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8/14/2019 DMX Technologiies 3Q2009 Financial Stmts 091109
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 1
UNAUDITED FINANCIAL STATEMENTS FOR THIRD QUARTER OF FY2009
1(a) An Income statement (for the group) together with a comparative statement for the correspondingperiod of the immediately preceding financial year.
Consolidated Statement of Comprehensive Income
Group Group Note 1
3Q 3Q 9 months 9 months 2Q
2009 2008 Change 2009 2008 Change 2009
US$'000 US$'000 % US$'000 US$'000 % US$'00
Revenue 46,332 45,654 1.49% 133,882 123,452 8.45% 48,81
Cost of sales (34,446) (33,686) 2.26% (101,170) (91,448) 10.63% (37,91
Gross profit 11,886 11,968 -0.69% 32,712 32,004 2.21% 10,90
Gross profit % 25.65% 26.21% -0.56% 24.43% 25.92% -1.49% 22.33%
Other operating income 31 121 -74.38% 92 540 -82.96% 42
Distribution expenses (2,974) (2,941) 1.12% (8,091) (8,410) -3.79% (2,632
Administrative expenses (2,425) (3,401) -28.70% (8,530) (9,272) -8.00% (2,864
Other operating expenses (3,058) (2,658) 15.05% (8,987) (7,527) 19.40% (2,953
Share of result of a jointlycontrolled entity
(93) - NM (320) - NM (84)
Finance costs (141) (151) -6.62% (407) (632) -35.60% (160)
Profit before income tax 3,226 2,938 9.80% 6,469 6,703 -3.49% 2,249
Income tax expenses (474) (606) -21.78% (919) (1,066) -13.79% (319)
Profit after income tax 2,752 2,332 18.01% 5,550 5,637 -1.54% 1,930
Profit attributable to:
Equity holders of the parent 2,655 2,192 21.12% 5,044 5,400 -6.59% 1,571
Minority interests 97 140 -30.71% 506 237 113.50% 359
Profit after income tax 2,752 2,332 18.01% 5,550 5,637 -1.54% 1,930
PAT margin 5.94% 5.11% 4.15% 4.57% 3.95%
Other comprehensive income:
Exchange differences ontranslating foreign operations
(63) (206) -69.42% (66) 685 -109.64% 60
Other comprehensive incomefor the period
(63) (206) -69.42% (66) 685 -109.64% 60
Total comprehensive incomefor the period
2,689 2,126 26.48% 5,484 6,322 -13.26% 1,990
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 2
Total comprehensive incomeattributable to:
Equity holders of the parent 2,592 1,986 30.51% 4,978 6,085 -18.19% 1,631
Minority interests 97 140 -30.71% 506 237 113.50% 359Total comprehensive incomefor the period
2,689 2,126 26.48% 5,484 6,322 -13.26% 1,990
Operating profit is arrived at after crediting and (charging)
Interest income 31 65 -52.31% 92 360 -74.44% 42
Interest expense (141) (152) -7.24% (407) (633) -35.70% (160)
Share-based payment expenses (220) (100) 120.00% (660) (600) 10.00% (220)
Net foreign exchange (loss) gain 932 (270) -445.19% 854 (271) -415.13% 241
Allowance for doubtful trade (18) (11) 63.64% (182) (285) -36.14% (15)
Allowance for stockobsolescence
(3) (184) NM (13) (241) -94.61% -
Amortisation of intangible assets (2,812) (2,242) 25.42% (8,105) (6,254) 29.60% (2,696
Depreciation of fixed assets (1,053) (823) 27.95% (3,039) (2,229) 36.34% (999)
Profit / (loss) on disposal ofproperty,plant and equipment
16 (1) -1700.00% 49 (29) -268.97% 33
Fair value change of derivativefinancial Instrument
(5) - NM (27) - NM (22)
Share of result of a jointlycontrolled entity
(93) - NM (320) - NM (84)
Note 1: 2Q09 Profit and loss statement is used for comparison purposes only.
