Financial Results

Click here to download this report in PDF.

(英文) 2010財政年全年未審核財務報表及股息公告

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF
QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

1(a) An income statement (for the group) together with a comparative statement
for the corresponding period of the immediately preceding financial year

1(a) Consolidated Statement of Comprehensive Income

With effect from annual period beginning or after 1 January 2009, FRS1 Presentation of Financial Statement requires an entity to present all non-owner changes in equity in a Statement of Comprehensive Income. Non-owner changes will include income and expenses recognized directly in equity. This is a change of presentation and does not affect the recognition or measurement of the entity’s transactions. Previously, such non-owner changes were included in the Statement of Changes in Equity.

Notes:
(i) Operating profit is arrived at after charging(crediting) the following:

1(b)(i) A balance sheet (for the issuer and group),
together with a comparative statement as at the end of the immediately preceding financial year

1(b)(ii) Aggregate amount of group’s borrowings and debt securities

Amount repayable in one year or less, or on demand

Amount repayable after one year

Details of any collateral
Nil

1(c) A cash flow statement (for the group), together with a comparative statement
for the corresponding period of the immediately preceding financial year

Note to Consolidated Cash Flow Statement

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following balance sheet amounts:

1(d)(i)A statement (for the issuer and group) showing either (i) all changes in equity or (ii)changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.

1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.

A) Changes in share capital during the financial period

As at 30th June 2010, the Company’s issued and paid up capital, excluding treasury shares comprises of 362,105,188 (30th June 2009: 360,435,188) ordinary shares. Movement in the number of the Company’s issued and paid-up capital, excluding treasury shares are as follows:

B) Share Options – Eu Yan Sang Employees Share Option Scheme

Between 1st April 2010 and 30th June 2010, the Company did not issue any ordinary shares under both the Eu Yan Sang Employees Share Option Scheme 2000 (“the 2000 scheme”)

Under the 2000 scheme, options to subscribe for 4,496,250 shares remained outstanding as at 30th June 2010, compared to 4,496,250 as at 30th June 2009.

Under the 2006 scheme, options to subscribe for 10,195,000 shares remained outstanding as at 30th June 2010, compared to 9,030,000 as at 30th June 2009. Movements in the number of the unissued shares of the Company under the 2006 scheme during the year are as follows:

C) Performance Share Plan

At the extraordinary general meeting of the Company held on 25th October 2007, the Company’s shareholders approved the adoption of the Eu Yan Sang Performance Share Plan (“EYS PSP”). As at 30th June 2010, no shares were granted and outstanding under the EYS PSP (30th June 2009: nil).

D) Treasury shares

No treasury shares were held by the Company as at 30th June 2010 and 30th June 2009.

1(d)(iii)To show the total number of issued shares excluding treasury shares at the end of the current financial period and as at the end of the immediately preceding year.

The number of issued shares as at 30th June 2010 is 362,105,188 (30th June 2009: 360,435,188) ordinary shares.

1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.

Not Applicable.

2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice

The figures have not been audited or reviewed by the auditors.

3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of matter)

Not applicable

4. Whether the same accounting policies and methods of computation as in the issuer’s most recently audited annual financial statements have been applied

This financial statement has been prepared based on the accounting policies and methods of computation consistent with those adopted in the most recent audited financial statement for the year ended 30 June 2009.

New standards effective for annual periods beginning on or after the dates are as stated:

Borrowing Costs

Reference	Description	Effective for annual periods beginning on or after
FRS 1 (revised 2008)	Presentation of Financial Statements	1 January 2009
FRS 23 (revised 2007)		1 January 2009
Amendments to FRS 107	Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments	1 January 2009
FRS 108	Operating Segments	1 January 2009
FRS 108	Operating Segments	1 January 2009
Improvements to FRSs		1 January 2009

5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change

Not applicable.

6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group’s business. It must include a discussion of the following:-

a. any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and

b. any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

Overview

Group revenue for the year ended 30th June 2010 (“FY10”) increased 10% to S$244.7 million as compared to the same period in last year (“FY09”). The increase was mainly attributable to the increase in retail sales in all our 3 core markets. Operating profit increased 3% to S$20.9 million while profit for the year, net of tax increased 29% to S$16.9 million.

(A) Revenue

Group revenue for FY10 increased by 10% to S$244.7 million as compared to S$222.5 million achieved in FY09. The increase was mainly attributable to the increase in retail sales in all our 3 core markets, namely Hong Kong, Singapore and Malaysia.

Revenue by Activities:

* Traditional Chinese Medicine (“TCM”) - comprising Chinese Proprietary Medicine (“CPM”), Health Foods and Medicinal Herbs.

Retail – TCM revenue achieved in FY10 was 13% higher than FY09. Retail activities were relatively resilient at our outlets throughout the regional markets as consumers continue to recognise our premium brand and accept TCM as an alternative to western medicine and health supplements. The Group’s top selling products such as Bottled Bird’s Nest (“BBN”), Bo Ying Compound (“BYC”), Bak Foong Pills (“BFP”), Lingzhi Cracked Spores Capsules (“LCS”) and Essence of Chicken (“EOC”) continue to show steady growth.

Wholesale – TCM revenue decreased by 5% to S$31.1 million in FY10 was mainly due to lower export to China.

Clinic – TCM revenue was flat at S$14.3 million in FY10.

Revenue under Others was mainly contributed by food & beverages and rental income.

