Ocean Sky International Limited - Ocean Sky International Ltd ...

In HY2002, we generated net cash from operating activities before changes in working capital of S$11.5
million. Net cash used in working capital amounted to S$20.6 million. This was mainly due to increase
in stocks and debtors of S$19.7 million and S$17.8 million respectively offset by increase in creditors of
S$17.3 million. After payment of interest and income tax totalling S$1.7 million, net cash used in
operating activities amounted to S$10.8 million. Net cash used in investing activities was mainly for
purchase of fixed assets of S$3.5 million, acquisition of minority interests' stakes in subsidiaries of S$1.4
million and expenditure deferred of S$0.9 million. There was a net cash outflow from financing activities
of S$1.0 million due mainly to repayment of finance lease financing and term loans.
We had financed our growth through both internal and external sources. Our internal sources of cash
comprise cash generated from operations and capital provided by our Shareholders. Our external
sources of liquidity comprise bank facilities, hire purchase creditors and suppliers’ credit.
As at the Latest Practicable Date, our material sources of unused liquidity are unutilised banking
facilities amounting to an aggregate of approximately US$20.0 million. Taking into account the amount of
unutilised facilities, our cash and cash equivalents on hand and the net proceeds from the issue of the
Invitation Shares, our Directors are of the opinion that our Group has adequate working capital for our
present requirements.
PROFIT ESTIMATE
Barring any unforeseen circumstances, our Directors estimate that our Group will achieve a profit before
tax and profit after tax of $16.6 million and $13.8 million respectively, on a turnover of $221.0 million for
FY2002.
Our Directors believe that our Group will be able to achieve the profit estimate as most of our revenue is
based on secured customer orders. Based on the audited results for the six months ended 30 June
2002, our Group achieved a turnover, profit before taxation and profit after taxation of $92.0 million, $9.6
million and $7.7 million respectively.
Our turnover is estimated to increase by 22.8% from $180.0 million in FY2001 to $221.0 million in
FY2002 due to the full-year contribution of our manufacturing facilities in El Salvador, Honduras and
Brunei. We have also secured new customers such as Phillips-Van Heusen.
We enjoyed higher profit margins due to our subsidiaries becoming fully operational, a higher level of
productivity and better production planning. These had contributed to the increase in our profit before tax
from $12.0 million in FY2001 to $16.6 million in FY2002. We have also benefited from tax savings
because of tax-exempt status enjoyed by certain of our subsidiaries granted in FY2001 and FY2002.
For the nine months ended 30 September 2002, we achieved a Group turnover, profit before tax and
profit after tax of $171.0 million, $13.7 million and $11.4 million, respectively based on our unaudited
management accounts. This represented 77.4%, 82.5% and 82.6% of the respective estimates. In the
second half of the year, we had incurred additional airfreight costs amounting to $3.5 million due to
unforeseen US port closures. We had also provided for staff bonus and directors’ fee amounting to $3.5
million in the second half of the year. For the remaining three months of FY2002, we expect to recognise
additional turnover and profit before tax of $50.0 million and $2.9 million respectively based on secured
customers’ orders.
State of order book
As at 1 January 2003, we have secured confirmed customers’ orders for our products amounting to $53
million which is scheduled to be fulfilled in the current financial year.
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