Dear Investors,
Thank you very much for the questions and the opportunity for us to respond. We hope you have a better understanding of our business through this online exchange. Your questions will be reposted in blue followed by our replies in black.
Warmest regards,
The Management Team
Kingsmen Creatives Ltd
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Shirley Sim, you wrote:
Your company has been expanding aggressively in the Asian region, that will require more funding in terms of capital expenditure and working capital. Although your bottomline has increased by a whopping 70%, your cashflow had almost been depleted by almost 50% compared to the same period last year. Despite this your company has paid out dividend yearly, depleting your already low cashflow balance. Are there plans to raise more cash to fund these projects?
Hi Shirley Sim,
For the first half of FY2005, we used up S$1.77 million of our cash and cash equivalents. There was a net outflow from operating activities of S$264,000, and funds were utilised for i) acquisition of PPE of S$737,000; ii) a further capital injection of S$53,000 to our affiliated company in Thailand; and iii) dividend payment of S$708,000 to shareholders.
Due to the nature of the industry we operate in, business activities usually start picking up from the second quarter onwards. For the first half of FY2005, we also had a few bigger projects that required some initial outlay in costs. The timing differences in the cash inflow and outflow, which are project related, are usually short-term in nature, with positive cashflow by the third quarter. The acquisition of PPE and the investments are part of our expansion plans for Singapore and the region, and we managed to make significant headway in the first half of FY2005. We plan to continue making dividend payout to our shareholders from our profits, after reviewing our financial requirements and setting aside some reserves for expansion. With careful management of our funds, we are assured that our cashflow will be adequate.
There are plans for the Group to acquire some of the other affiliated companies over the next two years. Most likely, we will have to raise some additional capital to fund the acquisition. Alternatively, the acquisition may be paid by a new share issue or a combination of shares and cash, or funded by debt or bank borrowings.
Best regards.
The Management Team
Kingsmen Creatives Ltd
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K.C. Ng, you wrote,
Based on Kingsmen's present scale of operations (revenue - FY04: S$63.3m, 1HFY05: S$28.1m), growing presence in Asia-Pacific (15 locations), conservative balance sheet (equity: S$13.1m @30Jun05; nett cash position), the current market capitalisation of S$12.6m (based on closing share price of S$0.125 @17Aug05) seems low, bearing in mind the IPO launch price was S$0.30/share. Perhaps the reasons contributing to the current low share price are the fall in net profit in FY04 to S$1.4m and the still low profitability in 1HFY05 (net profit: S$0.7m, equivalent to only 2.5% on revenue).I would like Kingsmen's management to share with investors any specific ideas and action plans being taken to increase profitability of the business in 2HFY05 and into FY06 and beyond.Thank you.
P/S: I enjoy reading Kingsmen's annual report and believe the company's public disclosures are of pretty high standards.
Hi K.C. Ng,
In the face of competition and changes to the industry, we are constantly looking for growth and improvements, with the ultimate goal of increasing our bottom-line. The following are some of the strategies that we have adopted and will continue to focus on:-
- Process improvement
- cost management with a regional focus, such as sourcing regionally;
- project management efficiency; and
- designing for more efficient production.
- Export of cost-competitive, high quality fixtures for retail interiors to the Asia-Pacific region, United States and potentially Europe. This area of business provides high growth and better margin.
- Continuous training for our managers and staff and the grooming of the second echelon of leaders.
- Pro-active sales/marketing efforts focusing on key accounts, with an overall macro view on our customers' needs and requirements.
- Undertaking selective projects.
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Bruce Chew, you wrote:
Dear Kingsmen Team,
Firstly, congratulations on the 70% growth in profit.
Based on the results stated in your HY announcement; I cannot help but notice that the Exhibitions and Museums Divsion revenue is rather dependent on a few big contracts. Are there plans to focus on SME type of engagement to diversify your dependencies? Or put it another way, how many % of your E&M Division revenue is dependent on the top five clients?
