Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
EFORCE HOLDINGS
HKEx Stock Code : 00943 
 
Corporate Profile
Principally engaged in the manufacture and sales of healthcare and household products.

Business Review - For the year ended December 31, 2012

Results for the year

Turnover of the Group for the year ended 31 December 2012 amounted to HK$149.5 million, which represented an increase of 9% as compared to HK$137.1 million in 2011.

The consolidated loss of the Group for the year ended 31 December 2012 amounted to HK$202.4 million. This represented an increase of approximately HK$147.1 million or 266% as compared to the loss of HK$55.3 million in 2011.

Manufacturing business

The Group's manufacturing business continued engage in the manufacture and sales of healthcare and household products for the year ended 31 December 2012.

Turnover of the manufacturing business segment increased 9% on a year-to-year basis to HK$149.5 million (2011: HK$137.1 million) mainly due to launch of new products which leads to higher sales volume and average selling price. Sales were up 68% in United Kingdom and 75% in United States of America mainly due to launch of new products in these countries. Sales in Hong Kong and others were up 34% respectively mainly due to new customers in these countries.

In addition to the increase in sales volume and average selling price, more stable raw material cost and higher worker efficiency have further improved the gross margin to 21% as compared to 14% in 2011. As a result, gross profit was increased by HK$12.5 million to HK$31.7 million (2011: 19.2 million).

Other costs were maintained at about the same level in 2012 as compared to 2011.

Coal mining business

As disclosed in the Company's announcement date 14 December 2012, the Group's coal mine project in Central Kalimantan Province in the Republic of Indonesia (ˇ§PT Bara Mineˇ¨) was originally scheduled to commence production in the first quarter of 2013. The Group has commenced, as planned, the acquisition and/or relinquishment of surface rights held by other parties in the area covered by the Group's exploration and exploitation rights in the second half of 2012, but has found that negotiations of terms were more protracted than expected (and might entail higher costs than budgeted) and expected a delay in commencement of operations by at least a few months.

Since then negotiations have been ongoing with different relevant parties. The Company will inform the shareholders of the Company of any further development in the operation of the PT Bara Mine as and when appropriate.

An updated review of the coal resources estimate as at 31 December 2012 was conducted by Roma Oil and Mining Associates Limited in February 2013 under the JORC Code which showed no material change for the PT Bara Mine since the last resource estimate was done and reviewed by them in June 2011 and February 2012 respectively.

During 2012, approximately HK$0.6 million acquisition and exploration related expenditures were capitalized as costs of the mining rights.

Apart from the annual review on the resources estimate, the Group has also engaged an independent valuer, Roma Appraisals Limited, to determine the fair value of the PT Bara Mine. Due to the continuing decline in the price of coal and the delay in the commencement of operations of the PT BaraMine, a non-cash impairment loss of HK$182 million was recognised for the year ended 31 December 2012 (2011: Nil).

Others

Other income was increased by HK$37.2 million mainly due to non-cash fair value gain of HK$40.8 million on the call option assets and derivative component of the convertible bonds issued by the Company in July 2011 (the ˇ§Convertible Bonds 2011ˇ¨) and the reversal of certain overprovision for accrued expenses in previous years.

Finance costs were increased from HK$13.5 million in 2011 to HK$27.4 million in 2012 mainly due to the effective interest charges on liability component of the Convertible Bonds 2011 were calculated for the full year in 2012 but only for approximate five and a half months in 2011 when the Convertible Bonds 2011 was issued.

Business Outlook - For the year ended December 31, 2012

Looking ahead into 2013, global economic conditions remain uncertain and weaker-than expected recovery may again slow down global demand of consumer products. We will continue to take measures on manufacturing automation, cost rationalization and capital expenditure control so as to operate from a leaner base and remain price-competitive. Such efforts have already reflected in improved gross margin in 2012.

As for the coal mining business, although the price of coal has also been adversely affected by the slow recovery of the global economic conditions, we believe the PT Bara Mine will create long term value to our shareholders by enable us to tap into the energy and natural resources market in Southeast Asia's largest economy with high growth potential. We will actively seek other investment opportunities in the region and to explore the feasibility of expanding into other natural resources business to enhance the Group's growth.

Source: eForce Holdings (00943) Annual Results Announcement
Chairman Tam Lup Wai, Franky Issued Capital (shares) 183M
Par Value HKD 0.001 Market Capitalisation (HKD) 44M
 
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