CCFH climbs back from red with $1.7m profit in FY2012

Turnaround led by lower production costs.

In a release, Catalist-listed investment holding company CCFH Ltd. (CCFH) announced its unaudited financial results for the financial year ended 31 December 2012 (FY2012).

For the financial year under review, there was a 22.6% increase in revenue from S$29.0 million for the financial year ended 31 December 2011 (“FY2011”) to S$35.6 million for FY2012, primarily attributable to an increase in children’s wear sales from the European and South American markets under its Original Design Manufacturing (ODM) division.

A higher gross profit of S$10.2 million was also achieved in FY2012 versus S$4.2 million in FY2011, as a result of lower cost of production. Overall, CCFH achieved a net profit after tax amounting to S$1.7 million for FY2012, from a loss of S$35.2 million in the previous financial year.

Mr Xu Rongsen, Chief Executive Officer of CCFH remarked: “We are happy to see the fruits of our labour in the past year, and we would like to thank our shareholders for their patience as we re-organised the Group and its businesses. This turnaround is only the beginning of CCFH’s commitment to delivering better returns to our shareholders.”

The 22.6% increase in overall revenue for FY2012 was primarily attributable to improved sales from the ODM division. The retail business segment recorded sales revenue of S$8.8 million for FY2012, a decrease of 2.1% from S$9.0 million in FY2011. This was due to a decrease in revenue in the bedding and bed linen business of S$1.1 million, partially offset by an increase of S$0.9 million in revenue from the children’s wear business, particularly from the Group’s “JJL Kids” brand. The Group also re-commenced its Sourcing and Procurement business in December 2012, and recorded S$1.4 million in revenue from its wholly-owned subsidiary, Eagleton (Xiamen) Import & Export Co., Ltd (Xiamen Eagleton) for FY2012.

Gross profit margin increased significantly from 14.4% in FY2011 to 28.6% in FY2012, mainly due to the improved gross profit margins from both the ODM Division and the children’s wear business under the Retail Division. The improvement in gross margins was due to lower production costs, as the Group reduced manpower costs by outsourcing certain production processes to third parties, and also benefited from a decrease in the price of cotton, which is a key raw material.

The Group underwent a reorganisation in FY2012 and FY2011. Its efforts included the closure of the bedding and bed linen flagship store at 56 Tanglin Road in June 2011, the closure of the children’s wear factory in Zhangzhou City, and the relocation of its business to Shishi City. These efforts, together with the dormancy of the Sourcing and Procurement business from the third quarter of FY2011, resulted in the lowering of selling and distribution expenses by S$2.7 million to S$3.0 million in FY2012 from S$5.7 million in FY2011 and led to a decrease in general and administrative expenses by S$2.0 million to S$6.7 million in FY2012 from S$8.7 million in FY2011.