Ecowise Annual Report 2007 - ecoWise Holdings Limited

OPERATIONSREVIEWReview of Financial PerformanceFor FY2007, the Group recorded S$21.6 million in revenuewhich is 15.2% higher than that of S$18.8 million inFY2006. This improvement was essentially due to theincrease in ship repair and maintenance activities whichrequired surface blasting to be performed at customers’shipyards and new customers added during the year.The Group also saw an improvement in the gross profitmargin from 53.3% in FY2006 to 56.1% in FY2007 asa result of lower disposal costs contributing to theimproved margins.With the growth in gross profit and revenue, the Groupalso witnessed an increase in net profit attributable toshareholders of 37.0% to S$4.9 million in FY2007 fromS$3.5 million in FY2006.The Group’s administrative expenses were 15.0% higherthan that of the corresponding period due to an increasein staff related costs with the expansion of their operations.At the same time, the Group also paid out performanceand incentive bonus for achieving the financial targets.There was an increase in depreciation cost due toacquisition of new assets.The Group’s total current assets increased by S$3.8 millionmainly due to the increase in trade receivables and cashand cash equivalents as a result of higher sales partiallyoffset by the disposal of Watertech Pte Ltd during the year.Our total non-current asset increased by S$0.3 million dueto the purchase of plant and equipment in FY2007.The Group’s total current liabilities increased byS$1.8 million mainly due to dividends declared partiallyoffset by the disposal of Watertech Pte Ltd during theyear. The total non-current liabilities have increased byS$0.1 million due to additional finance leases taken upfor new plant and equipment.The cash and cash equivalents at the end of the reportingperiod was at S$7.4 million. The increase of S$2.7 millionwas mainly due to higher sales and the disposal ofsubsidiary partially offset by dividend payments.As part of the Group’s efforts to broaden shareholderparticipation and enhance liquidity in its stock, the Groupundertook a Rights-Cum-Warrant issue on 24 July 2007.A total of 249,975,000 renounceable non-underwrittenrights shares were issued at S$0.01 per rights shares,based on three rights shares for every one share held.It also included 83,325,000 free detachable warrants,with each warrant carrying the right to subscribe for onenew share at an exercise price of S$0.05.Key Business Segment Reviewa) Recovery of Industrial Materials Going StrongIn this rewarding year of FY2007, our industrial materialsrecovery business segment which continued to be the maindriver of the Group’s growth and development, accountedfor 85% of FY2007 revenue. In line with our cooperationand partnership with Holcim (Singapore) Pte Ltd (“HolcimSingapore”), we were able to gradually decrease ourdisposal cost for used copper slag, even as the collectionvolume from our customers in the shipyards and shiprepairs business picked up.As part of the Group’s conscientious effort in buildingour position as one of the major players in the marketof collection and recovery of used copper slag, the Groupsigned a joint venture agreement with Holcim Singaporeon 14 January 2008. This corporate action was aimedat laying a firm foundation for the Group in terms ofbuilding up its market presence in the recovery of usedcopper slag and other sustainable sources of alternativefuels and raw materials.16 • ecoWise Holdings Limited • Annual Report 2007