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 3
1(b) (i) A Balance Sheet (for the issuer and group) together with a comparative statement as at the end ofthe immediately preceding financial year.
Statements of Financial PositionThe Group The Company
Note 1 Note 2 Note 1
30-Sep-09 31-Dec-08 30-Jun-09 30-Sep-09 31-Dec-08
US$'000 US$'000 US$'000 US$'000 US$'000
ASSETS
Current assets:
Cash and cash equivalent 12,906 15,055 14,806 371 98
Pledged bank deposits 3,408 8,616 5,346 - 1,382
Derivative financial instruments 3,653 - 1,678 1,295 -
Trade receivables 123,286 121,687 125,194 - -Other receivables and prepayments 6,152 4,399 5,840 105,123 104,651
Inventories 10,850 9,112 9,999 - -
Total current assets 160,255 158,869 162,863 106,789 106,131
Non-current assets:
Property, plant and equipment 8,609 7,059 7,632 - -
Goodwill 27,677 26,559 26,559 - -
Intangible assets 26,178 27,298 25,131 - -
Investments in subsidiaries - - - 11,534 11,534
Interests in a jointly controlled entity 597 528 690 - -
Deferred tax assets 89 80 85 - -
Total non-current assets 63,150 61,524 60,097 11,534 11,534Total Assets 223,405 220,393 222,960 118,323 117,665
LIABILITIES AND EQUITY
Current liabilities:
Bank loans 3,894 7,317 4,271 - -
Trust receipt loans 2,194 3,985 2,687 - -
Trade payables 11,639 10,675 13,301 - -
Other payables 11,421 12,470 11,497 1,269 261
Current portion of finance leases 7 63 14 - -
Total current liabilities 29,155 34,510 31,770 1,269 261
Non-Current Liability
Bank loans 2,474 - 2,121 - -
Finance leases 108 152 112 - -
Deferred tax liabilities 681 688 680 - -
Total non-current liability 3,263 840 2,913 - -
Capital, reserves and minorityinterests:
Issued capital 26,571 26,571 26,571 26,571 26,571
Share premium 88,496 88,496 88,496 88,496 88,496
Contributed surplus 1,534 1,534 1,534 1,534 1,534
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 5
1 (c) A cash flow statement (for the group, together with a comparative statement for the corresponding period of theimmediately preceding financial year.
Statement of Cash Flows 3Q 3Q 9 months 9 months
2009 2008 2009 2008US$ '000 US$ '000 US$ '000 US$ '000
Cash flows from operating activities:
Profit before income tax 3,226 2,938 6,469 6,703
Adjustments for:
Depreciation expenses 1,053 823 3,039 2,229
Interest expenses 141 152 407 633
Allowance for doubtful trade & other receivables 18 11 182 285
Allowance for inventories 3 184 13 241
Amortization expenses 2,812 2,242 8,105 6,254
Fair value change of derivative financial
instruments 5 - 27 -
Share-based payment expenses 220 100 660 600
Share of result of a jointly controlled entity 93 - 320 -
Loss (Gain) on disposal of property, plant andequipment (16) 1 (49) 29
Interest income (31) (65) (92) (360)
Operating cash flows before movement in workingcapital 7,524 6,386 19,081 16,614
Trade receivables 1,953 (6,488) (1,718) (15,925)
Other receivables, deposits and prepayments (239) (1,154) (1,680) (2,918)
Inventories (658) 507 (1,555) (463)
Trade payables (1,703) 2,645 923 4,169
Other payables (1,630) 658 (2,603) 907
Cash generated from operations 5,247 2,554 12,448 2,384
Income tax paid (477) (165) (935) (573)
Interest paid (141) (152) (407) (633)
Interest received 31 65 92 360
Net cash generated from operating activities 4,660 2,302 11,198 1,538
Cash flows from investing activities
Addition to intangible assets (3,829) (2,505) (6,955) (7,141)
Increase in long term investment - (320) - (320)
Purchase of property, plant & equipment (1,858) (745) (4,462) (2,435)
Decrease (increase) in pledged bank deposit 1,938 255 5,208 (3,555)
Acquisition of interests in a jointly-controlled entity - - (389) -
Proceeds on disposal of derivative financialinstruments - - - 3,024
Purchase of derivative financial instruments (1,980) - (3,680) -
