Financials
Condensed Interim Financial Statements For The Six Months And Full Year Ended 31 May 2024
Financials Archive
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Condensed interim consolidated income statement
Condensed interim consolidated statement of comprehensive income
Condensed Interim Balance Sheet
Review Of performance Of The Group
Sales
FY24 vs FY23
Revenue
The Group recorded a 1.5% increase in revenue from S$108.9 million in FY23 to S$110.6 million in FY24. The increase was mainly driven by higher revenue from the warehouse and logistics segment. The increase was partially offset by decrease in freight revenue and infrastructural materials and services revenue in FY24.
Cost of sales
The cost of sales increased by 1.0% from S$77.3 million in FY23 to S$78.1 million in FY24. This was mainly due to higher operating costs in the warehouse and logistics segment, which were in line with the increase in sales. The increase was partially offset by the decrease in operating costs in the infrastructural materials and services segment, which was in tandem with the decrease in sales.
Gross profit
The Group’s gross profit increased by 2.7% from S$31.6 million in FY23 to S$32.5 million in FY24. Correspondingly, the Group’s gross margin increased marginally from 29.0% in FY23 to 29.4% in FY24.
Other income
Other income decreased by 9.7% from S$2.0 million in FY23 to S$1.8 million in FY24. This was mainly due to the reversal of overprovision for withholding tax in FY23, which was partially offset by an increase in interest income.
Marketing and distribution costs
Marketing and distribution costs increased marginally from S$0.4 million in FY23 to S$0.5 million in FY24, due to higher expenses incurred on marketing activities.
Administrative expenses
Administrative expenses increased by 4.7% from S$23.0 million in FY23 to S$24.1 million in FY24. The increase in FY24 was mainly due to the increase in staff costs by S$0.7 million and the allowance of expected credit loss for receivables in China increased by S$0.6 million.
Finance costs
Finance costs decreased by 4.8% from S$2.8 million in FY23 to S$2.7 million in FY24. This was mainly due to decrease in interest expenses on lease liabilities.
Other expenses
Other expenses of S$204,000 in FY24 were mainly due to net foreign exchange losses.
Share of results of associates
Share of result from associate, Cenxi Haoyi Recycling Co., Ltd, contributed a gain of S$45,000 in FY24, a decrease from S$134,000 in FY23, due to lower sales volume in FY24.
Tax expenses
The effective tax rate decreased from 43.2% in FY23 to 36.3% in FY24 mainly due to decrease in losses in certain subsidiaries in FY24 as compared to FY23. The higher losses of the subsidiaries in FY23 lowered the overall group profit in FY23 and led to higher effective tax rate in FY23.
Profit before tax
Profit before tax decreased by 1.8% from S$6.9 million in FY23 to S$6.8 million in FY24. The decrease was mainly due to the increase in provision for allowance of the expected credit loss of S$0.6 million. The decrease was offset by the increase in profit from the warehousing and logistics segment.
Other comprehensive income
Other comprehensive income mainly comprises change in fair value of cash flow hedges and foreign currency translation of subsidiaries and associates.
2H FY24 vs 2H FY23
Revenue
The Group recorded a 0.9% increase in revenue from S$54.6 million in 2H FY23 to S$55.0 million in 2H FY24. The increase was mainly due to higher revenue from the warehousing and logistics segment of S$2.3 million, contributed by the increase in storage and warehousing service revenue, offset by decrease in revenue of S$2.0 million from the infrastructural materials and services segment.
Cost of sales
The cost of sales increased by 1.3% from S$38.5 million in 2H FY23 to S$39.1 million in 2H FY24. This was mainly due to the increase in cost from the warehousing and logistics segment in tandem with the increase in revenue, which was offset by the cost reduction in the infrastructural materials and services segment as revenue decreased.
Gross profit
The Group’s gross profit in 2H FY24 remained constant at approximately S$16.0 million, decreased marginally by 0.2% in 2H FY24 as compared to 2H FY23. The decrease was due to lower average selling price of ready-mix concrete in China leading to a lower gross profit margin from the infrastructural materials and services segment. The Group’s gross margin decreased marginally from 29.3% in 2H FY23 to 29.0% in 2H FY24.
Other income
Other income decreased by 14.8% from S$1.5 million in 2H FY23, to S$1.3 million in 2H FY24. The decrease was mainly due to the reversal of overprovision for withholding tax in the prior year, partially offset by the increase in interest income and grant income from the government.
Marketing and distribution costs
Marketing and distribution costs increased from S$189,000 in 2H FY23 to S$344,000 in 2H FY24, due to higher expenses incurred on marketing activities.
Administrative expenses
Administrative expenses increased by 10.5% from S$11.0 million in 2H FY23 to S$12.1 million in 2H FY24. This was mainly due to an increase in the allowance for expected credit losses relating to receivables of S$1.3 million in China.
Finance costs
Finance costs decreased slightly from S$1.35 million to S$1.28 million in 2H FY24, mainly due to a decrease in interest expenses on lease liabilities.
