REVIEW OF OPERATIONS AS AT 30 JUNE 2010
The profit after tax for the year attributable to the members of the Group was $263,926 (2009: loss of $920,145).
The mild recovery of the economy and financial markets continued during the reporting period, in spite of turbulences in Europe since May.
Orchid, operating profitably since January 2009, has recorded a small profit for the third consecutive semester, as we continued to sell assets at prices above book value. This included our shares in Gongyou Machines Ltd and RGM Entertainment Pte Ltd, which were sold during the past six months. These divestments came in addition to the divestment of our Thailand property subsidiary Pangala Group Limited, which has been finalised before 31 December 2009, also at a profit compared with book value. A negative factor was the strong development of the Australian dollar, as most of our investments are denominated in other currencies, so that the increase in value in the currencies of the country of investment was partly neutralised if measured in Australian dollars.
Our operating costs in the last year have been below the previous year.
Orchid’s strategy, to invest in Pre-IPO stage companies, has in financial year 2007 led to the first ever profit in the history of the Company. Thereafter, the financial crisis has led to a collapse of the IPO markets and very low equity prices for listed small caps. We have abstained from new investment, in order to conserve cash, for more than 2 years.
Orchid is in a net cash position and financially able to source attractive deals. We are proactively searching and examining investment targets, and are currently in negotiations with interesting targets. We will inform the market in due course upon reaching significant milestones regarding such negotiations.