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FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

Financials Archive

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STATEMENT OF PROFIT OR LOSS FOR THE FOURTH QUARTER AND FINANCIAL YEAR ENDED 31 DECEMBER 2017


STATEMENT OF COMPREHENSIVE INCOME FOR THE FOURTH QUARTER AND FINANCIAL YEAR ENDED 31 DECEMBER 2017


STATEMENTS OF FINANCIAL POSITION

REVIEW OF GROUP PERFORMANCE

Revenue

Financial year 2017 vs financial year 2016

For the year ended 31 December 2017, the ornamental fish and accessories activities continued to be our core business segments, which together accounted for approximately 86.7% of the total revenue. Our revenue increased by approximately $7.3 million or 9.1% from $80.5 million registered in FY 2016 to $87.8 million in FY 2017. All business segments registered improvement in revenue contribution during the current financial year.

On a geographical basis, revenue from Singapore and overseas grew by approximately 4.0% and 11.3% respectively in FY 2017 as compared to FY 2016.

4Q 2017 vs 4Q 2016

Although the revenue from our ornamental fish activities registered growth of approximately $0.7 million or 9.2% in the 4th quarter of 2017 as compared to its corresponding period in 2016, the reduction in our accessories revenue has resulted in a marginal decrease in our overall revenue in the current quarter as compared to its corresponding period in 2016.

Fish

Our Dragon Fish sales continue to grow in tandem with the other ornamental fish revenue in the current quarter. We have since strived to gradually increase our export of ornamental fish by diversifying to more customers and more countries around the world from our export hubs in Singapore, Malaysia, Thailand and Indonesia, which have given rise to the improved ornamental fish revenue by approximately $0.7 million or 9.2% in the current quarter as compared to its corresponding period in 2016.

Accessories

With our accessories business being more export-oriented, we managed to leverage on our Group’s existing overseas distribution bases & network and the infrastructure available to explore more untapped markets with growth potential.

During the 4th quarter of 2017, we saw a dip in revenue contribution from our accessories business by approximately $0.8 million or 6.7% as we experience the loss of sales resulting from the delay in the shipment of products to certain overseas customers due to the change in import regulations of those countries (such as Indonesia). These orders will only be delivered in FY 2018 after the fulfilment of the new requirements. In addition, there was a one-off increase in sales from a major customer following the acquisition of a new subsidiary in Guangzhou in the 4th quarter of 2016, which has lifted the revenue contribution registered for this business segment in that quarter.

Plastics

Revenue from our plastics business remained relatively consistent in the current quarter, comparable to that of the corresponding period in 2016.

4Q 2017 vs 3Q 2017

Although our accessories activities registered stable revenue in the 4th quarter of 2017 as compared to its previous quarter, the reduction in our ornamental fish and plastic revenue has resulted in a decrease in overall revenue by approximately $0.5 million or 2.0% from approximately $22.5 million in 3rd quarter 2017 to $22.0 million in the 4th quarter of 2017.

Fish

During the 3rd quarter of 2017, our ornamental fish revenue included sales generated from our newly-incorporated subsidiary in Hainan Province, China, which farms antibiotic-free edible fish. As the first phase of the operations (involving the growing of edible fish fries to marketable fingerlings) took a period of 6 months (from March to September 2017), the sales derived from this business activity in 4th quarter of 2017 was marginal, resulting in a dip in revenue contribution in the current quarter as compared to the previous quarter.

Nonetheless, the above reduction was partially mitigated by the increase in revenue contribution from the ornamental fish export business as the demand from our European customers, who would mostly take off for their own vacation during the summer holidays, picked up during the current quarter.

Accessories

Revenue from accessories business remained relatively consistent in the current quarter, comparable to that of the previous quarter.

Plastics

Revenue from our plastics activities registered a decrease of $0.2 million or 6.2% in the 4 th quarter of 2017 as compared to the previous quarter as its revenue contribution was escalated by a one-off increase in orders from a major customer in the 3rd quarter of 2017.