Other expenses
Other expenses of S$65,000 in 2H FY24 were mainly due to net foreign exchange losses.
Tax expenses
The effective tax rate has decreased from 41.8% in 2H FY23 to 30.6% in 2H FY24 mainly due to decrease in losses in certain subsidiaries in 2H FY24 as compared to 2H FY23. The higher losses of the subsidiaries in 2H FY23 lowered the overall group profit in 2H FY23 and led to higher effective tax rate in 2H FY23.
Other comprehensive income
Other comprehensive income mainly comprises change in fair value of cash flow hedged, foreign currency translation of subsidiaries and associates and share based payments.
Condensed interim statements of Financial Position
Non-current assets decreased by S$13.2 million from S$131.4 million as at 31 May 2023 to S$118.2 million as at 31 May 2024. The decrease was mainly due to depreciation of property, plant and equipment, amortisation of intangible assets, fall in value of the financial assets at fair value through profit or loss and decrease in associate due to dividend received from the associate. The decrease was offset with the increase in deferred tax assets arising from the allowance of expected credit loss relating to receivables in China.
Current assets decreased by S$2.3 million from S$69.2 million as at 31 May 2023 to S$66.9 million as at 31 May 2024. This was mainly due to decrease in inventories, derivative financial assets and cash and cash equivalents. The decrease was offset with the increase in trade and other receivables and prepaid operating expenses.
Non-current liabilities decreased by S$14.9 million from S$64.4 million as at 31 May 2023 to S$49.5 million as at 31 May 2024. The decrease was mainly due to reclassification of borrowings and lease liabilities to current liabilities.
Current liabilities decreased by S$2.5 million from S$43.8 million as at 31 May 2023 to S$41.3 million as at 31 May 2024. The decrease was mainly due to repayment of borrowings and principal portion of lease liabilities and decrease in other liabilities. The decrease was offset with the increase in trade and other payables and tax payable.
Shareholders’ equity increased from S$92.4 million as at 31 May 2023 to S$94.3 million as at 31 May 2024. This was mainly due to profit for the year, partially offset by dividend payment of S$1.6 million, share buyback and decrease in other reserves due to foreign currency translation.
Condensed interim consolidated statement of cash flows
FY24 vs FY23
During FY24, the net cash generated from operating activities amounted to approximately S$21.8 million. This comprises positive operating cash flows before changes in working capital of S$27.9 million, adjusted by net working capital outflow of S$3.3 million and income taxes paid of S$3.1 million.
Net cash used in investing activities of S$2.2 million was mainly due to purchase of property, plant and equipment amounting to S$2.4 million.
Net cash used in financing activities of S$22.7 million was mainly due to the repayment of loans and borrowings, payment of principal portion of lease liabilities and dividends paid.
After taking into consideration of the above movements, cash and cash equivalents decreased by S$3.2 million to S$26.5 million as at 31 May 2024.
2H FY2024 vs 2H FY2023
The Group’s net cash generated from operating activities for 2H FY2024 was S$12.4 million. This comprises positive operating cash flows before changes in working capital of S$14.2 million, adjusted by net working capital outflow of S$0.5 million and income taxes paid of S$1.5 million.
Net cash used in investing activities of S$0.7 million was mainly due to purchase of property, plant and equipment amounting to S$0.8 million.
Net cash used in financing activities of S$12.1 million was mainly due to the repayment of loans and borrowings and payment of principal portion of lease liabilities.
After taking into consideration of the above movements, cash and cash equivalents decreased by S$0.4 million to S$26.5 million as at 31 May 2024.
Commentary
The International Monetary Fund (“IMF”) maintains its 2024 growth forecast for Singapore at 2.1% and has trimmed its 2025 GDP growth forecast for Singapore to 2.3%. The IMF has raised its 2024 growth estimate for China to 4.6%. It was also highlighted that one of the biggest risks for Asia’s economy is a protracted property sector correction in China. (1)
The Group will continue to maintain efficient cost management and regular credit assessments of its customers in the infrastructural materials and services segment based in Guangxi, China, while China’s rural revitalization strategy is progressing in a gradual manner.
The Group believes that its prior investments in enhancing its assets to maximise usable areas and raising its competency in storage and logistics for higher-value cargoes, including specialty chemicals, dangerous goods, and electronics, have improved its market position and competitiveness in the warehousing and logistics industry.
According to the Asian Development Bank, growth momentum in Singapore is likely to continue into 2025, and inflation is expected to moderate to 3% in 2024 and 2.2% in 2025. (2) While the Group believes that this is likely to continue to drive sustainable growth for the Group, it will continue to manage its business operations in both Singapore and China conscientiously and prudently.
The Group will update shareholders on any material developments when they arise.
Sources:
https://www.theedgesingapore.com/news/global-economy/imf-keeps-singapores-2024-gdp-growth-forecast-21-trims-2025-outlook-slightly
https://www.straitstimes.com/business/adb-sees-singapore-growth-accelerating-and-inflation-slowing-in-2024-to-2025