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Financials

Unaudited First Quarter Financial Statements For The Period Ended 31 August 2017

Financials Archive

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Profit and Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement

The Group recorded a 53.1% increase in revenue to S$17.4 million for the three months ended 31 August 2017 ("1Q FY18"), compared with S$11.4 million in the previous corresponding period. The increase was mainly due to the addition of port operations service provider, TNS Ocean Lines (S) Pte Ltd ("TNS"), and higher revenue contributed by ready-mix concrete manufacturing plant, Wuzhou Xing Jian Readymix Co., Ltd ("Wuzhou Xing Jian") as it ramped up production progressively since it commenced production in June last financial year. This was partially offset by the decrease in storage and handling revenue from the warehousing & logistics segment.

Cost of sales increased by 61.4% from S$8.7 million in 1Q FY17 to S$14.1 million in 1Q FY18, in line with higher revenue. The increase was attributable to the additional expenses from the operations of TNS and Wuzhou Xing Jian, which was partially offset by lower rental expenses due to the expiry of lease of external warehouse space.

For 1Q FY18, the Group’s gross profit increased by 25.7% to S$3.3 million, compared with S$2.6 million in 1Q FY17. The composite gross margin decreased from 23.3% in 1Q FY17 to 19.1% in 1Q FY18, mainly due to lower gross margin from the warehousing & logistics segment.

Other income increased from S$0.1 million in 1Q FY17 to S$0.4 million in 1Q FY18. This was mainly due to the gain on disposal of property, plant and equipment, as well as additional income including government’s grants and insurance claims.

Marketing and distribution costs increased by S$0.2 million in 1Q FY18, compared with S$37,000 in 1Q FY17. This was mainly due to higher expenses incurred on marketing by TNS and Wuzhou Xing Jian.

Administrative expenses increased by 55.6% to S$3.4 million in 1Q FY18 from S$2.2 million in 1Q FY17. This was mainly due to increase in staff cost with the addition of TNS and ramp up of production in Wuzhou Xing Jian, as well as the increase in the amortisation of intangible assets.

Finance costs decreased by 11.4% to S$0.4 million in 1Q FY18. This was mainly due to the lower property loan interest as a result of refinancing, which was partially offset by additional finance costs incurred by Wuzhou Xing Jian and TNS.

Other credit of S$73,000 in 1Q FY18 was mainly net foreign exchange gain, a reversal from an expense of S$0.2 million in 1Q FY17.

Share of results from associates reversed from a loss of S$0.1 million in 1Q FY17 to a profit of S$20,000 in 1Q FY18. This was due to the gradual improvement in the occupancy rate for storage of metals and lower administrative expenses, as well as the reversal of the provision for doubtful debts as a result of bad debts recovery.

The loss of S$0.7 million from its share of results of joint venture came from the chartering of the liquefied gas carrier vessel, Gas Aries. Due to the subdued economic recovery, the chartering rate of the renewed contract in 1Q FY18 was significantly lower as compared to the chartering rate in 1Q FY17.

Taking into account of the above, the Group recorded a net loss attributable to the owners of the Company of S$1.1 million for 1Q FY18, compared with a net profit of S$0.1 million in 1Q FY17.

Other comprehensive income for foreign currency translation and share of foreign currency translation of associates was a result of the translation of the financial statements of the foreign subsidiaries and associates from its functional currencies.

Statement of Financial Position

Non-current assets increased by S$2.4 million from S$137.3 million as at 31 May 2017 to S$139.7 million as at 31 August 2017. The increase was mainly due to increase in property, plant and equipment arising from the redevelopment of the 39 Benoi Road property, the purchase of fixed assets for the operations in Wuzhou Xing Jian and the warehousing & logistics in Singapore. The increase was partially offset by the decrease in investment in joint venture due to share of losses for the period under review and decrease in land use rights and intangible assets due to amortisation.

Current assets increased by S$1.7 million from S$32.8 million as at 31 May 2017 to S$34.6 million as at 31 August 2017. This was mainly due to the increase in trade and other receivables resulting from (i) higher trade receivables from Wuzhou Xing Jian due to higher revenue, and (ii) an additional loan of S$1.4 million was from the Group to Gas Aries Limited, which is a subsidiary of its joint venture company, Ocean Latitude Limited. The increase was partially offset by the decline in cash and cash equivalents from S$10.6 million as at 31 May 2017 to S$8.1 million as at 31 August 2017, which was attributed to the redevelopment of the 39 Benoi Road property and the purchase of fixed assets.

Non-current liabilities increased by S$6.0 million from S$53.8 million as at 31 May 2017 to S$59.8 million as at 31 August 2017. This was mainly due to (i) the increase in borrowings to finance the redevelopment of 39 Benoi Road property, and (ii) a marginal increase in other liabilities due to higher construction retention for the 39 Benoi Road property. The increase was partially offset by the repayment of borrowings and finance lease liabilities.

Current liabilities decreased by S$0.9 million from S$28.0 million as at 31 May 2017 to S$27.1 million as at 31 August 2017. The decrease was mainly due to (i) the decrease in trade and other payables mainly attributed to the payment of the amount due to the builder on the redevelopment of the 39 Benoi Road property, and (ii) the decrease in finance lease liabilities as a result of the repayment. This was offset by the increase in borrowings undertaken for working capital purposes in Wuzhou Xing Jian and loan to Gas Aries Limited.

Shareholders’ equity decreased from S$83.1 million as at 31 May 2017 to S$81.9 million as at 31 August 2017 due to the losses for the period under review.

Statement of Cash Flows

4Q FY2017 vs 4Q FY2016

During 1Q FY18, the net cash used in operations amounted to approximately S$5.1 million. This comprises positive operating cash flows before changes in working capital of S$1.8 million, adjusted by net working capital outflow of S$4.9 million, interest received and taxes paid of S$1,000 and S$129,000, respectively.

Net cash used in investing activities of S$4.4 million was mainly due to the cash outlay for the redevelopment of 39 Benoi Road property, and the purchase of vehicles and equipments during the quarter under review.

Net cash generated from financing activities for 1Q FY18 was S$7.0 million. This was mainly attributable to the proceeds from bank borrowings of S$8.9 million for the redevelopment of 39 Benoi Road property, working capital purposes in Wu Zhou Xing Jian and Gas Aries Limited, which was partially offset by the repayment of loans, finance leases and interest expenses.

Commentary

The Group expects the business environment to continue to be challenging amid the geopolitical uncertainties and subdued economic growth, with inflationary cost pressure weighing on the operating performance of the Group.

The redevelopment of the 39 Benoi Road warehouse cum office property is completed. Upon completion, the Group increased their storage space and open yard space by an additional 400,000 sqft and 130,000 sqft respectively, coupled with capability of handling chemical dangerous products. Viva Industrial Real Estate Investment Trust (“Viva”) had also commenced the construction of the vehicular link to connect the 40-foot container ramp from 39 Benoi Road warehouse property to that of 30 Pioneer Road warehouse property. On completion of the vehicular link, Viva shall pay the Group an additional S$3 million and shall share the maintenance and repair costs of the ramp.

The Group will also continue to drive synergies among the subsidiaries within its core warehousing & logistics division, to achieve stable and sustainable earnings growth in the long term.

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