Profitability

Financial year 2017 vs financial year 2016

In line with the higher overall revenue contribution registered, our operating profit increased by approximately $0.8 million in FY 2017 as compared to FY 2016, with the considerable improvement in profit generated from our core business segments.

4Q 2017 vs 4Q 2016

As a result of the improvement in overall revenue contribution, the operating profit generated from all business activities registered positive growth in the 4th quarter of 2017 as compared to its corresponding period in 2016.

Fish

The higher revenue contribution from our ornamental fish business registered in the 4th quarter of 2017, coupled with the difference in sales mix, and the reliance and resilient of our ornamental fish export business, has continued to generate respectable profit margins during the current quarter as compared to its corresponding period in 2016.

Accessories

Despite the lower revenue contribution in the 4th quarter of 2017, the better profit yielded from our accessories activities in the current quarter was primarily due to our conscientious efforts made to capture more markets through the selling of more proprietary brand of innovative products with better margins.

In addition, during the 4th quarter of 2016, there were initial costs incurred in aligning the business activities of the newly acquired subsidiary in Guangzhou into the operation framework of the Group, which has affected the profitability of this business segment in FY 2016.

Plastics

The increase in operating profit from our plastics activities despite the reduction in revenue contribution in the 4th quarter of 2017 was mainly due to improved profit margins as a result of the favourable raw material prices as compared to its corresponding period in 2016.

Unallocated corporate expenses

These were staff costs and corporate/administrative expenses incurred in relation to the overseeing of both the Group’s local and overseas operations. The increase in corporate expenses during the current quarter, as compared to its corresponding period in 2016, was mainly due to expenses incurred in relation to a brand building exercise conducted by the Group to realign and refresh our brand strategies, with the aim to improve on our product offerings in order to better cater for our customers’ needs.

4Q 2017 vs 3Q 2017

Fish

The decline in profitability from our ornamental fish business in 4th quarter of 2017 as compared to the previous quarter was in line with the lower revenue contribution mainly from our edible fish business due to reasons as mentioned earlier. In addition, the fixed operating costs incurred in relation to the Group’s aquaculture business during the current quarter despite its low sales, has constituted to the dip in profitability.

Accessories

The better profit yielded from our accessories activities were in accordance with the stable increase in revenue from 3rd quarter 2017 to 4th quarter of 2017 as well as the sales of more proprietary brand of innovative products with better margins.

Plastics

The relatively lower revenue registered by the plastic business in the current quarter, coupled with the difference in sales mix recorded in both quarters has given rise to the decline in its profitability quarter-on-quarter.

VARIANCE FROM PROSPECT STATEMENT

There is no variance from the previous prospect statement.

PROSPECTS

The vision objectives of our Group are:
  1. - to be the world’s Number 1 ornamental fish exporter;
  2. - to breed Dragon Fish of the highest value;
  3. - to establish our “Ocean Free” and “OF” brands as the most recognisable among aquarium accessories brands in Asia;
  4. - to be an innovative technology company; and
  5. - to produce antibiotic-free, sustainable edible fish for the benefit of our consumers and the environment.
The above-mentioned objectives of the Group were announced in detail in our Full Year Financial Statements and Dividend Announcement dated 12 January 2018.

The business landscape continues to be challenging, requiring us to be continually innovative, nimble and agile. Over the years, we have shown ourselves to be resilient, sparing no effort to transform ourselves so as to stay ahead of the competition and to strengthen our business fundamentals. We will continue to focus on innovation to expand our pipeline of compelling products particularly in the areas of filtration, fish nutrition and genetic breeding of unique Dragon Fish, as well as the sustainable farming of edible fish/seafood for the China consumer market. These initiatives will continue to position us favourably as we move ahead to achieve our vision of being the world’s largest ornamental fish company.