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Financials

Unaudited Second Half Year And Full Year Financial Statements For The Year Ended 31 May 2021

Financials Archive

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Profit and Loss

Consolidated Statement of Comprehensive Income

A statement of financial position

Review of Performance

Income Statement

FY2021 vs FY2020

Revenue

For the financial year ended 31 May 2021 (“FY21”), the Group’s revenue increased by 10.9% year-on-year to S$119.0 million, up from S$107.3 million in the financial year ended 31 May 2020 ("FY20"). The increase was mainly attributed to higher revenue contribution from (i) higher utilisation of warehouse space; (ii) increase in trucking volume, and (iii) higher revenue from ready-mix concrete plant.

Cost of sales

Cost of sales increased by 5.7% from S$85.4 million in FY20 to S$90.3 million in FY21, in tandem with the increase in revenue.

Gross profit

Gross profit increased by 31.4% from S$21.8 million in FY20 to S$28.7 million in FY21. The Group's gross margin increased from 20.4% in FY20 to 24.1% in FY21, mainly due to better utilisation of warehouse space and Singapore government support schemes.

Other income

Other income increased by 136.9% from S$3.1 million in FY20 to S$7.3 million in FY21. The increase was due to gain on disposal of subsidiaries amounting to S$2.5 million and government support schemes in FY21.

Marketing and distribution costs

Marketing and distribution expenses increased by 57.5% from S$0.2 million in FY20 to S$0.3 million in FY21. The increase was due to higher expenses incurred on marketing from Wuzhou Xing Jian.

Administrative expenses

Administration expenses increased by 22.2% from S$13.0 million in FY20 to S$15.8 million in FY21. The increase was due to increase in staff expenses, impairment loss on goodwill, allowance for expected credit loss and depreciation expenses compared to FY20.

Finance costs

Finance costs decreased by 16.8% from S$3.4 million in FY20 to S$2.8 million in FY21. The decrease was due to the reduction of interest on lease liabilities.

Other credit

Other credit of S$233,000 in FY21 was mainly due to net foreign exchange gain.

Share of results of associates

The share of loss from associates increased mainly due to the start-up costs of Cenxi Haoyi Recycling Co., Ltd in China.

Tax expenses

In FY20, some of the subsidiaries were in loss making position resulting in higher effective tax rate of 42.7%. In FY21, those subsidiaries has turned profitable and hence, reducing the effective tax rate to 30.8%.

Profit attributable to owners of the Company

As a result of the above, the Group recorded a net profit attributable to owners of the Company of S$11.5 million in FY21 as compared to S$4.7 million in FY20. The improvement in the result in profit was due to higher revenue contributed from Wuzhou Xing Jian, better utilisation of the warehouses, gain on disposal of subsidiaries and government support schemes.

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 FY2021 vs 2H FY2020

Revenue

The Group's revenue grew 12.7% to S$58.9 million for the 2nd half year ended 31 May 2021 ("2H FY21") from S$52.3 million for the 2nd half year ended 31 May 2020 ("2H FY20"). The increase was mainly attributed to higher revenue contribution from (i) higher utilisation of warehouse space; and (ii) higher revenue from ready-mix concrete plant.

Cost of sales

Cost of sales increased by 10.0% from S$40.7 million in 2H FY20 to S$44.8 million in 2H FY21, in tandem with the increase in revenue.

Gross profit

The Group's gross profit increased by 22.1% from S$11.6 million in 2H FY20 to S$14.2 million in 2H FY21 which was mainly due to higher revenue contributed from Wuzhou Xing Jian. The gross margin increased from 22.2% in 2H FY20 to 24.0% in 2H FY21. The increase was due better utilisation of the warehouses and Singapore government support schemes.

Other income

Other income increased by 144.9% from S$1.7 million from 2H FY20 to S$4.1 million in 2H FY21. The increase was mainly due to gain on disposal of subsidiaries.

Marketing and distribution costs

Marketing and distribution expenses increased by 52.8% from S$106,000 in 2H FY20 to S$162,000 in 2H FY21. The increase was due to higher marketing expenses for Wuzhou Xing Jian.

Administrative expenses

Administrative expenses increased by 44.1% from S$6.5 million in 2H FY20 to S$9.3 million in 2H FY21. The increase was due increase in staff expenses, impairment loss on goodwill, allowance for expected credit loss and depreciation expenses compared to 2H FY20.

Finance costs

Finance costs decreased from S$2.0 million in 2H FY20 to S$1.3 million in 2H FY21. The decrease was due to the reduction of interest on lease liabilities.

Other expenses

Other expenses incurred in 2H FY21 and 2H FY20, mainly due to net foreign exchange gain.

Share of results of associates

The share of loss from associates in 2H FY21 was mainly due to the start-up costs of Cenxi Haoyi Recycling Co., Ltd in China.

Tax expenses

In 2H FY20, some of the subsidiaries were in loss making position resulting in higher effective tax rate of 39.2%. In 2H FY21, those subsidiaries has turned profitable and hence, reducing the effective tax rate to 31.4%.

Profit attributable to owners of the Company

As a result of the above, the Group recorded a net profit attributable to owners of the Company of S$5.0 million in 2H FY21 as compared to S$2.9 million in 2H FY20. The improvement in profit was due to higher revenue contributed from Wuzhou Xing Jian, better utilisation of the warehouses, gain on disposal of subsidiaries and government support schemes.

