Listed Companies' Announcement

MASNET No. 33 OF 13.08.2004

Announcement No. 33

YHI INTERNATIONAL LIMITED


Half Year Financial Statement And Dividend Announcement for the Period Ended 30/06/2004


PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3),



1(a) An income statement (for the group) together with a comparative statement for the
1(a)(i) Income statement (Q2 FY2004 vs Q2 FY2003)

Group
(Actual)
Group (Proforma)
Group
(Actual)
01/04/04-
30/06/04
S$'000
01/04/03-
30/06/03
S$'000
Incr/(Decr)
%
16/05/03-
30/06/03
S$000
Sales
75,016
52,839
42.0
24,556
Cost of sales
(55,028)
(38,802)
41.8
(18,145)
Gross profit
19,988
14,037
42.4
6,411
Other operating income
244
198
23.2
139
Distribution costs
(6,985)
(4,661)
49.9
(1,915)
Administrative expenses
(6,179)
(4,184)
47.7
(2,084)
Other operating expenses
(269)
(333)
(19.2)
(217)
Operating profit
6,799
5,057
34.4
2,334
Finance income
17
4
325.0
4
Finance cost
(392)
(722)
(45.7)
(348)
Profit before tax
6,424
4,339
48.1
1,990
Tax
(1,532)
(1,054)
45.3
(442)
Profit after tax
4,892
3,285
48.9
1,548
Minority interests
(105)
(162)
(35.2)
(76)
Profit attributable to shareholders
4,787
3,123
53.3
1,472

Explanatory Notes :-

(a) The YHI International Limited Group was formed as a result of a Restructuring Exercise undertaken pursuant to a Restructuring agreement dated 16 May 2003 as described in the Prospectus dated 24 June 2003. As such, comparatives for 2003 are based on proforma basis on the assumption that the Group structure had been in place since 1 January 2003.(b) The proforma financial statements of the Group, because of their nature, may not give a true picture of the Group's financial position on results. The proforma financial statements of the Group are not necessarily indicative of results of the operations or related effects on the financial position that would have been attained had the Group actually existed earlier.

Notes to Income Statement (Q2 FY2004 vs Q2 FY2003):-

Group
(Actual)
Group (Proforma)
Group (Actual)
01/04/04-
30/06/04
01/04/03-
30/06/03
16/05/03-
30/06/03
S$'000
S$'000
S$'000
Other income including interest income
17
4
4
Interest on borrowings
(392)
(722)
(348)
Depreciation
(1,223)
(832)
(482)
Amortisation of goodwill
(25)
-
14
Allowance for doubtful debts and bad debts written off
(899)
(777)
(267)
Allowance for slow-moving and obsolete inventories
(297)
192
9
Inventory written off
(26)
(28)
-
Foreign exchange gain
292
47
36
Profit on sale of other investments, properties, and/or plant and equipment
1
25
27

1(a)(ii) Income statement (1H FY2004 vs 1H FY2003)

Group
(Actual)
Group (Proforma)
Group (Actual)
01/01/04-
30/06/04
S$'000
01/01/03-
30/06/03
S$'000
Incr/(Decr)
%
16/05/03-
30/06/03
S$000
Sales
140,443
100,230
40.1
24,556
Cost of sales
(103,602)
(74,359)
39.3
(18,145)
Gross profit
36,841
25,871
42.4
6,411
Other operating income
390
458
(14.8)
139
Distribution costs
(12,879)
(8,676)
48.4
(1,915)
Administrative expenses
(10,819)
(7,492)
44.4
(2,084)
Other operating expenses
(931)
(681)
36.7
(217)
Operating profit
12,602
9,480
32.9
2,334
Finance income
36
8
350.0
4
Finance cost
(749)
(1,432)
(47.7)
(348)
Profit before tax
11,889
8,056
47.6
1,990
Tax
(2,594)
(1,742)
48.9
(442)
Profit after tax
9,295
6,314
47.2
1,548
Minority interests
(292)
(289)
1.0
(76)
Profit attributable to shareholders
9,003
6,025
49.4
1,472

