Asia Pacific Wire & Cable Corporation Limited — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; this is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under IFRS as issued by the IASB and reported in U.S. dollars. The company manufactures and distributes wire and cable products and provides supply, delivery and installation (SDI) services across North Asia, Thailand and the Rest of the World (ROW).
Key financial results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $425.8 million | $433.9 million |
| Gross profit / margin | $30.2 million / 7.1% | $32.5 million / 7.5% |
| Operating profit | $1.5 million | $8.1 million |
| Profit before tax | $0.5 million | $7.6 million |
| Consolidated net profit | $0.3 million | $4.8 million |
| Profit attributable to APWC shareholders / EPS | $3.9 million / $0.19 | $3.9 million / $0.19 |
| Cash from/(used in) operating activities | $(6.1) million | $6.6 million |
| Cash and cash equivalents at year-end | $38.0 million | $54.0 million |
| Interest-bearing loans and borrowings | $53.7 million | $57.7 million |
| Working capital | $154.4 million | $165.9 million |
Material changes and operating drivers
- Revenue declined 1.9% year over year. North Asia revenue fell 24% to $58.6 million, reflecting lower volume, competition and a sluggish market; Thailand revenue fell 3% to $166.9 million amid infrastructure-project delays and lower government spending. ROW revenue rose 8% to $200.2 million, supported by Australian construction demand and completed Singapore public-sector projects.
- Operating profit fell 80.8%. Gross margin declined to 7.1% from 7.5%; management attributed the reduction mainly to fewer higher-margin Thai government projects, lower enameled-wire sales and onerous Thai contracts. North Asia operating performance improved, while Thailand moved to an operating loss; ROW remained profitable.
- Impairment losses on financial and contract assets rose to $4.6 million from $0.5 million. Almost all of the 2023 charge related to a $4.6 million allowance against overdue receivables from related party Italian-Thai Development; the company reported $5.6 million outstanding from that counterparty.
- Finance costs increased 53% to $2.5 million, primarily because of higher interest rates, despite lower year-end borrowings. Average LME copper prices fell 3.76% to $8,483 per ton; copper accounted for about 73% of product cost at year-end.
- Operating cash flow turned negative, and year-end cash declined by $16.0 million. Trade receivables increased to $105.0 million from $82.0 million; days sales outstanding rose to 80 from 78. Investing cash outflow was $4.9 million and financing cash outflow was $5.5 million.
Liquidity, debt and outlook
- At year-end, current assets were $295.0 million and current liabilities were $140.6 million. The company reported $38.0 million cash and approximately $187.8 million of unused credit facilities, net of letters of credit; facilities totaled approximately $264.0 million and are reviewed annually. Management stated it expects cash and existing credit lines to meet requirements for at least the next 12 months.
- All $53.7 million of reported borrowings were classified as current at December 31, 2023. In February 2024, Charoong Thai agreed to extend a $9 million bank loan to March 2027 at 4.76%, secured by land and subject to covenants. The filing’s contractual-obligations schedule reports $57.2 million of loan payments due within one year, including contractual payment amounts; verify the reconciliation to the balance-sheet carrying value.
- Management estimated 2024 capital expenditures of $0.7 million, subject to market conditions, principally for equipment to expand capacity in Australia and Thailand. It expects to fund these expenditures from operations. APWC did not pay dividends for 2020–2023 and does not anticipate a 2024 distribution.
- Unfulfilled SDI contract transaction prices were $195.0 million at year-end, expected to be recognized over three years. SDI revenue was $57.7 million in 2023. The auditor identified estimating total contract revenue, costs and progress on SDI contracts as a critical audit matter.
Risks, contingencies and governance
- Key exposures include copper-price volatility and limited ability to pass cost changes through promptly; foreign-exchange and interest-rate movements; intense competition; dependence on infrastructure spending and concentrated customers; supply disruption; and political, regulatory and currency-transfer risks in the countries where the group operates.
- One ROW customer accounted for 19.0% of 2023 revenue. PEWC, the controlling shareholder, beneficially owned approximately 81.0% of APWC and conducts related-party business with it. The company uses Nasdaq controlled-company exemptions, and most directors are PEWC-affiliated.
- APWC is a holding company; subsidiary distributions may be constrained by debt covenants, minority interests, local law and foreign-exchange controls. The company cautions that its debt agreements contain restrictive covenants and default provisions. It reported covenant compliance at year-end.
- The company reported no material pending legal proceedings and believes its operations materially comply with environmental laws. It carries no product-liability or business-interruption insurance. It reported no cybersecurity threat identified in 2023 that materially affected or was reasonably likely to materially affect the company, but cannot rule out undetected incidents.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not provide an internal-control attestation because APWC is a non-accelerated filer.
Important facts for investors to verify
- Collection and recoverability of receivables, especially the Italian-Thai balance and the basis for the $4.6 million allowance.
- SDI contract cost-to-complete estimates, margins, timing of revenue recognition and execution of the $195.0 million unsatisfied contract balance.
- Availability and renewal terms of unused credit facilities, debt covenants, and the post-year-end $9 million refinancing and its collateral requirements.
- Whether Thailand can restore profitability amid delayed public projects and onerous contracts, and whether ROW growth and customer concentration remain sustainable.
- Cash conversion, working-capital requirements, copper-cost pass-through, and the company’s stated 2024 capex and no-dividend expectations.