Financial Results

INTERIM FINANCIAL INFORMATION FOR THE SECOND HALF AND FINANCIAL YEAR ENDED 31 DECEMBER 2024

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SECOND HALF AND FINANCIAL YEAR ENDED 31 DECEMBER 2024

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SECOND HALF AND FINANCIAL YEAR ENDED 31 DECEMBER 2024

STATEMENTS OF FINANCIAL POSITION

REVIEW OF GROUP PERFORMANCE

Consolidated Statement of Profit or Loss

Revenue by business segment

Financial Year 2024 vs Financial Year 2023

For the year ended 31 December 2024 (“FY 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 of $71.4 million in FY 2024 was approximately $1.1 million or 1.6% higher than that reported in FY 2023. Although the revenue from our fish and plastics activities recorded healthy growth, it was partially offset by the reduction in revenue contribution from the accessories segment.

On a geographical basis, revenue from Singapore dipped by approximately 4.5% while revenue from overseas grew by 5.3%, in FY 2024 as compared to FY 2023.

6 months ended 31 December 2024 vs 6 months ended 31 December 2023

Notwithstanding 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

The revenue contribution from our accessories business declined by approximately $1.1 million or 5.9% in the current financial period as compared to its corresponding period in 2023. Despite our conscientious efforts made to focus on selling more of our proprietary brand of innovative products, our revenue from the accessories export activities was affected by the weakening and conservative purchasing sentiments experienced globally. Our customers grew to be more vigilant in their procurement requirements due to trade disruptions, geopolitical tensions and economic uncertainties during the current financial period.

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 year. The reduction was partially mitigated by a one-time compensation income following a land expropriation by the local government in China.

Other expense was related to loss on biological assets (brooder stocks) amounted to approximately $7.4 million, arose from the disposal of a substantial portion of brooder stocks following the Group’s strategic decision to reduce its efforts in the breeding of dragon fish during the previous financial year.

The moderate increase in selling and distribution expenses in the 2^nd half of 2024 and for the financial year ended 31 December 2024 was in line with the gradual increase in revenue contribution during the current financial periods.

Included in the general and administrative expenses in FY 2023 was an allowance for obsolete and slow-moving inventory of approximately $1.5 million arose from an inventory profiling and assessment exercise undertaken by the Group to streamline and optimise its inventory holding.

Excluding the above one-off allowance made for obsolete and slow-moving inventory in FY 2023, the overall general and administrative expenses was approximately $0.5 million or 4.1% and $0.6 million or 2.4% higher in the 2^nd half of 2024 and for the financial year ended 31 December 2024 respectively, as compared to its corresponding periods in 2023. This was mainly due to higher personnel expenses as a result of the increase in overall headcount and annual salary revision, as well as start-up costs incurred by the newly incorporated business units in Malaysia and Indonesia during the current financial periods.

The impairment loss 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 approximately $0.1 million or 56.4% and $0.1 million or 40.1% in the 2^nd half of 2024 and for the financial year ended 31 December 2024 respectively, as compared to the corresponding periods in 2023 was mainly due to lower interest rates charged by the financial institutions, coupled with an increase in finance income during the current financial periods.

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 for the year ended 31 December 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 (Loss) before tax by business segment

Financial Year 2024 vs Financial Year 2023

In tandem with the higher revenue contribution, our overall profitability recovered in FY 2024. The increase in profit contribution from our accessories and plastics segments has fueled the growth in profitability in FY 2024 as compared to FY 2023.

6 months ended 31 December 2024 vs 6 months ended 31 December 2023

Fish

In spite of the higher revenue registered in the 2^nd half of 2024, the noticeable lower handling fees derived from the handling of transhipments in relation to our aquaculture business has sliced off the profitability of this segment by approximately $0.5 million or 43.0% as compared to the corresponding period in 2023.

Accessories

Included in the profitability from the accessories segment was a one-time compensation income of approximately $0.7 million following a land expropriation by the local government in China.

Notwithstanding the dip in revenue contribution from the accessories business, operating profit (excluding compensation income) derived was approximately $0.1 million higher in the current financial period as compared to its corresponding period in 2023. Our on-going effort to review and streamline inventory management processes, coupled with better margins from selling more of our in-house proprietary products, have lifted the profitability of this business segment.

Plastics

Despite the flat growth in revenue registered in the 2^nd half of 2024, profit generated from plastic activities improved as compared to its corresponding period in 2023. It was mainly due to better margins yielded and the difference in sales mix recorded in both periods.

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 lower unallocated corporate expenses registered in the 2^nd half of 2024 as compared to its corresponding period in 2023 was mainly attributed to lower finance costs incurred during the current financial period.

