Gross profit decreased during Q2FY13 to a loss of $37.9 million from $7.0 million in Q2FY12 predominantly as a result of the impairment of inventory of $31.0 million and advance to suppliers of $9.0 million (where the net realizable value was estimated to be lower than cost) being included in cost of sales, coupled with the decreased sales in China. See "Impairment" below.
General and Administrative ("G&A") expenses were slightly lower in Q2FY13 at $2.2 million, compared to $2.6 million in Q2FY12. The decrease is predominately due to lower foreign exchange loss and reduced stock based compensation expense, coupled with consistent G&A at the operations of HLJ, JS and Hanampi.
Impairment loss of $78.5 million is related to property and equipment in Q2FY13, versus nil for Q2FY12. The increase is due primarily to the measurement of the recoverable amount of the HLJ/JS CGUs based on fair value less cost to sell as a result of the valuation analysis conducted in connection with the Special Committee's assessment of the Privatization Proposal. See "Impairment" below.
EBITDA decreased during Q2FY13 to negative $1.9 million compared to $6.0 million during Q2FY12. The main reason for the decrease was lower production and sales volumes during Q2FY13, which generated reduced gross profit.
The Company reported a net loss of $122.8 million in Q2FY13 compared to net income of $2.9 million during the same quarter in fiscal 2012. As a result, loss per share was $2.04 for Q2FY13, compared to income per share of $0.05 for the same quarter during fiscal 2012. Non-IFRS loss per share was $0.07 for Q2FY13.
For the six month period in fiscal 2013 ("H1FY13"), sales were $50.9 million versus $57.5 million in the comparative six month period last year ("H1FY12"). Gross margin was negative 63 percent in H1FY13 versus 14.8 percent in H1/12, producing negative gross profit of $31.9 million and $8.5 million respectively. See "Impairment" below.
General and Administrative ("G&A") expenses were lower in H1FY13 at $3.6 million, compared to $5.1 million in H1FY12. The decrease is due to decreased foreign exchange loss, a reduction in public company compliance costs, and reduced payroll and payroll related expenses, caused by a reduction in headcount at the HLJ facility between the comparative periods, as well as lower maintenance expenses in H1FY13 compared to H1FY12.
Impairment loss of $78.5 million relating to property and equipment in H1FY13, is a non-cash item, versus nil for H1FY12. See "Impairment" below.
EBITDA decreased during H1FY13 to $1.9 million compared to $5.0 million during H1FY12. The main reason for the decrease was reduced gross profit and operating income.
Net loss for H1FY13 was $121.4 million compared to a profit of $0.9 million during H1FY12. As a result, loss per share was $2.02 for H1FY13, compared to income per share of $0.02 for H1FY12. Non-IFRS loss per share was $0.04 for H1FY13.
The Company performed an assessment of whether there is any indication of impairment in the carrying amount of its CGUs as of December 31, 2012. Based on this assessment, the Company decided that it needed to measure its recoverable amount of its CGUs. The Company measured the recoverable amount based on fair value less cost to sell. The assumptions underlying the Company's measurement of recoverable value were drawn from the formal valuation prepared in connection with the Special Committee's review of the Privatization Proposal. The Company determined that the estimated recoverable amount of the HLJ/JS CGUs, its manufacturing facilities in China, was lower than its carrying amount. An impairment of approximately $78.5 million was recorded against property and equipment to fully impair these assets. In addition, the Company determined that impairments of approximately $31.0 million against inventory and $9.0 against advances to suppliers were required at HLJ/JS. The impairment of inventory and advances to suppliers is included as cost of goods sold.
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