EU YAN SANG INTERNATIONAL LTD. 2/12/2016 Financial Statements and Related Announcement::Second Quarter and/ or Half Yearly Results
Issuer/ Manager | EU YAN SANG INTERNATIONAL LTD |
Securities | EU YAN SANG INTERNATIONAL LTD SG1I87884967 E02 EU YAN SANG INTL W161128 SG9CC0976432 PG7W EUYANSANG S$75M4.1%N180606 SG56I0993536 2WLB |
Stapled Security | No |
Announcement Title | Financial Statements and Related Announcement |
Date & Time of Broadcast | 12Feb2016 07:05:12 |
Status | New |
Announcement Sub Title | Second Quarter and/ or Half Yearly Results |
Announcement Reference | SG160212OTHROJSG |
Submitted By (Co./ Ind. Name) | Lam Chee Weng |
Designation | Chief Financial Officer |
Description (Please provide a detailed description of the event in the box below Refer to the Online help for the format) | Please see attached. |
For Financial Period Ended 31/12/2015
Attachments
EYS_Q2FY16_SGXNET_Final.pdf
EYSI_Q2FY16_Press_Release_12 Feb_FINAL.PDF
Total size =806K
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Dividend
-
Current Financial Period Reported On
Any dividend declared for the current financial period reported on?
None
-
Corresponding Period of the Immediately Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year?
None
-
Date payable
Not Applicable.
-
Books closure date
Not Applicable.
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If no dividend has been declared/recommended, a statement to that effect.
Not applicable.
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If the Group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect.
Interested Persons Transactions for the financial period ended 31 December 2015
Interested Person Transaction
Aggregate value of all interested
Aggregate value of all
person transactions (excluding
interested person
transactions less than S$100,000 and
transactions conducted
transactions conducted under
under shareholders'
shareholders' mandate pursuant to
mandate (excluding
Rule 920)
transactions less than
S$100,000 pursuant to Rule
920)
Transactions with:-
S$'000
S$'000
(a) XAct Solutions Pty. Ltd
3
-
(b) Shanghai Rongyue Medical Information Consulting
Co. Ltd.
218
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- Negative confirmation pursuant to Rule 705(5). (Not required for announcement on full year results)
Income tax expense
The higher effective tax rates for the 2nd quarter and half year were largely due to the changes in the composition of profit or loss positions of the subsidiaries within the Group.
Property, plant and equipment
The increase in the Group's property, plant and equipment ("PPE") was primarily attributed to the impact of the stronger HKD on PPE held in Hong Kong.
Inventories
The increase in inventories was largely due to the building up of inventories for upcoming Chinese New Year ("CNY") promotions.
Trade and other receivables
The higher trade and other receivables were largely attributed to increased billings to wholesale customers during the 2nd quarter and higher credit card receivables for sales to retail customers.
Prepayments
The increase in prepayments was mainly due to prepayments for goods and services in relation to the upcoming CNY promotions.
Trade and other payables
The fluctuation in trade and other payables was largely due to timing of purchases and payments to suppliers. The increase was generally due to the increase in purchase of goods and services for the upcoming CNY promotions.
Interest bearing loans and borrowings
The higher loans and borrowings were largely due to short-term borrowings taken up for working capital purposes.
Notes payable
The $25M notes were reclassified from non-current liabilities to current liabilities as they mature in November 2016. This resulted in the net current liability position for the Group and Company as at 31 December 2015.
Tax payable
The reduction in tax payable was largely due to income tax payment to the tax authorities during the 2nd quarter.
Cash flows
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Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.
The results for the period are in line with the prospect statement contained in the FY2015 full year announcement made on 26 August 2015.
- A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.