Turnover by Geographical Locations:

Malaysia market lead our growth by 19% to MYR172.2 million, Hong Kong market grew 11% to HK$581.0 million while Singapore market increased by 8% to S$67.1 million. These revenue growth in our core countries signified robust demand for our products as we continue to fulfill our vision to our customer.

(B) FY2010 Retail Outlets & Clinics

In FY10, the Group added 5 retail outlets and 1 integrative medical centre. The establishment of these new outlets and medical centre will contribute to the improvement in Group turnover.

(C) Profitability

In line with the higher revenue in 12MFY10, Gross Profit increased by 10% to S$124.5 million compared to S$113.6 million achieved in 12MFY09. Gross Profit margin was stable at 50.9%. Operating Profit increased only by 15% to S$23.3 million mainly due to slower growth in operating expenses.

Together with a fair value gain on our properties, profit for the year, net of tax attributable to shareholders for 12MFY10 increased by 47% to S$19.2 million as compared to S$13.1 million in 12MFY09.

(D) Distribution and selling expenses

In 12MFY10, distribution and selling expenses were S$79.1 million or 11% higher than 12MFY09. The higher distribution and selling expenses were mainly due to higher advertising and promotional activities, salaries and rental costs.

(E) Administrative expenses

In 12MFY10, administrative expenses increased by 3% to S$21.8 million as compared to 12MFY09. The increase was mainly due to higher corporate branding activities and other miscellaneous costs.

(F) Interest income and Interest expenses

Lower interest income was due to lower fixed deposits interest offered by our principal bankers.

Lower interest expenses were attributable to application of cash to retire interest bearings loans and borrowings during the year.

(G)Taxation

The Group’s effective tax rate was lower in 12MFY10 mainly due to the followings:

(a) lower losses of foreign subsidiaries which cannot be offset against profit within the
group companies as compared to 12MFY09; and

(b) lower tax rate in certain foreign subsidiaries.

(H) Investment Properties

Increase in investment properties were due to fair value gain on revaluation of the Group’s investment properties.

(I) Inventories

Higher inventories were due to stocking up at our retail outlets as at 30th June 2010.

(J) Trade receivables and other receivables

Higher trade receivables were due to timing differences of payment from our debtors and higher rental deposits required for new outlets.

(K) Prepayments

Higher prepayments were mainly due to exercising of option to purchase an industrial property at 21 Tai Seng Drive (Singapore), insurance premium and rental paid in advance.

(L) Cash and bank balances

Higher cash and bank balances were due to higher retail sales and collections from trade receivables as at 30th June 2010.

(M) Trade and other payables

Higher trade and other payables were mainly resulted from the replenishment of inventories to meet the demand in the subsequent quarters and the timing of repayments.

(N) Cash flows

Net cash provided by operating activities was lower at S$24.7 million in 12MFY10 as compared to S$31.2 million achieved in 12MFY09. The lower net cash provided by operating activities were mainly due to the strong Singapore dollar and the increase in inventories by S$4.3 million as compared to a decrease in inventories by S$7.8 million in 12MFY09.

The Group’s gearing ratio was 25.0% as at 30th June 2010.

9. 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 FY2009 full year announcement made on 27th August 2009

10. 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

Driven largely by Asia, the year ahead points to a higher confidence level with the economies showing signs of recovery at different acceleration in various regions. The improvements in the economies shown throughout the region and sustainable growth in the employment rates may provide a support platform for our retail business to grow,

Not withstanding, business costs, inventory costs, assets bubbles and inflation are expected to grow with the continuation of a low interest rate policy lead by the Federal Reserve of the United States of America. The gradual withdrawal of economic stimulants and anti-recession programs implemented by various government during the financial crisis may also dampen the general consumer sentiment in the short-term.

The general market and business conditions are expected to remain challenging and competitive in the next 12 months. Moving forward, the Group’s strategy is to leverage on its’ competency and explore opportunities to grow it’s core business. The Group will continue to manage its’ business risks prudently and review its’ business strategy with a view to enhance shareholders’ value.

11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on?

Name of Dividend    First & Final and Special

Dividend Type    Cash

Dividend Rate    First & Final of 1.0 cent and Special of 1.5 cent per ordinary share

Par Value of shares    N/A

Tax Rate    Tax Exempt one-tier dividend

(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year?

Name of Dividend    First & Final and Special

Dividend Type    Cash

Dividend Rate    First & Final of 1.0 cent and Special of 1.2 cent per ordinary share

Par Value of shares    N/A

Tax Rate    Tax Exempt one-tier dividend

(c) Date payable

24th November 2010

(d) Books closure date

The Register of Members and Register of Transfers of the Company will be closed at 5.00pm on 9th November 2010 and up to 5.00pm on 10th November 2010 (both days inclusive) for the purpose of determining Shareholders’ entitlements to dividends. Registrable Transfers received by the Company’s Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623, up to 5.00pm on 9th November 2010 will be registered before entitlements to the dividend are determined.

The Annual General Meeting will be held on 28th October 2010.

12. If no dividend has been declared/recommended, a statement to that effect

Not applicable

PART II – ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT
(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

13. Segmented revenue and results for business or geographical segments (of the group)
in the form presented in the issuer’s most recently audited annual financial statements, with comparative information for the immediately preceding year

14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments

Please refer to discussion in Note 8 of this announcement.

A breakdown of sales

15. A breakdown of the total annual dividend (in dollar value) for the issuer’s latest full year and its previous full year

BY ORDER OF THE BOARD

Danny Heng Hang Siong
Chief Financial Officer & Company Secretary
26^th August 2010