Achieva reports lower turnover for 1H FY 2002 –
Electronics slowdown and business consolidation pulls Group into the red
16 August 2002, Singapore — Achieva Limited (“Achieva”), one of Asia Pacific’s top knowledge-based, value-added distributors and solutions providers focusing on electronics and IT-related products, today announced that its Group turnover (unaudited) fell by 6% from about $244.8 million in the first half of FY2001 to $230 million for the first six months ended 30 June 2002. The lower turnover is due to the slowdown of markets in Vietnam, China and Malaysia.
At half-time, the Group registered an operating loss before interest and tax of $3.4 million compared to an operating profit before interest and tax of $6.2 million for the corresponding period last year.
The Group’s weak financial performance was attributable to a few key factors:
– Losses of $2.9 million incurred by the PC peripherals sub-group which had to reduce margins to
maintain market share;
– Reduced margins in the electronic components sub-group;
– One-time write-off in investments relating to Nano Storage Pte Ltd of $1.9 million;
– Start-up investments for expanding its operations into North Asia especially in the People’s Republic of China (PRC); and
– Unrealised translation loss due to weakness in the US$
Due to funding difficulties faced by Nanochip, Inc., Achieva took a decision to voluntarily liquidate Nano Storage so as to cut losses. In the event of a successful funding exercise by Nanochip, Inc., the Group may be able to recover $965,000 as per the terms of the convertible notes issued by Nanochip, Inc. Achieva had earlier concluded an Asia-Pacific distribution agreement with Nanochip, Inc., and would be able to benefit from the Asian distribution rights for Nanochip’s products should they go into commercial production.
Earnings per share fell from 0.91 cents in the first 6 months of last year to a loss per share of 0.98 cents in the first half of this year. Net tangible assets backing per share also fell from 12.42 cents to 11.23 cents. There will be no interim dividends.
Turnover for the Group’s electronic components sub-group grew by 16% from $31.8 million in the first half of last year to $37 million this half-year, reflecting increase in contribution from the new markets in China. Operating profit for this sub-group was $2.6 million for the first half of this year, down 34% from $3.9 million for the corresponding period of last year.
All the other business segments registered lower turnover and losses.
In terms of geographical contribution, Singapore and Australia were the only two markets whose turnover increased, rising by 7% and 11% respectively over the same period last year. All the markets posted operating losses compared to last year.
Commenting on the results, Mr Henry Lim, President and CEO of Achieva , said:
“Our unfavourable financial performance reflects clearly the impact of the difficult operating environment – resulting from weak regional economies, the global slowdown in the electronics industry and our decision to reposition ourselves to focus on our core competencies and growth drivers. We have consolidated our businesses, streamlined our product portfolio to weed out non-performing lines, and made strategic investments to grow our businesses in North Asia and India, which is a major IT hub in the region. We expect our business expansion initiatives in these markets to yield results by early next year, if not the second half of this year.
Achieva’s top management members have taken the initiative to cut our own salaries to demonstrate our commitment and responsibility in keeping the Group lean during these challenging times. Going forward, Achieva remains committed to scaling up the value chain to provide knowledge-based value-added solutions for our customers and partners. In the meantime, we will concentrate on building our core strengths in marketing and distribution of higher-margin products and services to deliver long-term returns to our shareholders.”
The PC peripherals business expects difficult trading conditions to continue to the end of the current financial year. However the second-half performance is expected to be better than the first half.
The electronic components sub-group, which will be growing its business in North Asia, is expected to remain profitable in the second half of the financial year.
The Directors expect the IT market to continue to be volatile. Barring unforeseen circumstances, the Group expects the second half-year results to be better than the first-half results. However, the Group does not expect to be profitable for the full year.
Listed on the Mainboard of the Singapore Exchange since June 2000, Achieva is one of Asia Pacific’s top value-added distributors and solutions providers focusing on electronics and IT-related products. With corporate headquarters in Singapore and its operations spanning the Asia-Pacific region, the Achieva Group currently represents in excess of 30 product brands.
Currently, the Group has four operating divisions in 9 countries and a staff strength of about 240, serving a growing customer base of about 8000 in the Asia-Pacific region.