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 6
Proceeds from disposal of property, plant andequipment - - 70 -
Deposit paid for acquisition of an investment - 57 - -
Net cash used in investing activities (5,729) (3,258) (10,208) (10,427)
Cash flows from financing activities
New bank loans raised 743 - 15,670 -
Increase (decrease) in trust receipts loans (493) 567 (1,791) (4)
Repayment of bank loans (795) (1,147) (16,647) (7,055)
Repayment of finance leases (11) (16) (100) (47)
Dividend payment (200) - (200) -
Net cash used in financing activities (756) (596) (3,068) (7,106)
Net effect of exchange rate changes on consolidating
subsidiaries (75) (165) (71) 710
Net decrease in cash and cash equivalents (1,900) (1,717) (2,149) (15,285)
Cash and cash equivalent at beginning of the quarter 14,806 26,419 15,055 39,987
Cash and cash equivalent at the end of thequarter 12,906 24,702 12,906 24,702
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 7
(i) A Statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equityother than those arising from capitalization issues and distributions to shareholders, together with acomparative statement for the corresponding period of the immediately preceding financial year.
Statement of Changes in Equity
GROUP
Q3 2009 Movement Issued Share Contributed Legal*Currencytranslation
ShareOption Accumulated Minority Total
capital premium surplus reserve reserve reserve profits / (loss) Total interests Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'00
Balance at 1 Jul 2009 26,571 88,496 1,534 7 2,923 1,500 66,293 187,324 953 188,277
Currency translation
difference - - - - (62) - - (62) - (62)Dividends - - - - - - - - (200) (200)
Recognition of share-based payment - - - - - 220 - 220 - 220
Total comprehensiveincome for the period - - - - - - 2,655 2,655 97 2,752
Balance at 30 Sep2009 26,571 88,496 1,534 7 2,861 1,720 68,948 190,137 850 190,987
Q3 2008 Movement
Balance at 1 Jul 2008 23,048 85,113 1,534 7 3,052 2,011 62,724 177,489 291 177,780
Currency translationdifference - - - - (206) - - (206) - (206)
Recognition of share-based payment - - - - - 100 - 100 - 100
Total comprehensiveincome for the period - - - - - - 2,192 2,192 140 2,332
Balance at 30 Sep2008 23,048 85,113 1,534 7 2,846 2,111 64,916 179,575 431 180,006
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 8
COMPANY
Q3 2009 Movement Issued Share Contributed Legal
*Currency
translation
Share
Option Accumulated Minority Totalcapital premium surplus reserve reserve reserve profits / (loss) Total interests Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'00
Balance at 1 Jul 2009 26,571 88,496 1,534 - - 1,500 (883) 117,218 - 117,218
Recognition of share-based payment - - - - - 220 - 220 - 220
Total comprehensiveincome for the period - - - - - - (384) (384) - (384)
Balance at 30 Sep2009 26,571 88,496 1,534 - - 1,720 (1,267) 117,054 - 117,054
Q3 2008 Movement
Balance at 1 Jul 2008 23,048 85,113 1,534 - - 2,011 (51) 111,655 - 111,655
Recognition of share-based payment - - - - - 100 - 100 - 100
Total comprehensiveincome for the period - - - - - - (103) (103) - (103)
Balance at 30 Sep2008 23,048 85,113 1,534 - - 2,111 (154) 111,652 - 111,652
* Other comprehensive income
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 9
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 purposes since the end of theprevious period reported on. State also the number of shares that may be issued on conversion of all theoutstanding convertibles, as well as the number of shares held as treasury shares, if any, against the totalnumber of issued shares excluding treasury shares of the issuer, as at end of the current financial periodreported on and as at the end of the corresponding period of the immediately preceding financial year.
