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Financials

First Quarter Financial Statements For The Period Ended 31 August 2018

Financials Archive

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Profit and Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement

Review for 1Q FY19 vs 1Q FY18

Revenue

The Group recorded a 9.4% increase in revenue to S$19.0 million for the three months ended 31 August 2018 ("1Q FY19"), compared with S$17.4 million in the previous corresponding period. The increase was mainly due to higher revenue contributed by ready-mix concrete manufacturing plant, Wuzhou Xing Jian Readymix Co., Ltd ("Wuzhou Xing Jian") and higher warehousing storage revenue.

Cost of sales

Cost of sales increased by 9.3% from S$13.8 million in the three months ended 31 August 2017 ("1Q FY18") to S$15.1 million in 1Q FY19, in line with higher revenue. The increase was attributable to the additional expenses from Wuzhou Xing Jian.

Gross profit

For 1Q FY19, the Group’s gross profit increased by 10.0% to S$3.9 million, compared with S$3.5 million in 1Q FY18 which was mainly derived from Wuzhou Xing Jian. The composite gross margin remains consistent in 1Q FY19.

Other income

Other income increased from S$0.4 million in 1Q FY18 to S$0.8 million in 1Q FY19. This was mainly due to gain on disposal of 49% stake in its associate, GKE Metal Logistics Pte Ltd, as well as additional income including government's grants and insurance claims.

Marketing and distribution costs

Marketing and distribution costs decreased by S$0.2 million in 1Q FY19, as a result of lower marketing activities incurred by Wuzhou Xing Jian.

Administrative expenses

Administrative expenses increased by 9.0% to S$3.7 million in 1Q FY19 from S$3.4 million in 1Q FY18. This was mainly due to increase in staff cost with the addition of TNS and increased production in Wuzhou Xing Jian, as well as the increase in the fair value adjustment for investment in available-for-sale financial assets.

Finance costs

Finance costs increased by S$0.4 million to S$0.7 million in 1Q FY19. This was mainly due to the higher loan interest incurred in the loan for redevelopment of 39 Benoi warehouse and purchase of equipment.

Other expenses/(credit)

Other expenses of S$0.3 million in 1Q FY19 was mainly net foreign exchange loss, a reversal from other credit of S$73,000 due to net exchange gain in 1Q FY18.

Share of result of associate

Share of result from associate reversed from a profit of S$20,000 in 1Q FY18 to a loss of S$154,000 in 1Q FY19. This was due to lower margin from the storage and shipment of metals and lower exchange gain.

Tax expense

Tax expenses arise due to profitable subsidiaries.

Loss from discontinued operation

The discontinued operation recorded a loss of S$0.7 million in 1Q FY18 mainly derived from the share of loss of Ocean Latitude Limited due to depressed chartering rate for its 83,000m3 liquefied gas carrier vessel Gas Aries.

Other comprehensive income

Other comprehensive income for foreign currency translation was a result of the translation of the financial statement of the foreign subsidiary and associate from its functional currencies.

Statement of Financial Position

Non-current assets decreased by S$6.0 million from S$138.1 million as at 31 May 2018 to S$132.1 million as at 31 August 2018. The decrease was mainly due to (i) decrease in property, plant and equipment due to depreciation and adjustment arising from the redevelopment of the 39 Benoi Road property, (ii) decrease in investment in associate due to disposal of associate; GKE Metal Logistics Pte Ltd and (iii) decrease in land use rights and intangible assets due to amortisation.

Current assets increased only slightly to S$38.6 million as at 31 August 2018. This was mainly due to the increase in trade and other receivables resulting from higher trade receivables from Wuzhou Xing Jian and GKE Warehousing & Logistics Pte Ltd. The increase was partially offset by the decline in cash and cash equivalents from S$12.6 million as at 31 May 2018 to S$10.8 million as at 31 August 2018, which mainly due to the repayment of loan and borrowings and payment to vendor for the redevelopment of 39 Benoi road warehouse.

Non-current liabilities decreased by S$0.3 million from S$57.7 million as at 31 May 2018 to S$57.4 million as at 31 August 2018. The reduction is mainly due to the repayment of borrowings.

Current liabilities decreased by S$4.4 million from S$42.2 million as at 31 May 2018 to S$37.8 million as at 31 August 2018. The decrease was mainly due to (i) the decrease in trade and other payables; (ii) the decrease in other liabilities due to reversal of accruals; and (iii) decrease in borrowings due to the repayment of borrowings. This was offset by the increase in finance lease liabilities due to the purchase of fixed assets.

Shareholders’ equity decreased from S$71.7 million as at 31 May 2018 to S$70.6 million as at 31 August 2018 due to the lower translation reserves and losses for the period under review.

Statement of Cash Flows

During 1Q FY19, the net cash generated from operations amounted to approximately S$1.8 million. This comprises positive operating cash flows before changes in working capital of S$2.8 million, adjusted by net working capital outflow of S$0.9 million, interest received and taxes paid of S$40,000 and S$0.2 million, respectively.

Net cash used in investing activities of S$79,000 was mainly due purchase of fixed assets of S$0.5 million which was partially offset by the sale proceed of 49% investment in associate company and disposal of fixed assets amounting to S$0.3 million and S$0.1 million, respectively.

Net cash used in financing activities for 1Q FY19 was S$3.5 million. This was mainly attributable to the repayment of loans, finance leases and interest expenses which was partially offset from the proceeds from bank borrowings of S$0.9 million.

Commentary

The Group remains cautious with the global economic and business environment becoming more challenging. Gradual increase in US interest rates is tightening financial conditions globally, and have contributed to bouts of volatility. Recent concerns over global trade tension between China and US have also contributed to heightened business uncertainty in the region. Amidst the uncertainty in the global market, the Group shall continue to monitor its business environment and manage its operating costs and continue to drive synergies among the subsidiaries within its core warehousing & logistics division.

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