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30-05-2011, 07:50 AM
(This post was last modified: 23-10-2013, 03:26 PM by CityFarmer.)
May 30, 2011
Huge losses at parts maker Surface Mount
SURFACE Mount Technology (Holdings) has blown a gaping hole in its finance in the fourth quarter, forcing it to seek a debt restructuring.
The maker of electronics parts reported last Saturday a widening of its net loss for the three months ended March 31 to HK$711.9 million, (S$113.8 million) from HK$10.9 million previously.
Revenue for the quarter fell by 17.4 per cent to HK$432.5 million, mainly due to a drop in orders for LED backlights for the LCD-TV business and the weakened demand for computer peripheral products.
The net margin for the quarter was adversely impacted by lower output due to a shortage of materials and labour and an inventory allowance for an increased number of end-of-life projects.
The quarterly loss included an impairment loss on property, plant and equipment of HK$$539.2 million. For the full year, net loss widened to HK$759.8 million from HK$53.2 million, despite a 14.7 per cent rise in revenue to HK$2.14 billion.
'As a result of the substantial loss in Q4, we became aware that we would be unable to comply with the financial covenants in respect of our bank borrowings,' Surface Mount said in its statement.
Under the circumstances, it has appointed Deloitte Touche Tohmatsu Reorganisation Services Department in Hong Kong to advise the company on a debt and corporate restructuring of the group, it added.
Group chairman and senior managing director Chan Kei Biu has apologised for the debacle: 'I would like to express my sincere apology... for our highly unsatisfactory performance in Q4. Moving forward, our priority will be to restructure and turn around the group.'
Full-year loss per share amounted to HK$2.89, compared to 20.24 HK cents last year. Net asset value per share shrank to two HK cents from HK$2.85.
The worsening financial position has prompted the auditors to flag that their audit opinion may include a qualification on the group's ability to continue as a going concern.
Surface Mount has started to exit from low-margin product lines and focus on higher margin products, such as health-care devices.
'Our Changchun factory ceased operations in May 2011. We are in the process of scaling down our Suzhou and Dalingshan plants. Our workforce will be adjusted in line with the downsizing. The group is in the course of disposing of idle assets to reduce indebtedness,' it said.
(Not Vested)
Huge losses at parts maker Surface Mount
SURFACE Mount Technology (Holdings) has blown a gaping hole in its finance in the fourth quarter, forcing it to seek a debt restructuring.
The maker of electronics parts reported last Saturday a widening of its net loss for the three months ended March 31 to HK$711.9 million, (S$113.8 million) from HK$10.9 million previously.
Revenue for the quarter fell by 17.4 per cent to HK$432.5 million, mainly due to a drop in orders for LED backlights for the LCD-TV business and the weakened demand for computer peripheral products.
The net margin for the quarter was adversely impacted by lower output due to a shortage of materials and labour and an inventory allowance for an increased number of end-of-life projects.
The quarterly loss included an impairment loss on property, plant and equipment of HK$$539.2 million. For the full year, net loss widened to HK$759.8 million from HK$53.2 million, despite a 14.7 per cent rise in revenue to HK$2.14 billion.
'As a result of the substantial loss in Q4, we became aware that we would be unable to comply with the financial covenants in respect of our bank borrowings,' Surface Mount said in its statement.
Under the circumstances, it has appointed Deloitte Touche Tohmatsu Reorganisation Services Department in Hong Kong to advise the company on a debt and corporate restructuring of the group, it added.
Group chairman and senior managing director Chan Kei Biu has apologised for the debacle: 'I would like to express my sincere apology... for our highly unsatisfactory performance in Q4. Moving forward, our priority will be to restructure and turn around the group.'
Full-year loss per share amounted to HK$2.89, compared to 20.24 HK cents last year. Net asset value per share shrank to two HK cents from HK$2.85.
The worsening financial position has prompted the auditors to flag that their audit opinion may include a qualification on the group's ability to continue as a going concern.
Surface Mount has started to exit from low-margin product lines and focus on higher margin products, such as health-care devices.
'Our Changchun factory ceased operations in May 2011. We are in the process of scaling down our Suzhou and Dalingshan plants. Our workforce will be adjusted in line with the downsizing. The group is in the course of disposing of idle assets to reduce indebtedness,' it said.
(Not Vested)
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