Share Capital Changes Number of shares US$
' 000 ' 000
Ordinary shares of US$0.05 each at 1 Jan 2009 & 30 Sep 2009 531,410 26,571
Share Options & Contingent Shares
As at 30 Sep 2009, the following Employee Share Options remained outstanding:
Date of grant Exercise Period
Exerciseprice per
share
Balance atbeginning ofyear or dateof grant, if
laterTotal
exercisedTotal
cancelled
Balanceoutstanding
as at 30Sep 2009
3 October 20032 October 2004 to 26May 2013 S$0.6778 3,327,677 - (22,133) 3,305,544
25 April 2008
24 April 2009 to 25
April 2018 S$0.226 19,919,580 - * - 19,919,580
28 November 200827 November 2009 to28 Nov 2018 S$0.093 20,000,000 - - 20,000,000
Total 43,247,257 - (22,133) 43,225,124
*As at 2 October 2009, 7,387,000 shares were issued pursuant to the exercise of employee share options.
1(d) (iii) To show the total number of issued shares excluding treasury shares as at the end of the currentfinancial period and as at the end of the immediately preceding year.
Total no of issued shares Number of shares
As at 31 December 2008 531,410,184
As at 30 September 2009 531,410,184
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 10
1(d) (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at
end of the current financial period reported on
The Company has not implemented Share Purchase Plan. As such, there is no treasury sharestransaction for year ending 30 September 2009.
2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g.Singapore Standard on Auditing 910, Engagements to Review Financial Statements, or anequivalent standard).
The figures have not been audited or reviewed.
3. Where the figures have been audited or reviewed, the auditors report (including any qualifications oremphasis of matter).
The figures have not been audited or reviewed.
4. Whether the same accounting policies and methods of computation as in the issuers most recentlyaudited annual financial statements have been applied.
The accounting policies and methods of computation applied by the Group are consistent with thoseused in its most recently audited financial statements as at 31 December 2008 except for theadoption of certain Financial Reporting Standards (FRS) and interpretations of FRS (INT FRS)that are mandatory for the financial year beginning on or after 1 January 2009. The adoption ofthese FRS and INT FRS has no significant impact on the financial position or performance of theGroup.
5. If there are any changes in the accounting policies and methods of computation, including anyrequired by an accounting standard, what has changed, as well as the reasons for, and the effect of,the change.
On 1 January 2009, the Group adopted the revised adopted the revised Singapore Financial
Reporting Standard (FRS 1R) Presentation of Financial Statements. FRS 1R requires allchanges in equity arising from transactions with owners in their capacity as owners to be presentedseparately from components of comprehensive income. Components of comprehensive income arepresented in the Consolidated Statement of Comprehensive Income.
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 11
6. Earnings per ordinary share of the group for the current period reported on and the correspondingperiod of the immediate preceding financial year, after deducting any provision for preferencedividends.
Earnings per share The Group The Group
3Q 3Q 9 months 9 months2009 2008 2009 2008
Based on the weighted averagenumber of ordinary shares onissue (US cents) Note 1 0.50 0.48 0.95 1.17
On fully diluted basis (USCents) Note 2 0.47 0.48 0.91 1.17
Note 1) The weighted average number of ordinary shares in issue for 3Q2009: 531,410,184 and YTD Sep2009: 563,189,468 (3Q2008 & YTD Sep 2008 are also 460,960,102).
Note 2) The earnings per share on a fully diluted basis are calculated on the adjusted average number ofordinary shares for 3Q2009: 531,410,184 and YTD Sep 2009: 553,633,811 (3Q2008 & YTD Sep 2008 are
also 460,960,102).
