Thakral's earnings drop 18% to $18.5m

THAKRAL Corp's earnings fell for the full year ended March 31, 2005, on flat revenues and lower profits from property development.

The distribution and trading group posted a net profit of $18.5 million for the year, down 18 per cent from a year ago. Group turnover inched up 1 per cent to $535.3 million. Earnings per share fell to 1.23 cents from 1.51 cents.

For the fourth quarter itself, Thakral's net profit fell 23 per cent to $4.7 million while revenue decreased 4 per cent to $134.9 million.

Full-year turnover was flat due to the absence of revenue contribution from its former subsidiaries Beijing Wenlu and China Express Associates which were divested during the financial year.

Thakral said the fall in full-year net profit reflected the reduced gross profits from its property development unit in Wujiang, and its home entertainment and security cards units. Advertising and promotion expenses of $1.6 million were also incurred on building the group's own brand.

The group said its balance sheet strengthened in the past 12 months. Proceeds from a private share placement helped to boost its cash balance from $42.1 million to $61.3 million.

With a reduction in total borrowings from $44.8 million to $32.3 million, total debt-to-equity ratio improved from 27 per cent to 16 per cent. Its net cash position improved from a negative $2.7 million in the previous financial year to a positive $29 million.

Thakral is recommending a final one-tier tax-exempt dividend of 0.6 cent per share.

While market conditions in China, one of the group's major markets, remain challenging, Thakral said it is optimistic that business operations will improve.

The group is setting up a China holding company and expanding its operations in China. It plans to expand its network of retailers in China within the next three to four years in China to 8,000-10,000 and integrate its business operations this year.

Thakral said it is also exploring more opportunities in other emerging Asian markets such as India and Indochina. The group is looking to expand its marketing and branding activities for Apple iPods and other brands in Vietnam and India.