With regard to the queries raised by the Singapore Exchange Securities Trading Limited in its letter dated 1 March 2004 in relation to the Company's Full Year Results, the Board of Directors of the Company wishes to respond as follows:
Question 1 - Please provide the reason(s) for the 23% increase in trade receivables from S$17.701 million to S$21.756 million.
Trade Debtors increased from S$17.7 million in FY2002 to S$21.8 million in FY2003 mainly due to higher unbilled revenue for jobs which were completed as at 31/12/03 as well as higher trade debtors balance generally. Due to the recovery of our business in the second half of FY2003, a higher proportion of our jobs were completed towards the end of the year and this accounted for the higher billings and unbilled revenue as at 31/12/03.
Question 2 - Aggregate value of interested person transactions transacted during the financial year under the Company's mandate for interested person transactions, in the form stipulated in Rule 907, as required by Rule 920(1)(a)(ii).
There were no transactions of S$100,000 or above which were transacted during the financial year under the Company's mandate for interested person transactions.
Question 3 - Operating profit after tax as a percentage of revenue fell from 7.7% in the 2nd half of FY2002 to 4% for the corresponding period in FY2003. Provide the reason(s) for the decline.
Operating profit after tax fell from S$2.9 million (7.7% of revenue) in the second half of FY2002 to S$1.4 million (4.1% of revenue) in the corresponding period in Y2003 due to the following reasons :-
i) lower turnover of S$2.3 million and a lower gross profit of approximately S$0.8 million for the second half of FY2003;
ii) lower net interest income (decreased by S$0.2 million) for the second half of FY2003;
iii) provision for diminution in value of investment of S$0.1 million made in the second half of FY2003;
iv) higher selling & marketing expenses (increased by S$0.1 million) for the second half of FY2003;
v) provision for doubtful debts of S$70,000 in FY2003 as compared with a write-back of S$53,000 in FY2002;
vi) higher operating cost (increased by S$0.5 million) for the second half of FY2003; off set by:-
vii) higher corporate fee income (increased by S$0.2 million) for the second half of FY2003; and
viii) lower tax expenses (decreased by S$0.1 million) for the second half of FY2003.
Question 4 - We note from your Prospectus dated 9 September 2003 that a restructuring exercise was carried out in August 2003 to form the Kingsmen Group. In your Full year Results announcement, you provided the actual results for Kingsmen Group for FY2003. However, proforma group results were prepared on the assumption that the post-restructuring Group structure had been in place from 1 January 2002. In this regards, please explain the basis on which the actual results for Kingsmen Group for FY2003 were prepared, with emphasis on how the actual results can serve as a meaningful comparison with the proforma group results for FY2002.
The actual figures for FY2003 were prepared on the basis that the restructuring exercise was effective from 1 January 2003. Therefore, to serve as a meaningful comparison, the proforma FY2002 figures were prepared on the assumption that the post-restructuring Group structure had been in place from 1 January 2002. This will ensure that the same basis were used in the preparation of both the proforma FY2002 and actual FY2003 figures.