FY16 Q2 Outlets & Clinics
Countries
Retail
General TCM Clinics
Premier TCM Clinics
Integrative Medical Centre
F&B outlets
Company-operated outlets
Franchise outlets
Total
Added / (Closed)
Total
Added / (Closed)
Total
Added / (Closed)
Total
Added / (Closed)
Total
Added / (Closed)
Total
Added / (Closed)
Total
Added / (Closed)
Total
Australia
2
47
(1)
20
1
67
-
-
-
-
-
-
-
-
Malaysia
3
88
-
-
3
88
-
6
-
-
-
-
-
2
Hong Kong
1
61
-
-
1
61
-
-
-
-
-
2
-
-
Singapore
-
44
-
-
-
44
(2)
23
-
2
-
-
-
-
China
(1)
10
-
-
(1)
10
-
-
-
-
-
-
-
2
Macau
-
2
-
-
-
2
-
-
-
-
-
-
-
-
Total
5
252
(1)
20
4
272
(2)
29
-
2
-
2
-
4
The Group's retail network comprised 252 company-operated outlets and 20 franchise outlets as at 31 December 2015. During the 2nd quarter, a net total of 6 company- operated outlets was added in Australia, Malaysia and Hong Kong. 1 company-operated outlet was closed in China while there was a net reduction of 1 franchise outlet in Australia.
For the clinic network, there was a net closure of 2 clinics in Singapore, resulting in 31 TCM clinics as at 31 December 2015. Integrative Medical Centre ("IMC"), remained at 2 as at 31 December 2015.
Profitability
The Group's OP for the 2nd quarter was lower than last year, largely due to the decline in gross margin contribution and higher D&S expenses. OP for the half year was below last year, mainly due to lower revenue and gross margin contribution. The lower adminstrative expenses for the 2nd quarter and half year helped to reduce the overall decline in OP for both periods.
The decline in Profit before tax ("PBT") for the 2nd quarter was primarily due to the lower OP and lower foreign exchange gain. PBT for the half year was below last year, primarily due to the decrease in OP. PBTs for both periods were also impacted by "other losses", which related to losses arising from security breach and unauthorised modifications to payment batch in the internet banking payables system in Healthylife Australia. Police investigations are on-going to ascertain causation but initial review has indicated security breach from external sources. The decline in PBTs also led to the lower Profits after tax ("PAT") for both periods.
Distribution and selling expenses
The Group's D&S expenses for the 2nd quarter were 2% above the previous corresponding quarter while D&S expenses for the half year were marginally below last year. The increase in D&S expenses for the 2nd quarter was largely attributed to higher operating costs from the increase in company-operated outlets in Australia and the F&B operations in Shanghai.
Administrative expenses
Administrative expenses for the 2nd quarter and half year were lower by 12% and 19% respectively compared to the previous corresponding periods. The lower expenses were mainly due to lower personnel-related expenses across most markets and lower spending on corporate projects, branding and corporate communication activities.
Interest expenses
The Board of Eu Yan Sang International Ltd does hereby confirm that to the best of its knowledge, nothing has come to the attention of the Board which may render the second quarter unaudited financial statements for the period ended 31 December 2015 to be false or misleading in any material aspect.
BY ORDER OF THE BOARDLam Chee Weng Chief Financial Officer 12 February 2016
Net cash used in operating activities for the half year was S$1.4 million compared to S$2.8 million for the previous corresponding period. The lower cash used in operating activities was mainly due to the lower build-up in inventories.
Net cash used in investing activities for the half year was S$6.3 million, largely arising from capital expenditure on new and existing outlets and factory construction in Hong Kong. The cash outflow during the half year was lower than that of last year as last year's cashflow included the acquisition of properties in Hong Kong and Macau.
Net cash generated from financing activities for the half year was below that of last year by S$18.1 million, mainly due to lower short-term borrowings taken up by the Group.
The Group's cash and cash equivalents amounted to S$24.6 million as at 31 December 2015 compared to S$24.4 million as at 31 December 2014. The Group's gearing ratio was 97.8% as at 31 December 2015.
The Group expects the business environment in its key markets to remain challenging in line with broad market expectations. Despite the macro-environmental issues seen in Hong Kong and Malaysia that have persisted over the last few quarters, the Group's performance in Hong Kong has shown traction, where the rate of decline in revenues have moderated versus comparable periods last year, while its business in Malaysia, after a weak Q1 FY2016 performance, has rebounded in Q2 FY2016. This improvement in Malaysia however, when reported in Singapore dollars has been muted due to currency depreciation of the Malaysian Ringgit.
