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INTERIM FINANCIAL INFORMATION AS AT AND FOR THE HALF YEAR ENDED 30 JUNE 2021

Financials Archive

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE HALF YEAR ENDED 30 JUNE 2021


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2021


STATEMENTS OF FINANCIAL POSITION

REVIEW OF GROUP PERFORMANCE

Consolidated Statement of Profit or Loss

Revenue by business segment

6 months 2021 vs 6 months 2020

For the six months ended 30 June 2021, the fish and accessories activities continued to be our core business segments, which together accounted for approximately 90.4% of the total revenue. Our overall revenue registered of $39.7 million for the six months ended 30 June 2021 was approximately $6.5 million or 19.5% higher than that of its corresponding period in 2020.

On a geographical basis, revenue from Singapore and overseas grew by approximately 5.6% and 26.6% respectively in the 1st half of 2021, as compared to its corresponding period in 2020.

Fish

Our fish exports are very dependent on the operations and availability of air cargo, and with the extensive reduction of capacity and flight frequencies during the Covid-19 pandemic since the beginning of FY 2020, our fish export business was severely affected. Similarly, our aquaculture business, revolved around our farms in the Hainan Province in China, was also impacted by the lockdown in China which dampened domestic demand and depressed fish fry prices. As such, our fish revenue dived during the 1st half of 2020.

Following the lifting of border restrictions and the gradual reopening of air traffic in the latter part of 2020, we saw a recuperation of revenue from this business segment with a stable flow of customers’ orders. The resilience in the demand for fish has elevated the revenue registered in the 1st half of 2021, which was approximately $3.5 million or 29.5% higher than its corresponding period in 2020.

Moving ahead, we will look into the expansion and strengthening of the domestic network within each of our export hubs in Singapore, Malaysia, Thailand, Indonesia and China to mitigate the risk of global supply chain disruptions.

Accessories

The Movement Control Order (MCO) experienced in Malaysia since March 2020 and the closure of our China operations for almost one month till mid-February 2020 under a directive by its local government to help limit the spread of Covid-19 infections has resulted in lower accessories revenue registered in the 1st half of 2020.

With the full resumption of operating activities in all business locations, coupled with the increase in revenue from our export business, as we continued to leverage on the Group’s existing distribution bases, network and infrastructure available to explore more untapped markets, our accessories revenue increased substantially by approximately $3.8 million or 22.4% in the 1st half of 2021 as compared to its corresponding period in 2020. The revenue registered in the current half-year period was also higher than the amount reported pre-pandemic.

Plastics

The loss of a major customer since May 2020 has driven down the revenue contribution from the plastics segment since the 2nd half of 2020. We managed to focus on generating revenue through selling products with sustainable margins, such as essential items used to enhance hygiene protocols for the food and beverage packing and healthcare sectors, instead of entering price war with our competitors.

Other income mainly consists of handling income derived from the handling of transhipments in relation to our aquaculture business. The increase in handling income was in tandem with the increase in aquaculture business activities during the current financial period.

The increase in selling and distribution expenses by $94K or 9.1% for the six months ended 30 June 2021 as compared to its corresponding period in 2020 was in line with the increase in business activities and revenue contribution in the 1st half of 2021.

The full resumption of business activities and the higher revenue registered by the Group during the 1st half of 2021 have resulted in a broad-spectrum increase in operating costs as compared to the corresponding period in 2020.

The increase in general and administrative expenses by approximately $2.2 million or 21.7% in the 1st half of 2021 as compared to its corresponding period in 2020 was mainly due to higher personnel expenses as a result of the increase in headcount and annual salary revision, as well as a lower amount of payouts and rebates received from the authorities which provided wage support to employers. The total amount of such grants and credits received during the six months ended 30 June 2021 amounted to approximately $0.3 million (30/6/2020: $0.8 million).

The impairment loss on trade receivables of approximately $0.2 million for the six months ended 30 June 2021 was derived at by ascertaining the amount of expected credit losses that would result from all possible default events over the expected life of these receivables during the period, which was in compliance with SFRS(I) 9 Financial Instruments.

The decrease in net finance costs by $77K or 38.9% for the six months ended 30 June 2021 as compared to the corresponding period in 2020 was mainly due to lower outstanding amounts, as well as lower interest rates charged by financial institutions during the current financial period.

The effective tax rate registered for the 1st half ended 30 June 2021 was lower than the amount obtained by applying the statutory tax rate of 17% on profit before tax mainly due to the utilisation of tax credits.

The Group incurred losses for the half year ended 30 June 2020. The tax expense was in relation to the operating profits registered by the profitable entities.