7. Net asset value (for the issuer and group) per ordinary share based on the total number of issuedshares excluding treasury shares of the issuer at the end of the (a) current period reported on and(b) immediately preceding financial year.
Net asset value per share The Group The Company
30-Sep-09 31-Dec-08 30-Sep-09 31-Dec-08
Net asset value per ordinary share(US cents) 35.78 34.72 22.03 22.09
Net asset value per ordinary share as at 30 Sep 2009 and 31 Dec 2008 are calculated based on sharecapital of the Company of 531,410,184 shares.
8. A review of the performance of the group, to the extent necessary for a reasonable understanding ofthe groups business. The review must discuss any significant factors that affected the turnover,costs, and earnings of the group for the current financial period reported on, (where applicable)seasonal or cyclical factors. It must also discuss any material factors that affected cash flow,working capital, assets or liabilities of the group during the current financial period reported on.
Profit and Loss Statement
The following paragraphs should be read in conjunction with our Profit and Loss Statement forquarter ended 30 September 2009 as presented on Section 1(a) of this document.
Revenue
The Group reported a 1.5% increase in 3Q09 revenue to US$46.3m over 3Q08. For the 9 months ofFY09, the Group registered 8.5% revenue growth to US$133.9m.
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 12
Digital Media group continued to be the growth driver of revenue for 3Q09 and the 9 months; at11.0% and 23.3% respectively. This spurred Digital Media Group to contribute 34.5% of 3Q09 and34.3% of revenue for the 9 months. Although Managed Services division grew by 47% growth in3Q09, this growth was insufficient to offset the lower Infrastructure Solutions revenue; especially
from outside of China. As a result, Infrastructure Enabling group registered a decline in revenue of2.9% in 3Q09. For the 9 months of FY09, Infrastructure Enabling group contributed 65.7% of totalrevenue; compared to 69.8% in the same corresponding period last year.
The Group had a slow quarter of revenue from outside China in 3Q09; as compared to 3Q08, due tothe festive season in Malaysia and Indonesia. Revenue from this geography declined to 17.8%;compared to 26% in 3Q08. This led to a revenue contribution of 24.6% for the 9 months of FY09versus 27.7% for the 9 months of FY08. Revenue from China grew by 13.1% for the 9 months andChina contributed 75.4% of total revenue; compared to 72.3% in the previous corresponding period.
Gross Margins
Gross margins in 3Q09 normalized back to 25.7%; compared to 22.3% in 2Q09 and 26.21% in
3Q08. For the 9 months; gross margins at 24.4% was 1.5% lower than the previous period due tosales mix.
Operating Expenses (Distribution and Administrative Expenses)
The Group continued to exercise control over its operating expenses; despite generating higherrevenue for the 9 months. 3Q09 total operating expense at US$5.4m was about US$0.9m lowerthan 3Q08. US$0.2m increase in depreciation expense was offset by about US$1.2m exchangegains from the stronger Indonesian rupiah and Korean Won.
Similarly, US$0.8m higher depreciation expenses for 9 months of FY09 were offset by totalUS$0.7m savings in distribution and administration expenses and US$1.1m of exchange gains. Asa result, the Group achieved a US$1.1m lower total operating expense of US$16.6m for the 9months of FY09 over the same period last year.
Other operating expenses
Total other operating expense in 3Q09 at US$3.1m was about US$0.4m more than 3Q08. For the 9months of FY09, other operating expense at US$9.0m was US$1.5m higher than the 9 months ofFY08. The increase was due mainly to increases in amortisation expenses as a result of on-goingcommercialization of the Groups software.
The Group incurred expenditure on software development activities to generate new products andadd more features to its multi-media software during the last three years as part of DMXs ongoingsoftware development activities. Such expenditure were capitalised as intangible assets andamortised on a straight-line basis over 3 years upon commercial deployment. As the Group gainedmomentum in the commercial deployment of its multi-media software in the digital media market,
higher amortisation of intangible assets was charged.
