Financials

Half Year Results Financial Statement And Related Announcement


Financials Archive

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Income Statement

Balance Sheet

Review of Performance

Income Statement

In the six months financial period ended 30 September 2018 ("HY2019"), the Group registered a turnover of S$88.4 million. This represents an increase of S$48.4 million as compared to S$40.0 million for the comparative six months financial period ended 30 September 2017 ("HY2018"). The increase is mainly due to the increase in shareholdings in Jubilee Industries Holdings Ltd ("Jubilee"). This resulted in Jubilee being accounted for as a subsidiary of the Company with effect from 29 June 2017 rather than an associated company. This accounting treatment is a result of converting the convertible loan outstanding to shares in Jubilee. Gross profit for HY2019 increased by S$4.1 million compared to HY2018 of S$3.3 million.

Other income was S$0.1 million for HY2019 as compared to S$0.8 million in HY2018. The decrease of S$0.7 million in HY2019 was largely due to loss on currency translation as compared to a gain on currency translation in HY2018.

Operating expenses rose from S$7.2 million in HY2018 to S$7.8 million in HY2019. Marketing and distribution expenses increased by 225% from S$0.3 million in HY2018 to S$0.8 million in HY2019. Administration expenses increased by 136% from S$2.5 million in HY2018 to S$5.9 million in HY2019. This is due to staff cost incurred with Jubilee being a subsidiary corporation of the Company. Finance costs increased from S$0.3 million in HY2018 to S$0.6 million in HY2019 and this is in line with the increase of other financial liabilities. Other charges declined from S$4.1 million in HY2018 to S$0.5 million in HY2019 mainly due to remeasurement loss arising from consolidation of Jubilee amounting to S$3.7 million in HY2018.

Balance Sheet

Non-current assets increased by 15% from S$29.8 million as at 31 March 2018 to S$34.4 million as at 30 September 2018. The increase is mainly due to the goodwill arising from Jubilee's acquisition of HonFoong Plastics Industries Pte. Ltd ("HFPL").

Current assets as at 30 September 2018 comprise of inventories, trade and other receivables, other assets, financial assets, at fair value through profit and loss, financial assets, at fair value through other comprehensive income, and cash and cash equivalents. Total current assets amounted to S$63.0 million as at 30 September 2018 as compared to S$59.9 million as at 31 March 2018. The increase of S$3.1 million is mainly attributable to the increase in inventories which is aligned to the increase in cost of sales.

Current liabilities as at 30 September 2018 comprise of income tax payable, trade and other payables and other financial liabilities. Total current liabilities amounted to S$38.5 million as at 30 September 2018 as compared to S$35.7 million as at 31 March 2018. The increase of S$2.8 million is mainly due to an increase in trade and other payables and other financial liabilites of S$1.2 million and S$1.6 respectively. Trade and other payables increased in line with the increase in inventories and other financial liabilities increased due to the loans incurred from Jubilee's acquisition of HFPL.

Non-current liabilities comprise deferred tax liabilities, convertible loan and other financial liabilities. Total non-current liabilities increased slightly from S$5.1 million as at 31 March 2018 to S$5.3 million as at 30 September 2018 due to accrual of interest for the convertible loan.

The Group's working capital increased slightly from S$24.3 million as at 31 March 2018 to S$24.5 million as at 30 September 2018.

Cash Flow Statement

Net cash flow generated from operating activities for HY2019 was S$0.3 million, comprising operating profit before working capital changes of S$2.1 million and working capital outflow of S$1.8 million. The working capital outflow was mainly due to the increase in inventories and other assets, and the decrease of trade and other payables of S$2.2 million, S$0.1 million and S$3.7 million respectively. This is offset by the decrease in trade and other receivables of S$4.2 million. Net cash used in investing activities for HY2019 of S$0.4 million was mainly due investment in an associated company, EG Industries Sdn Bhd, and acquisition of property, plant and equipment of S$0.3 million and S$0.3 million respectively. This is offset by the acquisition of HFPL by Jubilee of a net cash inflow of S$0.2 million. Cash provided from financing activities was due to uplift of restricted cash of S$1.4 million offset by repayment of short term deposits and interest paid of S$0.6 million and S$0.2 million respectively. The Group recorded a net increase in cash and cash equivalents of S$0.5 million during HY2019.

Commentary

The Group noted that the operating environment would be challenging going forward given the current trade war situation. The Group will work and devote its resources to seek new opportunities in new business segments. The Group will remain vigilant on cost, credit and cash management in response to the volatile operating environment as it carries out its expansion strategies.

The Company announced on 23 January 2018 on the proposed acquisition of Refresh Laser Clinic Lot1 Pte. Ltd., Refresh Laser Clinic Tampines Pte. Ltd. (later renamed to Refresh Laser Clinic SPC Pte. Ltd in the Circular dated 2 August 2018), Refresh Laser Clinic Tpy Pte. Ltd., and Refresh Laser Clinic Bedok Pte. Ltd. for a purchase consideration of S$4 million. This purchase consideration would be paid by the Company by way of cash amounting S$2 million and an allotment and issuance of new ordinary shares in the capital of the Company for the residual S$2 million, amounting to 250,000,000 shares at an issue price of S$0.008 each. With the increasing social acceptance in the Aesthetic Medical Services sector, it should bring in long-term growth for the Company. The Company intends to expand the Aesthetic Medical Services sector via its subsidiary's crowdfunding platform to reach out to potential investors, and this is in line with its expansion strategies. This acquisition was completed and announced on 1 October 2018.

In line with the Company's intention to expand its Corporate Accretion Services, the Company had on 13 April 2018 entered into a non-binding memorandum of understanding with Liaoning Meal Plus Technology Ltd. ("Liaoning Meal Plus") for a proposed acquisition of the latter. Liaoning Meal Plus is in the primary business of developing software and machinery for the food and beverage industry. With such technology, it enables the Company to leverage on the existing capabilities of the Liaoning Meal Plus, its technology and network. There is also a synergy between the Company and the Liaonong Meal Plus as both parties work together indirectly in the provision of equipment and software to other entities within the same industry.

Jubilee had followed course on the expansion strategy of the Group. This is evidenced through its acquisition of HFPL, which was announced on 12 December 2017, where a Sales and Purchased Agreement was signed. The acquisition was for a 70% shareholding in HFPL for a consideration of S$3.5 million where S$1.0 million would be paid in cash and the remaining S$2.5 million through issuance of Jubilee shares. This acquisition was completed on 31 July 2018.