On a positive note, operations in Australia remain on track with double digit same store sales growth, and the Group intends to grow its existing network in Australia organically and through acquisitions. Singapore continues its revenue rejuvenation journey through incremental improvements in its retail operations and will be further extending its wholesale network. These two markets are expected to add resilience to group revenues, cushioning against revenue reductions in other markets. The Group has also embarked in a series of joint ventures with strategic partners in China. Through these collaborations, the Group is optimistic that the synergy of skillsets and resources will spur added momentum to its China operations.
As the overall operating business environment is expected to remain subdued, the Group will take a cautious approach and will continue to drive performance improvement and cost reduction initiatives including closure of non-profitable lines of business. rationalisation of weak performing retail outlets while continuing to focus on improving efficiency of back office operations through the use of technology. There will be added emphasis on wholesale and e-commerce channels to further growth opportunities. In addition, the Group intends to review its cash flow requirements and adequacy of its bank borrowings structure to ensure the Group's balance sheet is able to support revenue growth moving forward. With all these inititives, the Group expects to mitigate the impact from the negative operating environment and continue to drive a turnaround.
Turnover by Geographical Locations:
Second Quarter Ended 31
Half-Year Ended 31 December
December
2015 | 2014 | Change | 2015 | 2014 | Change |
'000 | '000 | +/(-)% | '000 | '000 | +/(-)% |
Core Countries
Hong Kong* SGD | 33,776 | 35,731 | (5) | 64,032 | 74,264 | (14) |
HKD | 186,018 | 212,773 | (13) | 353,180 | 450,633 | (22) |
Singapore SGD | 19,613 | 17,328 | 13 | 40,195 | 35,862 | 12 |
Malaysia SGD | 19,109 | 19,523 | (2) | 30,694 | 33,350 | (8) |
MYR | 57,687 | 50,613 | 14 | 91,761 | 85,888 | 7 |
Australia SGD | 13,109 | 12,110 | 8 | 25,861 | 24,249 | 7 |
AUD | 12,925 | 10,936 | 18 | 25,648 | 21,513 | 19 |
Total SGD 85,607 84,692 1 160,782 167,725 (4)
* Include Macau and China.
Hong Kong's revenue for the 2nd quarter and half year, in local currency terms, dipped by 13% and 22% respectively against the previous corresponding periods, primarily due to the decline in spending of mainland tourists and challenges in the retail environment. The stronger HKD, however, helped to reduce the overall revenue decline in SGD.
Singapore's revenue for the 2nd quarter and half year increased by 13% and 12% against the previous corresponding periods, largely due to effective marketing campaigns and launch of new products.
In terms of local currency, Malaysia's revenue for the 2nd quarter and half year grew by 14% and 7% respectively against last year, mainly due to higher sales from Eu Yan Sang members' promotions. As a result of the weakening MYR, Malaysia's revenue in SGD for the 2nd quarter and half year were below those of last year.
Australia's revenue for the 2nd quarter and half year, in terms of local currency, went up by 18% and 19% compared to last year, largely due to the increase in company- operated outlets and the increase in same-store sales. However, the growths in SGD for the 2nd quarter and half year were reduced to 8% and 7% respectively as a result of the weakening AUD.
Interest expenses for the 2nd quarter and half year were higher than those of the previous corresponding periods, mainly due to the higher short-term loans and borrowings taken up by the Group.
Eu Yan Sang International Ltd. issued this content on 12 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 13 February 2016 16:16:32 UTC
Original Document: http://www.euyansang.com.sg/on/demandware.static/-/Sites-EYSI_International-Library/default/dwc9544dfb/pdf/20160212-unaudited-results-for-the-second-quarter-and-half-year-ended-31-december-2015.pdf?version=1,455,352,493,000