Notes to Income Statement (1H FY2004 vs 1H FY2003):-

Group
(Actual)
Group (Proforma)
Group (Actual)
01/01/04-
30/06/04
01/01/03-
30/06/03
16/05/03-
30/06/03
S$'000
S$'000
S$'000
Other income including interest income 36
8
4
Interest on borrowings
(749)
(1,432)
(348)
Depreciation
(2,310)
(1,646)
(482)
Amortisation of goodwill
(50)
-
14
Allowance for doubtful debts and bad debts written off
(1,514)
(1,183)
(267)
Allowance for slow-moving and obsolete inventories
(673)
(70)
9
Inventory written off
(35)
(68)
-
Foreign exchange gain
93
79
36
Profit on sale of other investments, properties, and/or plant and equipment
26
27
27



1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement
Balance Sheets
Group
(Actual)
Group
(Actual)
Company
(Actual)
Company
(Actual)
30/06/04
31/12/03
30/06/04
31/12/03
S$'000
S$'000
S$'000
S$'000
Current assets:
Cash at bank and on hand
17,888
24,394
3,050
14,064
Receivables
52,172
43,932
33,858
*
33,891
*
Inventories
49,745
37,229
-
-
Other current assets
3,032
2,460
217
5
Total current assets
122,837
108,015
37,125
47,960
Non-current assets:
Investment in subsidiaries
-
-
41,629
34,963
Other investment
3,707
128
-
-
Property, plant and equipment
47,550
41,924
373
-
Intangibles
892
942
-
-
Deferred tax assets
1,555
1,534
8
20
Total non-current assets
53,704
44,528
42,010
34,983
Total assets
176,541
152,543
79,135
82,943
Current liabilities:
Trade and other payables
36,099
24,431
674
4,197
Borrowings
29,512
23,223
20
-
Provision for current tax
2,035
1,358
10
8
Dividends
-
2,314
-
-
Provision
290
290
-
-
Total current liabilities
67,936
51,616
704
4,205
Non-current liabilities:
Borrowings
9,241
9,965
-
-
Deferred tax liabilities
2,279
2,304
-
-
Total non-current liabilities
11,520
12,269
-
-
Total liabilities
79,456
63,885
704
4,205
Net assets
97,085
88,658
78,431
78,738
Shareholders' equity
94,962
87,221
78,431
78,738
Minority interests
2,123
1,437
-
-
97,085
88,658
78,431
78,738
* The receivables for the Company pertain to balances with its related companies.


1(b)(ii) Aggregate amount of group's borrowings and debt securities.
The Group's borrowings are secured by the following:-

(i) a first legal mortgage on the Group's freehold and leasehold properties;

(ii) a first legal charge on office equipment, plant and machinery of a subsidiary;

(iii) a first and floating charge on all the assets of a subsidiary;

(iv) corporate guarantee from the Company;(v) banker's guarantee, up to $7.9 million, given as security to another financial institution which granted banking facilities to a subsidiary. The banker's guarantee is in turn secured by a first and floating charge on all the assets of a subsidiary as referred to paragraph (iii) above.


1(c) A cash flow statement (for the group), together with a comparative statement for
1 (c)(i) Cash flows statement (Q2 FY2004 vs Q2 FY2003)