Earnings
DMXs 3Q09 profit after tax at US$2.8m was US$0.4m or 18.0% better than 3Q08 and 42.6% betterthan 2Q09. For the 9 months, the Group has caught up with the profit after tax of the previousperiod at US$5.6m; and exceeded full year 2008 PAT of US$3.6m.
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 13
Balance Sheet
The following paragraphs should be read in conjunction with our Balance Sheet as of 30 September
2009 as presented on Section 1(b) (i) of this document.
Total current assets increased slightly by US$1.4m to US$160.3m as at 30 September 2009. Thiswas due to the net positive impact from:-
US$2.1m decrease in cash and cash equivalents to US$12.9m.
US$5.2m decrease in pledged bank deposits.
US$3.7m increase in derivative financial instruments which are mainly structured depositsand bonds placed with banks.
US$1.6m increase in trade receivables to US$123.3m.
Of the US$123.3m trade receivables, about 86.9% or US$107.1m (30 June 09: 83.6% orUS$104.7m) relates to projects with numerous telecom operators in China, Malaysia,Indonesia and numerous cable TV operators in China. All these operators are reputableand credit-worthy customers. The nature of such projects is that payment is based onmilestone performance such as equipment delivery, project installation, completion andacceptances; which may take between 6 to 18 months to be fully accepted.
The Group recognizes revenue upon delivery of equipment to customers; whilecollections are on project milestone basis. Trade receivables relating to projects that theGroup are still implementing ie invoiced but not past due amounted to US$108.3m or87.8%; as compared to US$108.6m or 86.8% as at 30 June 2009 and US$102.7m or84.4% as at 31 December 2008. For the 9 months till 30 Sep 09, 61% or US$80.2m of
31 December 2008 trade receivables has been collected.
Aging of total trade receivables are as follows:-
0-180 days 181-360 days 361-540 days Over 540 days30 September 09 53% 30% 13% 4%30 June 09 47% 32% 17% 4%31 March 09 46% 29% 21% 4%31 December 08 54% 32% 14% 0%
The above trade receivables are irrevocable and not from any interested party. The Grouphas a task force in place that work closely with the each of the telecom and cable TV
operator on the progress of each project being implemented.
US$1.8m increase in other receivables and prepayments.
US$1.8m increase in inventories as a result of indent inventory placed for customers to bedelivered in the next quarter.
Non-current assets increased by about US$1.7m to US$63.2m as at 30 September 2009 fromUS$61.5m as at 31 December 2008. The increase was due to US$1.5m increase in capital
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 14
expenditure on spares and demonstration equipment to support the increased revenue andcustomers; US$1.1m increase in goodwill resulting from acquisition of 1MP and US$1.1m decreasein intangible assets.
Total current liabilities decreased by about US$5.3m to US$29.2m as at 30 September 2009. Thiswas due mainly to US$3.4m decrease in bank loans and US$1.8m decrease in trust receipts loans.
Non-current liabilities increased by US$2.5m to US$3.3m as at 30 September 2009. The Groupsecured a new long term bank loan of about US$2.4m.
The Group increased its total equity by US$6.0m to US$191.0m as at 30 September 2009. This wascontributed largely by US$5.0m increase in accumulated profits and US$0.7m increase in shareoption reserve.
Cash flow
The following paragraphs should be read in conjunction with our Cash flow Statement as of 30September 2009 as presented on section 1(c) of this document.
During 3Q09 and the 9 months of FY09, the Group generated US$5.2m and US$12.4m of cash fromoperations respectively. These ware significant improvements over the same corresponding period.Improved collections from trade receivables and overall management of payables during the periodenabled the Group to generate positive cash flow from operations. After payment for income taxand interest, the Group generated net cash from operating activities of US$4.7m and US$11.2m for3Q09 and 9 months of FY09 respectively, compared to US$2.3m and US$1.5m cash generationduring 3Q08 and 9 months of FY08.
