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In response to the queries raised by the Singapore Exchange Securities Trading Limited ("SGX.ST") on 23 February 2007, the Directors of AnnAik Limited ("the Company") wish to provide the following information:-
a) Please provide reasons for the increase in other receivables balance from S$1.5 million as at 31 December 2005 to S$4.2 million as at 31 December 2006 and provide details on what these other receivables relate to.
The other receivables consist mainly of advance payments made in relation to the purchase of steel raw materials, refundable deposits paid for use of land in PRC and tax recoverables. In FY 2006, there was a significant increase in the advance payments made for the purchase of steel raw materials.
b) Please provide reasons for the increase in inventories balance from S$22.3 million as at 31 December 2005 to S$30.4 million as at 31 December 2006 and advise whether provision for obsolescence is required.
During FY 2006, our holding of inventories rose because we have to stock up more raw materials and finished goods to meet higher sales demand in our manufacturing and distribution businesses.
Please note that we have reviewed the sale ability of all our inventories at end of FY 2006 and provision for obsolescence has been made for stock items which are slow moving.
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