Group
(Actual)
Group
(Proforma)
Group
(Actual)
01/04/04-
30/06/04
01/04/03-
30/06/03
16/05/03-
30/06/03
S$000
S$000
S$000
Cash flows from operating activities:
Profit before tax
6,424
4,339
1,990
Adjustments for:
Depreciation of property, plant and equipment
1,223
832
482
Profit on sale of property, plant and equipment
(1)
(29)
(27)
Loss on disposal of other investment
-
4
-
Interest expense
392
722
348
Interest income
(17)
(4)
(4)
Amortisation of goodwill on consolidation
53
-
2
Amortisation of negative goodwill on consolidation
(28)
-
(16)
Exchange differences
286
(40)
11
Operating cash flow before working capital changes
8,332
5,824
2,786
Changes in operating assets and liabilities
Receivables
1,748
(3,296)
(218)
Other current assets
(445)
1,453
952
Inventories
(10,359)
(3,420)
(2,075)
Payables
8,382
7,189
4,002
Cash generated from operations
7,658
7,750
5,447
Income tax paid
(1,576)
(1,056)
(68)
Net cash inflow from operating activities
6,082
6,694
5,379
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
41
54
44
Purchase of property, plant and equipment
(6,667)
(3,696)
(2,359)
Proceed from sale of club membership
-
4
-
Proceeds from minority interest
63
-
-
Purchase of subsidiary, net of cash acquired
1,019
-
-
Interest received
17
4
4
Net cash outflow from investing activities
(5,527)
(3,634)
(2,311)
Cash flows from financing activities:
Interest paid
(380)
(842)
(409)
Proceeds/(repayment) from trust receipts loans
1,177
(108)
(29)
Repayment of long-term bank loans
(325)
(347)
(151)
Proceeds/(repayment) of short-term bank loans
4,372
647
(722)
Repayment of finance lease liabilities
(176)
(41)
(13)
Dividends paid
(3,775)
(69)
(26)
Net cash inflow/(outflow) from financing activities
893
(760)
(1,350)
Net increase in cash and cash equivalents held
1,448
2,300
1,718
Cash and cash equivalents at the beginning of the financial period
15,714
3,176
3,638
Effects of exchange rate changes on cash and cash equivalents
88
(18)
102
Cash and cash equivalents at the end of the financial period
17,250
5,458
5,458

Explanatory Notes:-

Group (Actual)
Group (Proforma)
Group (Actual)
01/04/04-
30/06/04
01/04/03-
30/06/03
16/05/03-
30/06/03
S$'000
S$'000
S$'000
Cash and cash equivalents comprise: -
Cash at bank and on hand
17,888
5,603
5,603
Bank overdrafts
(638)
(145)
(145)
17,250
5,458
5,458
Purchase of subsidiary:-
Cash and bank balances
1,211
-
-
Less: Minority interest
(342)
-
-
Net identifiable assets purchased
869
-
-
Investment paid in Q1
(677)
-
-
Total consideration
192
-
-
Less: Cash and cash equivalent in subsidiary acquired
(1,211)
-
-
Net cash inflow from purchase of a subsidiary
(1,019)
-
-


1 (c)(ii) Cash flows statement (1H FY2004 vs 1H FY2003)

Group (Actual)
Group (Proforma)
Group (Actual)
01/01/04-
30/06/04
01/01/03-
30/06/03
16/05/03-
30/06/03
S$000
S$000
S$000
Cash flows from operating activities:
Profit before tax
11,889
8,056
1,990
Adjustments for:
Depreciation of property, plant and equipment
2,310
1,646
482
Profit on sale of property, plant and equipment
(26)
(31)
(27)
Loss on disposal of other investment
-
4
-
Interest expense
749
1,432
348
Interest income
(36)
(8)
(4)
Amortisation of goodwill on consolidation
99
-
2
Amortisation of negative goodwill on consolidation
(49)
-
(16)
Exchange differences
152
(125)
11
Operating cash flow before working capital changes
15,088
10,974
2,786
Changes in operating assets and liabilities
Receivables
(8,240)
(7,576)
(218)
Other current assets
(572)
376
952
Inventories
(12,516)
(2,422)
(2,075)
Payables
11,907
3,757
4,002
Cash generated from operations
5,667
5,109
5,447
Income tax paid
(1,963)
(1,211)
(68)
Net cash inflow from operating activities
3,704
3,898
5,379
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
66
70
44
Purchase of property, plant and equipment
(7,957)
(4,897)
(2,359)
Proceed from sale of club membership
-
4
-
Proceeds from minority interest
63
-
-
Purchase of subsidiary, net of cash acquired
342
-
-
Purchase of share in unquoted investment
(3,579)
-
-
Interest received
36
8
4
Net cash outflow from investing activities
(11,029)
(4,815)
(2,311)
Cash flows from financing activities:
Interest paid
(712)
(1,427)
(409)
Proceeds/(repayment) from trust receipts loans
6,757
1,575
(29)
Repayment of long-term bank loans
(1,044)
(814)
(151)
Repayment of short-term bank loans
(323)
(160)
(722)
Repayment of finance lease liabilities
(228)
(152)
(13)
Dividends paid
(3,775)
(206)
(26)
Net cash inflow/(outflow) from financing activities
675
(1,184)
(1,350)
Net increase/(decrease) in cash and cash equivalents held
(6,650)
(2,101)
1,718
Cash and cash equivalents at the beginning of the financial period
23,894
7,443
3,638
Effects of exchange rate changes on cash and cash equivalents
6
116
102
Cash and cash equivalents at the end of the financial period
17,250
5,458
5,458

