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THIRD QUARTER & NINE MONTHS FINANCIAL STATEMENTS ANNOUNCEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2017

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STATEMENT OF PROFIT OR LOSS FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2017


STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2017


BALANCE SHEET

REVIEW OF GROUP PERFORMANCE

Revenue

9 months 2017 vs 9 months 2016

For the nine months ended 30 September 2017, the ornamental fish and accessories activities continued to be our core business segments, which together accounted for approximately 86.6% of the total revenue. Our revenue increased by approximately $7.4 million or 12.7% from $58.4 million for the nine months ended 30 September 2016 to $65.8 million for the nine months ended 30 September 2017.

On a geographical basis, revenue from Singapore and overseas grew by approximately 4.9% and 16.1% respectively for the nine months ended 30 September 2017 as compared to its corresponding period in 2016.

3Q 2017 vs 3Q 2016

Our overall revenue increased by approximately $2.8 million or 14.4% in the 3rd quarter of 2017 as compared to its corresponding period in 2016. All business segments registered improvement in revenue contribution during the current quarter.

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. Coupled with the sales generated from our newly incorporated subsidiary in the Hainan Province (China), which deals in the farming of antibiotic-free edible fish, we saw a boost in revenue contribution during the current quarter from this business segment, which was approximately $1.3 million or 17.4% higher than 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. Our subsidiaries in Malaysia, China and Thailand have also managed to continue expanding their distribution network in their countries so as to capture more sales. Accordingly, our accessories business managed to register revenue contribution of $10.4 million in the current quarter, which is approximately $1.3 million or 13.7% higher than its corresponding period in 2016.

Plastics

With the enlarged customer base and the sales of more varieties of plastic products, the revenue contribution from our plastic activities managed to register a steady increase of approximately $0.3 million or 8.9% in the 3rd quarter of 2017 as compared to its corresponding period in 2016.

3Q 2017 vs 2Q 2017

The noticeable growth in revenue from our ornamental fish revenue had resulted in an increase in overall revenue in the current quarter as compared to the previous quarter.

Fish

Traditionally, the 3rd quarter of each year has been a relatively low season for our ornamental fish export business due to the summer holidays in Europe which started in June and extended till early September. Our European customers would mostly take off for their own vacation and would not actively make ornamental fish related purchases during the duration of the holiday season. Nevertheless, there was an increase in revenue contribution from this business segment by approximately $0.8 million or 9.3% quarter-to-quarter, mainly due to sales generated from our newly incorporated subsidiary in the Hainan Province, which deals in the farming of antibioticfree edible fish as mentioned above.

Accessories

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

Plastics

Revenue from plastics activities continued its growth momentum into the 3rd quarter of 2017. Our plastic business segment registered an improvement in revenue of approximately $0.1 million or 4.3% over the previous quarter, mainly due to an enlarged customer base and the sales of more varieties of plastic products as mentioned above.

Profitability

9 months 2017 vs 9 months 2016

In line with the higher overall revenue contribution registered, our operating profit increased by approximately $0.5 million for the nine months ended 30 September 2017 as compared to its corresponding period in 2016, with the considerable improvement in profit generated from our accessories business.

3Q 2017 vs 3Q 2016

As a result of the improvement in revenue contribution, the operating profit generated from all business activities registered positive growth in the 3rd quarter of 2017 as compared to its corresponding period in 2016.

Fish

Despite the initial start-up costs incurred in relation to the Group’s new edible fish business in the Hainan Province, we managed to lift the profitability of the ornamental fish business significantly in the current quarter as a result of the higher revenue registered from both our existing ornamental fish and the new edible fish business, as compared to its corresponding period in 2016.

Accessories

The surge in the operating profit from our accessories activities by approximately $0.2 million or 81.4% in the current quarter as compared to its corresponding period in 2016 was in line with the higher revenue recorded and the better margin yielded from the sales of more proprietary brand of innovative products so as to establish product differentiation which has derived better margins.

Plastics

The increase in operating profit from our plastics activities were in accordance with the steady increase in revenue contribution in the 3rd quarter of 2017, coupled with the difference in sales mix, as compared to the 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.

3Q 2017 vs 2Q 2017

Fish

The soar in profitability from our ornamental fish business in the 3rd quarter of 2017 as compared to the previous quarter was in line with the higher revenue contribution from both the existing ornamental fish and the new edible fish business, as well as the difference in sales mix. In addition, the comparatively lower profitability reported in the 2nd quarter of 2017 was due to the initial start-up costs incurred in relation to the Group’s new edible fish business.

Accessories

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

Plastics

The higher revenue registered by the plastic business in the current quarter, coupled with the difference in sales mix recorded in both periods, had given rise to the improvement in profit contribution from the 2nd quarter to the 3rd quarter of 2017.

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 2017.

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. It is also our intention to excel in the sustainable farming of edible fish for the China consumer market so as to build our new aquaculture business to be many times bigger than our existing businesses, which we expect to contribute positively to our Group’s results in FY 2018. These initiatives will continue to position us favourably as we move ahead to achieve our vision of being the world’s Number one ornamental fish exporting company.