Net cash used in investing activities in 3Q09 was US$5.7m; compared to US$3.3m in 3Q08. For the9 months, the Group utilized about US$10.2m in investing activities; which was about the sameamount utilized for the 9 months of FY08.
The Group utilized about US$0.8m and US$3.1m cash from financing activities in 3Q09 and 9months of FY09 respectively. The Group repaid more trust receipts loans.
During 3Q09, cash generated from operating activities were lower than cash utilisation in investingand financing activities, giving rise to US$1.9m decrease in cash and cash equivalent for the quarter.This decrease in 3Q09 caused the Group to end the 9 months of FY09 with about US$12.9m in cashand cash equivalent; about US$2.2m below the start of the year.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, anyvariance between it and actual results.
No forecast was given.
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 15
10. A commentary at the date of the announcement of the competitive conditions of the industry in whichthe group operates and any known factors or events that may affect the group in the next reportingperiod and the next 12 months.
As the Group enters into its last quarter of FY09, the Group sees improving market sentiment andincreased activities by telecom operators and enterprises on IT capex spending and hence believesthat our core business activities will remain on track for the rest of FY2009.
The improved sentiment has given the Group measured confidence that it should not need to incurany unexpected impairment or allowances for the year. With the profits after tax for the 9 months ofFY09 at US$5.6m, about US$2.0m higher than full year 2008, and barring unforeseencircumstances, the Group expects FY09 profits after tax to be much better than FY08.
Additionally, the Group believes that our established business network, customer reference baseand track record have strengthened our ongoing long-term business fundamentals.
With the primary objective of enhancing these business fundamentals, the Group entered into a
subscription agreement with KDDI Corporation of Japan on 10 September 2009.
This strategic transaction is intended to accelerate the growth of the Group to become a leadingtelecom and media solutions provider in Asia Pacific.
KDDI is the second largest telecom operator in Japan and one of the mega-carrier in Asia Pacificproviding fixed, mobile and broadcasting services. According to the agreement, the Group will issueover 588 million new shares to KDDI; raising cash of about S$188.4 million. Upon completion of theproposed transaction towards end of the year; KDDI will become a 50.1% controlling shareholder ofthe Group; on a fully diluted basis.
KDDI will support the Group to continue to develop and grow its existing business through referringappropriate business opportunities, jointly developing new products and services and by transferringspecialized technology, where appropriate, to enhance the Groups competitiveness and productsoffering.
Additionally, the capital raised will enhance the balance sheet of the Group; enabling the Group toparticipate in bigger projects, expand its geographical coverage and invest into new applicationbusiness to take advantage of the new business opportunities within the telecom industry in China.
The proposed transaction is subject to shareholders approval at a Special General Meeting to beheld in Singapore on 20 November 2009.
The Group looks forward to forging ahead with this strategic investment and alliance; to capitalise onthe anticipated business opportunities.
11. Dividend
a. Current Financial Period Reported On
Any dividend declared for the current financial period reported on? No
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DMX TECHNOLOGIES GROUP LTD
Q3-FY09 Results Announcement PAGE 16
Name of dividend NilDividend Type NilDividend amount per share (in S$ cents) Nil
Tax Rate Nil
b. Corresponding Period of the immediately preceding financial year.
Any dividend declared for the corresponding period of the immediately preceding financial year?
No
Name of dividend Not ApplicableDividend Type Not ApplicableDividend amount per share (in S$ cents) Not ApplicableTax Rate Not applicable
c. Date payable
Not Applicable
d. Books Closure date.
Not applicable
12. If no dividend has been declared/recommended, a statement to that effect.
No dividend has been declared or recommended for the year.
13. Statement Pursuant to Rule 705(5) of the Listing manual
The Directors confirm that, to the best of their knowledge, nothing has come to the attention of theBoard of Directors of the Company which may render the Groups unaudited financial result for thethird quarter ended 30 September 2009 to be false or misleading in any material aspect.
By Order of the Board
Jismyl Teo Chor KhinDirector9 November 2009