Financial Results

INTERIM FINANCIAL INFORMATION AS AT AND FOR THE HALF YEAR ENDED 30 JUNE 2024

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE HALF YEAR ENDED 30 JUNE 2024

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2024

STATEMENTS OF FINANCIAL POSITION

REVIEW OF GROUP PERFORMANCE

Consolidated Statement of Profit or Loss

Revenue by business segment

6 months ended 30 June 2024 vs 6 months ended 30 June 2023

In the 1^st half of 2024, our fish and accessories activities continued to be the core business segments, which together accounted for 88.7% of the total revenue. The overall revenue registered in the 1^st half of 2024 of $35.1 million was approximately $0.8 million or 2.3% higher than $34.3 million reported in the corresponding period in 2023. The improvements in revenue contribution from both the fish and accessories segments have resulted in an increase in the overall revenue.

On a geographical basis, revenue from Singapore dipped by approximately 4.7% while revenue from overseas grew by 7.0%, in the 1^st half of 2024 as compared to its corresponding period in 2023.

Despite the on-going trade tensions and geopolitical landscape, our revenue contribution from our fish exports has since stabilised in the current financial period. Our aquaculture business, with a wider product range and offerings, saw an increase in customers’ orders. This has also given rise to the improvement in revenue contribution from our fish segment in the current financial period, as compared to its corresponding period in 2023.

We will continue our efforts to 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.

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 and focus on selling more of our proprietary brand of innovative products. 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 $16.7 million in the current quarter, which is approximately $0.5 million or 2.9% higher than its corresponding period in 2023.

Plastics

Our plastics activities registered a flat growth in the current financial period as compared to its corresponding period in 2023. We managed to secure our customer base, focusing on generating revenue through selling products with sustainable margins, such as essential items used to enhance hygiene protocols for the healthcare and waste management sectors, as well as the hospitality segment.

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

Despite the increase in revenue contribution, the selling and distribution expenses stood at approximately $1.3 million in the 1^st half of 2024, comparable to the corresponding period in 2023 as we managed to negotiate for better freight charges, coupled with attaining certain operational efficiencies during the current financial period.

Notwithstanding the broad-spectrum increase in operating costs as a result of elevated inflationary pressure, the overall general and administrative expenses remained relatively stable at approximately $11.9 million in the 1^st half of 2024 as compared to its corresponding period in 2023, as the increases were offset by lower utility costs and favourable exchange rates during the current financial period

The impairment losses on trade receivables were 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 both periods, which was in compliance with SFRS(I) 9 Financial Instruments.

The decrease in net finance costs by $40K or 25.1% in the 1st half of 2024 as compared to the corresponding period in 2023 was mainly due to lower outstanding amounts, as the interest rates charged by the financial institutions stablised during the current financial period.

The tax expense was mainly in relation to the operating profits registered by the profitable entities within the Group.

Despite the utilisation of tax credits, the effective tax rate registered in the 1st half of 2024 was higher than the amount obtained by applying the statutory tax rate of 17% on profit before tax mainly due to losses incurred by some entities which cannot be offset against profits earned by other companies within the Group and the varying statutory tax rates of the different countries in which the Group operates.

Profit before tax by business segment

6 months ended 30 June 2024 vs 6 months ended 30 June 2023

The reduction in operating profit from our accessories activities was mitigated by the considerable growth in profit generated from our fish/aquaculture and plastics activities during the 1^st half of 2024 as compared to its corresponding period in 2023.

Fish

The improvement in profitability from our fish business by $0.4 million or 38.2% in the 1^st half of 2024 as compared to its corresponding period in 2023 was in line with the improvement in revenue contribution, as well as the difference in sales mix recorded in both periods.

Accessories

Notwithstanding an increase in revenue contribution, the operating profit from our accessories business declined noticeably by approximately $0.3 million or 64.5% in the 1^st half of 2024 as compared to the corresponding period in 2023. This was mainly due to our continuous efforts made to capture more sales, which eroded the profit margins of our accessories business in the current financial period.

Plastics

With the higher revenue registered and better margin yielded in the 1^st half of 2024, the profit generated from the plastic activities improved by approximately $0.1 million or 34.7% as compared to its corresponding period in 2023.

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 2024 were $57.3 million, decreased by approximately $1.6 million from $58.9 million as at 31 December 2023.

The reduction was due to –

• decrease in property, plant and equipment by approximately $0.9 million as a result of depreciation charge during the financial period, despite that there was 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 inventory by $0.4 million as a result of the continuous review carried out to streamline our inventory management process so as to better and effectively manage our inventory holding.
• decrease in cash and cash equivalents of approximately $1.2 million mainly utilised for purchases and settlement of trade liabilities and non-trade suppliers, as well as the payment of accrued bonus during the current financial period.

The above decreases were partially offset by the increase in trade and other receivables amounting to approximately $1.0 million due to higher sales registered in the month of June as compared to December when sales were generally affected by the year end festive holidays. Accordingly, trade receivables turnover days increased from 63 days as at 31 December 2023 to 64 days as at 30 June 2024. In addition, there was an increase in advance payment to suppliers for purchases made to be delivered in the coming quarter.

Total liabilities (Group) as at 30 June 2024 were $15.8 million, decreased by approximately $1.4 million from $17.2 million as at 31 December 2023.

The reduction was mainly due to –

• decrease in loans and borrowings by approximately $0.5 million mainly due to repayments made on lease liabilities on a monthly basis during the current financial period.
• decrease in trade payables upon settlement of trade liabilities and accrued operating expenses, as well as the reduction of accrued staff costs as a result of bonus payment made in January 2024, totalling approximately $0.9 million.

Consolidated Statement of Cash Flows

The improvement in net cash from operating activities for the 1^st half of 2024 as compared to its corresponding period in 2023 was mainly due to higher profit registered, coupled with the reduction in inventory held during the current financial period. This was, however, partially offset by the increase in trade receivables balance which was in line with the higher credit sales generated, as well as the prompt settlement of non-trade suppliers.

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 2024.

VARIANCE FROM PROSPECT STATEMENT

There is no variance from the previous prospect statement, included in the full year results announcement for the year ended 31 December 2023, released via the SGXNET on 12 January 2024.

PROSPECTS

Qian Hu envisages that the operating business environment in the 2^nd half of 2024 will remain challenging considering the volatility in the global macroeconomic and geopolitical environments. Notwithstanding, we believe that Qian Hu’s business strategy – with an optimal product mix, its culture of innovation and robust distribution network – is well placed to drive our performance.

While persisting in seizing new growth opportunities, developing new capabilities and enhancing competitiveness, we are always mindful of our core strengths and long-term business sustainability. As part of our culture of resilience, we have also worked hard at strengthening our balance sheet and business fundamentals. Our priority is to generate healthy cash flows from everything that we do while focusing on managing risks. We remain on track to becoming a debt-free company with a higher dividend payout.

(More information on the Group’s plans were announced in detail in our Full Year Results Announcement dated 12 January 2024)

Barring unforeseen circumstances, the Group expects to grow its revenue while achieving profitability in the 2^nd half of 2024.