Explanatory Notes:-

Group (Actual)
Group (Proforma)
Group (Actual)
01/01/04-
30/06/04
01/01/03-
30/06/03
16/05/03-
30/06/03
S$'000
S$'000
S$'000
Cash and cash equivalents comprise:-
Cash at bank and on hand
17,888
5,603
5,603
Bank overdrafts
(638)
(145)
(145)
17,250
5,458
5,458
Purchase of subsidiary:-
Cash and bank balances
1,211
-
-
Less: Minority interest
(342)
-
-
Net identifiable assets purchased / Total consideration
869
-
-
Less: Cash and cash equivalent in subsidiary acquired
(1,211)
-
-
Net cash inflow from purchase of a subsidiary
(342)
-
-



1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or
Statement of Changes in Equity
Share capital
Share premium
Foreign currency translation reserve
General reserve
Retained profits



Total
S$'000
S$'000
S$'000
S$'000
S$'000
S$'000
The Group (Actual)
Balance at 1 January 2004
48,716
28,285
180
723
9,317
87,221
Net profit
-
-
-
-
9,003
9,003
Transfer to General Reserve
-
-
-
98
(98)
-
Dividend
-
-
-
-
(1,461)
(1,461)
Foreign currency translation differences
-
-
199
-
-
199
Balance at 30 June 2004
48,716
28,285
379
821
16,761
94,962

Total
S$'000
The Group (Proforma)
Balance at 1 January 2003
(3)
Issue of shares pursuant to the Restructuring Exercise
34,116
Net profit
1,472
Foreign currency translation difference
904
Balance at 30 June 2003
36,489

Explanatory Note:-

The comparatives for the proforma statement of changes in equity of the Group for the period ended 30 June 2003 are prepared on the assumption that the Group structure had been in place since 1 January 2003.


Share capital
Share premium
Retained profit
Total
S$'000
S$'000
S$'000
S$'000
The Company (Actual)
Balance at 1 January 2004
48,716
28,285
1,737
78,738
Net Profit
-
-
1,154
1,154
Dividend
-
-
(1,461)
(1,461)
Balance at 30 June 2004
48,716
28,285
1,430
78,431

Share
capital
Share premium
(Accumulated loss)/Retained profit
Total
S$'000
S$'000
S$'000
S$'000
The Company (Actual)
Balance at 1 January 2003
*
-
(3)
(3)
Issue of shares pursuant to the Restructuring Exercise
34,116
-
-
34,116
Net Profit
-
-
24
24
Balance at 30 June 2003
34,116
-
21
34,137

* The share capital is S$2.00.
Explanatory Note:-

The YHI International Limited Group was formed on 16 May 2003 pursuant to a Restructuring Exercise as described in the Prospectus dated 24 June 2003.


1(d)(ii) Details of any changes in the company's share capital arising from rights issue,
(a) Changes In Authorised Share Capital


(b) Changes In Issued And Fully Paid Ordinary Shares

There was no change in the issued and paid up share capital of the Company.

Number of shares
S$
Balance at 1January 2004
243,579,845
48,715,969
Issue of ordinary shares
-
-
Balance at 30 June 2004
243,579,845
48,715,969



2. Whether the figures have been audited or reviewed and in accordance with
The figures have not been audited nor reviewed.


