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SECOND QUARTER AND HALF YEAR FINANCIAL STATEMENTS ANNOUNCEMENT FOR THE PERIOD ENDED 30 JUNE 2017

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STATEMENT OF PROFIT OR LOSS FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2017


STATEMENT OF COMPREHENSIVE INCOME FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2017


BALANCE SHEET

REVIEW OF GROUP PERFORMANCE

Revenue

6 months 2017 vs 6 months 2016

For the 6 months ended 30 June 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 $4.6 million or 11.9% from $38.7 million for the 6 months ended 30 June 2016 to $43.3 million for the 6 months ended 30 June 2017.

On a geographical basis, revenue from Singapore and overseas grew by approximately 1.6% and 16.2% respectively in the 1st half of 2017 as compared to its corresponding period in 2016.

2Q 2017 vs 2Q 2016

Our overall revenue increased by approximately $2.6 million or 13.7% in the 2nd 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 by approximately $0.6 million or 7.4% 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. Our subsidiaries in Malaysia, China and Thailand have also managed to continue expanding their distribution network in their countries to capture more sales. Coupled with the sales generated from our newly acquired subsidiary in Guangzhou, we saw a leap in revenue contribution in the current quarter from this business segment, which was approximately $1.8 million or 20.8% higher than its corresponding period in 2016.

Plastics

With the enlarged customer base and product mix, our revenue contribution from our plastic activities managed to register a steady increase of approximately $0.2 million or 8.8% in the 2nd quarter of 2017 as compared to its corresponding period in 2016.

2Q 2017 vs 1Q 2017

Although the revenue from our accessories activities registered noticeable growth quarter-onquarter, the slide in our ornamental fish revenue had resulted in a marginal growth in overall revenue in the current quarter as compared to the previous quarter.

Fish

Moving into 2nd quarter of 2017, we saw a reduction in our ornamental fish revenue contribution by approximately $1.1 million or 11.3% as compared to the previous quarter. This is mainly due to the summer holidays in Europe, which started in June and will extend till early September. Our ornamental fish export is affected as it has been the norm that our European customers will mostly take off for their own vacation and do not actively make ornamental fish related purchases during the duration of the holiday season.

Accessories

Traditionally, during the 1st quarter of each year, revenue contribution is lower from our China operations as they are closed for operations during the week-long Chinese New Year holidays. This had attributed to the lower accessories revenue in the previous quarter. In the current quarter, our accessories export business continued its leverage on the Group’s existing overseas distribution bases & network and infrastructure available to explore more untapped markets with growth potential, which had resulted in an increase in revenue contribution registered by this business segment of approximately $1.1 million or 11.6% in the current quarter as compared to the previous quarter.

Plastics

Revenue from plastics business remained consistent in the current quarter, comparable to that of the previous quarter in 2017.

Profitability

6 months 2017 vs 6 months 2016

In line with the higher overall revenue contribution registered, our operating profit increased by $0.2 million for the 6 months ended 30 June 2017 as compared to its corresponding period in 2016, mainly due to the considerable improvement in profit generated from our accessories business.

2Q 2017 vs 2Q 2016

Despite the improvement in profit contribution from our accessories business, the reduction in operating profit generated from the ornamental fish business segment has slashed the growth in profitability registered in the 2nd quarter of 2017 as compared to its corresponding period in 2016.

Fish

Despite higher revenue registered by the ornamental fish business, the reduction in profitability in the 2nd quarter of 2017 as compared to its corresponding period in 2016 was a result of the difference in sales mix. In addition, the initial start-up costs incurred in relation the Group’s new aquaculture business has constituted to the dip in profitability in the current quarter.

Accessories

The surge in the operating profit from our accessories activities by approximately $0.2 million or 93.7% in the current quarter as compared to the previous quarter was in line with the significantly 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 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 in the 2nd quarter of 2017, 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.

2Q 2017 vs 1Q 2017

Fish

The decline in profitability from our ornamental fish business in the 2nd quarter of 2017 as compared to the previous quarter was in line with the lower revenue contribution and the initial start-up costs incurred in relation the Group’s new aquaculture business as mentioned earlier.

Accessories

The better profit yielded from our accessories activities were in accordance with the steady increase in revenue from 1st quarter 2017 to 2nd quarter of 2017 as well as the sales of more proprietary brand of innovative products with better margins.

Plastics

The relatively consistent revenue registered by the plastics business in both quarters gave rise to the comparable profit registered 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 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 largest ornamental fish company.