Profit before tax by business segment

6 months 2021 vs 6 months 2020

The significant increase in profit contribution from our fish segment has fuelled the growth in overall profitability in the 1st half of 2021 as compared to its corresponding period in 2020.

Fish

The significant improvement in revenue registered by the fish business, coupled with higher handling fees derived from the handling of transhipments in relation to our aquaculture business, has lifted the profitability of this segment in the 1st half of 2021 as compared to its corresponding period in 2020

Accessories

Notwithstanding a noticeable increase in revenue contribution, the operating profit from our accessories business increased at a slower pace by approximately $0.1 million or 16.5% in the 1st half of 2021 as compared to the corresponding period in 2020. This was mainly a result of our continuing efforts to capture more sales, which eroded the profit margins of our accessories business in the current financial period.

Plastics

The profitability of our plastic activities dipped by approximately $0.3 million or 38.3% in the 1st half of 2021 as compared to the corresponding period in 2020 was in line with the lower revenue contribution, coupled with the relatively higher raw material prices and a gradual increase in overall operational costs.

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.

Consolidated Statement of Financial Position

Total assets (Group) as at 30 June 2021 were $77.3 million, decreased marginally by $0.5 million from $77.8 million as at 31 December 2020.

The reduction was due to –

  • decrease in property, plant and equipment by $1.1 million as a result of depreciation charge during the financial period, despite there were capital expenditure incurred in relation to the purchase of equipment and ongoing enhancements made to the farm and other facilities in Singapore and overseas, as well as the recognition of additional right-of-use (ROU) assets in accordance with the Singapore Financial Reporting Standards (International) (“SFRS(I)”) 16 Leases.

  • decrease in trade and other receivables by $1.8 million as a result of: -
    • conscientious effort made in the monitoring and collection of trade receivables outstanding during the financial period. Accordingly, our trade receivables turnover days has improved from 64 days in FY 2020 to 54 days as at 30 June 2021.
    • receipt of proceeds arising from the disposal of a subsidiary in the previous years.

The above reduction was partially offset by the increase in cash and cash equivalents of $2.5 million.

Total liabilities (Group) as at 30 June 2021 were $27.2 million, decreased marginally by $0.8 million from $28.0 million as at 31 December 2020.

The reduction was due to –

  • decrease in loans and borrowings by approximately $0.7 million as the increase in lease liabilities resulting from the recognition of additional right-of-use (ROU) assets during the current financial period was offset by the higher amount of repayment on lease liabilities.

  • decrease in current tax payable by approximately $0.1 million upon the settlement of tax liabilities in FY 2021.

Consolidated Statement of Cash Flows

The improvement in net cash from operating activities in the 1st half of 2021 as compared to the corresponding period in 2020 was mainly due to the operating profit registered during the current financial period.

Despite the loss registered for the six months ended 30 June 2020, the net cash from operating activities was mainly a result of the realisation of trade receivables into cash.

Net cash used in investing activities was mainly related to capital expenditure incurred for the purchase of equipment, as well as ongoing enhancements made to the farm and other facilities in Singapore and overseas.

Net cash used in financing activities was for the settlement of lease liabilities, as well as the servicing of interest payments on a monthly basis. In addition, there was payment of dividend made to the shareholders of the Company in April 2021.

VARIANCE FROM PROSPECT STATEMENT

There is no variance from the previous prospect statement released via the SGXNET on 12 January 2021.

PROSPECTS

The business landscape continues to be challenging, requiring us to be continually innovative and agile. We believe that we have the right combination of quality products, an innovative and creative mindset, a strategic roadmap and a strong business network that will drive our performance. (More information on the Group’s expansion plans were announced in detail in our Full Year Financial Statements and Dividend Announcement dated 12 January 2021)

In the 1st half of 2021, the pandemic continued to rage in many parts of the world. With the roll out of vaccines in more countries and key markets this year, the world is slowly seeing some light at the end of the tunnel. There is no immediate solution, and we must continue to be ever ready to adapt to the new normal and prepare for the economic recovery that will surely come.

As we move into the 2nd half of 2021 amidst such a challenging environment, the Group continues to preserve and focus on our core businesses, including our new engine of growth – Aquaculture. Throughout the pandemic, our core businesses have remained resilient, a testament of our enduring strength and versatility, as our strong fundamentals help us to navigate through such turbulent times. Qian Hu will continue its expansion plan as we expect to experience more normalcy moving forward.

Barring unforeseen circumstances, the Group expects its revenue to grow while achieving profitability in the 2nd half of 2021.