3. Where the figures have been audited or reviewed, the auditors' report (including
Not Applicable.


4. Whether the same accounting policies and methods of computation as in the
There were no changes in accounting policies and methods of computation adopted in the financial statements for the current reporting period as compared to the most recent audited annual financial statements as at 31 December 2003.


5. If there are any changes in the accounting policies and methods of computation,
Not applicable.


6. Earnings per ordinary share of the group for the current financial period reported
Earnings per share
Group
(Actual)
Group
(Proforma)
Group
(Actual)
Group
(Proforma)
Group
(Actual)
01/04/04 -30/06/04
Q2 FY2004
01/04/03 -
30/06/03
Q2 FY2003
01/01/04 -30/06/04
1H FY2004
01/01/03 -30/06/03
1H FY2003
16/05/03 -30/06/03
(a)Based on the number of ordinary shares on issue (cents)
1.97
1.83
3.70
3.53
NM
(b)On fully diluted basis (cents)
NA
NA
NA
NA
NA
NA – Not Applicable
NM -– Not Meaningful

(a) The earnings per share at 1.97 cents and 3.70 cents for Q2 FY2004 and 6 months ended 30 June 2004 respectively are based on the number of shares in issue of 243,579,845 ordinary shares.

(b) The earnings per share for Q2 FY2003 and 6 months ended 30 June 2003 are based on the pre-invitation share capital of 170,579,845 ordinary shares.

(c) Diluted earnings per share have not been calculated as no diluting events existed during these periods. No share options were granted to any employees during these periods.


7. Net asset value (for the issuer and group) per ordinary share based on issued share
Net asset value per share
Group (Actual)
Group
(Actual)
Company (Actual)
Company (Actual)
30/06/04
31/12/03
30/06/04
31/12/03
Net asset value per ordinary share (cents)
38.99
35.81
32.20
32.33

Net asset value per ordinary share as at 30 June 2004 and 31 December 2003 was calculated based on the number of shares in issue of 243,579,845 ordinary shares.
8. A review of the performance of the group, to the extent necessary for a reasonable
REVIEW OF SECOND QUARTER FINANCIAL RESULTS AND FINANCIAL POSITION (Q2 FY2004 VS Q2 FY2003)

The Group's turnover for Q2 of FY2004 amounted to S$75.0 million. This was S$22.2 million or 42.0% higher than the S$52.8 million recorded in Q2 of FY2003. The increase was attributable to continuous growth in both the distribution and manufacturing business segments.

Turnover from the distribution business increased by approximately S$12.9 million or 33.2% from S$38.8 million in Q2 of FY2003 to S$51.7 million in Q2 of FY2004. The increase was due to higher tyre sales volumes achieved in all our operations particularly in ASEAN, PRC and Australia.

Turnover from the manufacturing business increased by approximately S$9.3 million or 66.4% from S$14.0 million in Q2 of FY2003 to S$23.3 million in Q2 of FY2004. Comparing Q2 of FY2004 with Q2 of FY2003, the increase in turnover from the operations in Shanghai was due to an increase in production capacity to meet the increased demand.

Gross profit increased by approximately S$5.9 million from S$14.0 million in Q2 of FY2003 to S$19.9 million in Q2 of FY2004. The overall increase in gross profit of about 42.0% was in line with higher turnover. The increase in distribution costs and administrative expenses in Q2 of FY2004 as compared to the same period of FY2003 was in line with increased operating activities and due to the expanded operations overseas particularly in PRC, where both our distribution and manufacturing business segments are experiencing continuous growth.

Profit after taxation and minority interests increased by approximately S$1.7 million to S$4.8 million in Q2 of FY2004 as compared to S$3.1 million for the same period in FY2003.

REVIEW OF SIX MONTH YEAR-TO-DATE FINANCIAL RESULTS AND FINANCIAL POSITION (1H FY2004 VS 1H FY2003)

Group's turnover and profitability in first half of FY2004 were better than first half of FY2003.