Other comprehensive income

Other comprehensive income mainly comprises change in fair value of cash flow hedges and foreign currency translation of subsidiaries and associates.

Statement of Financial Position

Non-current assets decreased from S$136.7 million as at 31 May 2020 to S$130.4 million as at 31 May 2021. This decrease was mainly due to disposal of Van Der Horst Logistics Limited and its subsidiary, and depreciation of property, plant and equipment. It is partially offset by the acquisition of property, plant and equipment and additional capital contribution into an associate, Cenxi Haoyi Recycling Co., Ltd.

Current assets increased by S$21.6 million or 36.0% from S$60.0 million as at 31 May 2020 to S$81.7 million as at 31 May 2021. This was mainly due to the increase in trade and other receivables from Wuzhou Xing Jian by S$8.0 million and increase in cash and cash equivalents from S$23.1 million as at 31 May 2020 to S$30.9 million as at 31 May 2021.

Non-current liabilities increased by S$9.4 million or 13.2% from S$71.6 million as at 31 May 2020 to S$81.1 million as at 31 May 2021. The increase mainly arose from lease liabilities due to rental renewal of a property by approximately S$13.0 million and is offset by the repayment of borrowings.

Current liabilities decreased by S$0.9 million or 2.0% from S$43.5 million as at 31 May 2020 to S$42.6 million as at 31 May 2021. The decrease was mainly due to reduction in trade and other payables, fair value of derivative liabilities and repayment of principal portion of lease liabilities.

Total equity increased from S$81.6 million as at 31 May 2020 to S$88.4 million as at 31 May 2021 due to profit in FY21.

Statement of Cash Flows

FY2021 vs FY2020

The Group's net cash generated from operating activities in FY21 was S$25.2 million. It comprised positive operating cash flows before changes in working capital of S$34.9 million, adjusted by a decrease in net working capital flow of S$5.1 million, interest received and income tax paid of S$30,000 and S$4.6 million, respectively.

Net cash generated from investing activities was S$0.8 million in FY21. This was mainly due to the net cash inflow from disposal of subsidiaries of $5.6 million and proceeds from disposal of financial assets at fair value through profit or loss of S$0.3 million. This was partially offset with the capital contribution into investment in associate and purchase of property, plant and equipment.

Net cash used in financing activities was S$17.0 million in FY21. This was mainly due to the payment of principal portion of lease liabilities of S$9.5 million, purchase of treasury shares of S$0.5 million, repayment of loans, and interest expenses which was offset by proceeds from bank borrowings of S$6.6 million.

2H FY2021 vs 2H FY2020

The Group’s net cash generated from operating activities for 2H FY21 was S$14.1 million. This comprised positive operating cash flows before changes in working capital of S$15.8 million, adjusted by an increase in net working capital flow of S$0.5 million, interest received and income tax paid of S$16,000 and S$2.2 million, respectively.

Net cash generated from investing activities was S$4.3 million in 2H FY21. This was mainly due to the net cash inflow from disposal of subsidiaries of $5.6 million and was offset with the capital contribution into investment in associate and purchase of property, plant and equipment.

Net cash used in financing activities was S$12.4 million in 2H FY21 was mainly due to the repayment of loans, lease liabilities, interest paid and the acquisition of non-controlling interests.

Commentary

The Group continues to record optimal utilisation at better rental rates as demand for one-stop inventory management spurs growth in its warehousing and logistics segment. While the Group has successfully renewed its lease with cost savings for its 30 Pioneer Road warehouse cum office property in Singapore commencing 15 April 2021 for another five years, it will continue to seek viable opportunities to broaden its warehousing and logistics capabilities.

On 30 April 2021, Marquis Services Pte Ltd (“Marquis”) became the Group’s wholly-owned subsidiary following the acquisition of the remaining 30% stake in Marquis which it did not own. Marquis specialises in specialty chemicals storage and inventory management of chemical products and flammable materials, as well as industrial coating blending services and marine support services. The Group will continue to strengthen its dangerous cargo storage capabilities (Class 2, 3, 4, 5.1, 6.1, 8 and 9) to tap on the growing vibrancy in the specialty chemicals and electronics industries in Singapore.

On 31 May 2021, the Group completed the disposal of its 65% stake in Van Der Horst Logistics Limited and its subsidiary, which holds a warehouse property in Shanghai, China upon receipt of 50% of the sale consideration. The Company will update shareholders when the Deferred Consideration has been received.

The Group’s strategic investment in infrastructural materials and services in China is expected to remain positive as urbanisation projects in the cities where the Group operates, continue to drive demand for ready-mix concrete (“RMC”). The construction of the wholly-owned RMC manufacturing facility in Cenxi City (“Cenxi Xing Jian”) with an installed production capacity of 400,000m3 per annum was recently completed in July 2021 and it has since commenced trial production. The Group expects gradual positive contributions from the new establishments, Cenxi Xing Jian, and its associated company, Cenxi Haoyi Recycling Co., Ltd, which focuses on construction waste materials recycling in Cenxi City, China.

In early 2021, the Group has diversified to include the agri-tech business specifically indoor cultivation of vegetables in Singapore. The Group also expects contribution of this strategic business to progress gradually.