Hi Bruce Chew,
For exhibitions or events, our revenue may be derived from more than one client, as there could be up to hundreds of exhibitors in a major event. Most of the major exhibition events are recurring in nature, and take place every one or two years.
For our Exhibitions and Museums division, the top five shows/projects (including the museum project in Sentosa) accounted for approximately 47% of the total revenue of the division for the first half of FY2005.
The other 53% of our revenue from Exhibitions and Museums division comprises hundreds of other individual projects, which can range from a few thousand dollars per job to a few hundred thousand dollars per event.
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Max, you wrote:
Congrats for the improved results!
Here are my questions...
- What's the contribution (in terms of percentage) for Vietnam market in the coming year?
- What are the current few key accounts that accounted for significant contributions? Thanks.
Hi Max,
- We expect our Vietnam operations to contribute approximately 8% to 10% to the Group's revenue for FY2005.
- Key accounts that contributed significantly to our revenue in 1H05:-
DFS, FJ Benjamin, Esprit Retail, P&G, Pertama Mechandising, Wing Tai Asia, Nokia, Nuance, Charles & Keith, Bacarrat (Robinson's group of companies), Osim, BMW/Performance Motor Limited, Sime Darby, Yamaha(in Vietnam)
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Lim Choon Seng, you wrote:
Your results improved quite a bit but yet your share price still lingering at 12cts level. Seems like the market is ignoring Kingsmen for the time being. This Q&A on the Internet is a good start, so what more will Kingsmen do to market itself to investors out here?
- I remembered last year that you were busy acquiring your associate companies around the world... will this continue this year or next? If so, what benefits can we see as a result of this "consolidation"?
- Will the upcoming IRs benefit Kingsmen? If so, how?
Thank you management!
Hi Lim Choon Seng,
There are plans for the Group to acquire some of the other affiliated companies over the next two years, when these affiliated companies have achieved a certain level of profitability.
The acquisition of these affiliates is beneficial to the Group as these affiliates are in growth markets with good potential in the Exhibits and Interiors industry. Based on their potential, these affiliates will contribute more significantly to the Group in the long run.
The inclusion of these affiliated companies in the Group will enable the Group to gain direct access and presence in the countries that the affiliates operate in. The territories which the Group and these affiliates carry out their business have been clearly demarcated, to ensure that there will be no overlap between the territories of their respective business and operations. The acquisition of these affiliated companies will allow the Group to secure its presence in these territories without the need to set up new operations or to develop new marketplaces in these territories.
The proposed IRs in Singapore should benefit our Group as there are potential contracts for interior works, theme decorations and retail interiors. In addition, our services may be required when the resorts are operational and events and exhibitions are held there.
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Greg, you wrote:
Hi, thanks for the constant updates with investors.
Q1. Net margin has been very tight, moving forward, how is the management going to tackle this issue (if not managed well)?
Q2. Cash flow currently stands at S$1.3m, would additional funds be needed to expand the company?
Q3. What is the country mix from the revenue base?
Hi Greg,
Q1. Please refer to our reply to Mr K.C. Ng
Q2. Please refer to our reply to Ms Shirley Sim
Q3. Our revenue base from the various geographical segments are as follows:-
- Singapore 56%
- Malaysia 13%
- Vietnam 8%
- Asia 10%
- Europe, US & Others 13%
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Henry, you wrote:
I read in a research report that Kingsmen is one of the Singex's partners who has signed an MOUwith Singex to manage the exhibition centre in China worth $120 m for 15 years and is in the negotiation stage. How is the deal coming along? Is Kingsmen still in negotiation or is the deal completed?
Hi Henry,
Following the signing of the MOU, we have discussed the terms and conditions with our consortium partners. We have concluded that the deal would not be financially viable for us and therefore, we declined to proceed further.
Best regards.
The Management Team
Kingsmen Creatives Ltd
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Dear Investors,
Thank you for all your questions and the interest in Kingsmen. We have come to the end of this Q&A session.
We have enjoyed and learnt much from your questions and we hope that you have a better insight of our Company and know more about our operations.
Regards.
The Management Team
Kingsmen Creatives Ltd
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