The Group's turnover of S$140.4 million for the first half of FY2004 was S$40.2 million or 40.1% higher than the S$100.2 million recorded in first half of FY2003. Both the distribution and manufacturing businesses continued to experience good growth.

Turnover from the distribution business increased by approximately S$24.7 million or 33.0% from S$74.9 million in the first half of FY2003 to S$99.6 million in the first half of FY2004.The increase was due primarily to higher tyre sales volumes in ASEAN, PRC and Australia.

Turnover from the manufacturing business increased by approximately S$15.5 million or 61.2% from S$25.3 million in the first half of FY2003 to S$40.8 million in the first half of FY2004. This increase was due primarily to increase in turnover from the operations in Shanghai which had 4 production lines in 1H FY2004 as compared to 3 production lines for the same period in the previous year.

Gross profit increased by approximately S$11.0 million from S$25.8 million in the first half of FY2003 to S$36.8 million in the first half of FY2004. The overall increase in gross profit was due to higher turnover achieved in both the distribution and manufacturing businesses.

The increase in distribution costs and administrative expenses in the first half of FY2004 as compared to the same period of FY2003 was in line with increased operating and production activities. Compared to the same period last year, the decrease in finance cost was attributable to lower interest expenses following repayment of short term bank loans.

Profit after taxation and minority interests increased by approximately S$3.0 million to S$9.0 million in the first half of FY2004 as compared to S$6.0 million in the corresponding period in FY2003. This was mainly attributable to higher earnings from manufacturing operations in Shanghai as well as from our distribution business in ASEAN.

Property, plant and equipment increased by approximately S$5.6 million due primarily to capital expenditures relating to the operations in Shanghai and Wuxi, for the manufacturing and chroming of alloy wheels respectively.

Total current assets increased by approximately S$14.8 million mainly due to increase in receivables of approximately S$8.2 million and inventory of approximately S$12.5 million which were in line with higher turnover. A decrease in cash and cash equivalents of approximately S$6.5 million was due primarily to funding of PRC expansion programs.

Total current liabilities increased by approximately S$16.3 million mainly due to increase in trade and other payables which was in line with increased sales activities.



9. Where a forecast, or a prospect statement, has been previously disclosed to


Not applicable.


10. A commentary at the date of the announcement of the significant trends and
Both distribution and manufacturing business segments within the Group are expected to see further increase in sales.

Distribution business, particularly tyre sales will continue to increase in ASEAN and PRC operations attributable to availability of more supply of Yokohama tyres. The Hangzhou Yokohama Tire Co Ltd is on track to supply our operation in PRC. Yokohama Tire Philippines, Inc is also increasing its production capacity and this will bring benefits to the ASEAN operations.

In addition, our PRC operation has also started to distribute the Hitachi automotive batteries in PRC since the end of June 2004.

Demand for global alloy wheels remains buoyant especially with more closure of rim manufacturers worldwide. PRC has become a competitive production base for alloy wheels and our current exports of alloy wheels out of our Shanghai manufacturing operations, particularly to North America, Europe and Japan, will continue to remain our main focus. Both our fifth and sixth production lines have started full production in July 2004 and our order books are full until the first half of 2005.

Following the implementation of the ASEAN Free Trade Area (AFTA) tariffs, our Group intends to set up a manufacturing plant for the production of alloy wheels in ASEAN to increase the production capacity to meet the increasing market demand for alloy wheels in ASEAN.



11. Dividend
Not applicable.Not applicable.


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

No dividend has been recommended for the period ended 30 June 2004.



PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT

13. Segmented revenue and results for business or geographical segments (of the
Not applicable to Q1, Q2 & Q3 results.


14. In the review of performance, the factors leading to any material changes in
Not applicable to Q1, Q2 & Q3 results.


15. A breakdown of sales.

Not applicable to Q1, Q2 & Q3 results.



16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest


Not applicable to Q1, Q2 & Q3 results.



BY ORDER OF THE BOARD

Yuen Sou Wai
Executive Director
13/08/2004