improve working capital and cash flow and consolidate its trading
business. In addition, we focus on the collection of trade debtors
and will seek to expedite the delivery of firm orders following
pilot tests for our new products. The most advanced of which will
be the media kiosk project which we expect to complete pilot
testing in 2013 and deliver 30,000 units in 2014 (each priced at
USD$1,385) and delivering a net profit margin of 9%. Although, we
believe the media kiosk project will achieve revenue for the
Company first, the wireless taxi media should complete testing in
early 2014 with contract orders expected to follow. We look forward
to updating shareholders on these developments in due course.
Ivor Shrago
Chairman
30 September 2013
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2013
6 months 6 months
ended ended
30 Jun 30 Jun
2013 2012
Unaudited Unaudited
USD'000 USD'000
Revenue 46,704 64,417
Cost of sales (44,388) (55,172)
---------- ----------
Gross profit 2,316 9,245
Other income 473 275
Selling and distribution expenses (167) (356)
Administrative expenses (786) (959)
Finance costs (172) (220)
---------- ----------
Profit before tax 1,664 7,985
Income tax expense (217) (1,103)
---------- ----------
Profit for the period 1,447 6,882
Other comprehensive income
Exchange differences on translation
of foreign operations 34 82
---------- ----------
Total comprehensive income for the
period 1,481 6,964
========== ==========
Attributable to:
Equity Shareholders of the Company 1,507 6,995
Non-controlling interest (26) (31)
---------- ----------
1,481 6,964
========== ==========
Earnings per ordinary share
Basic and diluted 0.025 0.11
========== ==========
Condensed consolidated statement of financial position
as at 30 June 2013
30 Jun 30 Jun
2011 2012
Unaudited unaudited
USD'000 USD'000
ASSETS
Non current asset
Plant and equipment 106 142
Intangible assets 75 34
Deferred tax 590 601
---------- ----------
771 777
Current assets
Inventories 2,214 833
Trade and other receivables 56,139 47,592
Tax recoverable 167 -
Derivative financial assets - 81
Cash and cash equivalents 8,116 13,009
---------- ----------
66,636 61,515
---------- ----------
Total assets 67,407 62,292
========== ==========
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 5,796 5,796
Share premium 1,924 1,924
Other reserves (4,087) (4,121)
Retained earnings 26,018 24,545
---------- ----------
Equity attributable to owners 29,651 28,144
Minority Interest (36) (10)
---------- ----------
Total equity 29,615 28,134
---------- ----------
Liabilities
Non-current
Deferred tax liabilities 50 50
Borrowings 2,607 958
---------- ----------
2,657 1,008
---------- ----------
Current
Borrowings 20,804 11,398
Trade and other payables 5,554 10,856
Corporate income tax payable 8,777 10,896
35,135 33,150
---------- ----------
Total equity and liabilities 67,407 62,292
========== ==========
Condensed consolidated statement of cash flows
for the six months ended 30 June 2013
6 months 6 months
ended ended
30 Jun 30 Jun
2013 2012
Unaudited Unaudited
USD'000 USD'000
Profit before income tax 1,664 7,985
Adjustments for:
Interest expenses 172 220
Interest income (147) (185)
Depreciation of property, plant
and equipment 33 38
Amortisation of intangible assets 69 7
Derivative financial assets 81 38
---------- ----------
1,872 8,103
Operating profit before working
capital changes
(Increase)/decrease in inventories (1,381) 395
Increase in trade and other receivables (8,547) (3,433)
Increase in other current assets - (8)
Decrease in trade and other payables (5,302) (1,802)
---------- ----------
(13,358) 3,255
Cash generated from operations
Interest received 147 185
Tax paid (2,503) -
---------- ----------
Net cash (used in)/ from operating
activities (15,714) 3,440
---------- ----------
Investing activities
Purchase of property, plant and
equipment - (2)
Purchase of intangible assets (110) (1)
Proceeds from sale of derivative
financial assets - 125
---------- ----------
Net cash (used in)/from investing
activities (110) 122
---------- ----------
Financing activities
Dividend paid - (4,531)
Interest paid (172) (220)
Borrowings 11,055 1,052
Share redemption -
---------- ----------
Net cash inflow/(outflow) from financing
activities 10,883 (3,699)
---------- ----------
Net decrease in cash and cash equivalents (4,914) (137)
Cash and cash equivalents at beginning
of period 13,009 9,365
Effect of foreign exchange rate
changes 48 7
---------- ----------
Cash and cash equivalents at end
of period 8,116 9,235
========== ==========
Condensed consolidated statement of changes in equity
for the period ended 30 June 2013
Share Share Combination Translation Statutory Retained Total
capital Preimum reserve reserve reserve earnings equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'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
At 31 December
2012 5,796 1,924 (4,388) 190 77 24,545 28,144
Profit for the
period - - - 32 2 1,473 821
Other comprehensive
income - - - - - - 34
--------- --------- ------------ ------------ ---------- ---------- --------
At 30 June 2013 5,796 1,924 (4,388) 222 79 26,018 28,999
Attributable to non-controlling
interest
Shares Retained Total minority
in subsidiary earnings interest
USD'000 USD'000 USD'000
Balance at 31 December
2011 63 (13) 50
Losses for the period - (31) (31)
Balance at 30 June 2012 63 (44) 19
--------------- ---------- ---------------
Balance at 30 December
2012 63 (73) (10)
Losses for the period - (26) (26)
--------------- ---------- ---------------
Balance at 30 June 2013 63 (99) (36)
--------------- ---------- ---------------
Notes to the condensed consolidated financial statement
1. General information
Kada Technology Holdings Limited ("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").
2. Basis of preparationand accounting policies
The Group's interim financial information for the six months
ended 30 June 2013, 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 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 2013 are unaudited and were approved by the Board of Directors
on [29 September 2013].
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.
Notes to the condensed consolidated financial statement -
continued
2. Basis of preparationand accounting policies - continued
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
2012.
3. Segmental analysis
Solution Electronic
package Component Total
USD'000 USD'000 USD'000
6 months ended 30 June 2013
Revenue 652 46,052 46,052
========= =========== ========
Segment results (106) 1,108 1,002
Unallocated profit 10
Profit before income tax 1,012
========= =========== ========
6 months ended 30 June 2013
Revenue 5,984 58,433 64,417
Segment results 3,856 4,237 8,093
Unallocated loss (108)
Profit before income tax 7,985
========= =========== ========
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 2013.
Notes to the condensed consolidated financial statement -
continued
5. Earnings per share
6 months 6 months
to to
30 Jun 30 Jun
2013 2012
Proforma
USD USD
Earnings per share: 0.025 0.11
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 2013 and 30 June 2012, and year
ended 31 December 2011.
As there were no potential dilutive ordinary shares during the
financial years and period
presented in these consolidated financial statements, no diluted
earning per share is
presented.
6. Share capital
The issued share capital of the company as at 30 June 2013 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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