Consolidated Statement of Financial Position

Total assets (Group) as at 31 December 2024 were $58.0 million, decreased by approximately $0.9 million from $58.9 million as at 31 December 2023.

The reduction was mainly due to –

• decrease in inventory by $0.4 million as a result of the continuous review carried out to streamline our inventory management processes so as to better and effectively manage our inventory holding.
• decrease in cash and cash equivalents of approximately $0.9 million mainly utilised for the repayment of bank borrowings and lease liabilities during the current financial year.

The above decreases were partially offset by the increase in trade and other receivables amounting to approximately $0.4 million mainly due to higher credit sales, as well as the increase in advance payment to suppliers for purchases made to be delivered in the coming quarter. Trade receivables turnover days increased marginally from 63 days as at 31 December 2023 to 64 days as at 31 December 2024.

Total liabilities (Group) as at 31 December 2024 were $16.0 million, decreased by approximately $1.2 million from $17.2 million as at 31 December 2023.

The reduction was mainly due to the decrease in loans and borrowings by approximately $1.5 million resulting from the repayment of bank borrowings of $0.5 million, as well as the settlement of lease liabilities on a monthly basis during the current financial year.

The above decrease was partially offset by the increase in purchases from non-trade suppliers amounting to approximately $0.3 million.

Consolidated Statement of Cash Flows

The improvement in net cash from operating activities during the 2^nd half of 2024 and in FY 2024 as compared to its corresponding periods in 2023 was mainly due to higher profit registered, coupled with lower inventory held during the financial periods. In addition, we were able to better manage our cash flow by extending our credit terms with our non-trade suppliers for purchases made.

Net cash used in investing activities was mainly related to capital expenditure incurred in relation to the purchase of motor vehicles and equipment, as well as ongoing enhancements made to the farm and other facilities in Singapore and overseas. In addition, there was partial payment made for a new building acquired in the current financial year.

Net cash used in financing activities was for the settlement of bank loans and lease liabilities, payment of dividend to the non-controlling shareholder of a subsidiary, as well as servicing of the monthly interest payments. 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 released via the SGXNET on 19 July 2024.

PROSPECTS

Qian Hu projects that the challenging global business environment will persist as the Group moves into FY 2025, given the current macroeconomic and geopolitical developments.

The US Federal Reserve has dampened expectations for more rate cuts in 2025 in view of inflation risks as US trade tariffs with various countries increase with intensity under the Trump administration. The ongoing US-China trade tensions are expected to escalate and continue to put a damper on China’s economic performance and consumer spending despite efforts to stimulate domestic economy. The outlook on Europe’s economy is equally hazy given its domestic and external challenges. Despite headwinds, ASEAN remains a global growth driver with resilient domestic demands buoyed by sectors such as tourism, manufacturing, information technology, communications and financial services.

Notwithstanding, we believe that Qian Hu’s business strategy – with an optimal product mix, its culture of innovation and robust distribution network – is well positioned to forge ahead.

• Ornamental Fish business
  We remain optimistic that the Group’s ornamental fish exports will extend its growth trajectory for both its basic and premium categories given the strength of the US economy.
  
  The rising demand for bio-secure fish augurs well for our Recirculating Aquaculture system (RAS). In addition, we have expanded on our use of the land-based Aqua-Ring Technology (ART) system which facilitates intensive farming in Singapore.
  
  The ART is an environmentally friendly and energy-efficient integrated system with zero waste discharge and enhances biosecurity by minimizing the risk of spreading diseases. As the use of the ART expanded with promising results, we intend to continue to focus on the breeding and farming of certain essential ornamental fish species, such as guppies and goldfish, using this revolutionary technology.
  
  Moving forward, we will fortify our supply chain management and continue to invest in research and development.
• Aquaculture business
  In FY 2024, the Group’s aquaculture segment has been exporting more of the highly popular Marble Goby from our Hainan farm to Singapore and Malaysia.
  
  Our newly incorporated aquaculture farm in Malaysia, which focuses on cultivating Marble Goby, has commenced operations in the 2^nd half of 2024 and will be able to ramp up the supply of Marble Goby to meet the growing demand in the region. This new farm in Malaysia will also look to expand its edible seafood offerings in the near future.
  
  We are also exploring a collaboration with a Guangzhou-based company which specializes in laboratory diagnostics services, water conditioning and medication to help farmers improve water quality and yields in Malaysia.
• Aquarium and Pet Accessories business
  The rising demand for pet foods, medications and accessories for dogs, cats and small animals is fueling the Group’s expansion in this segment. While our main markets in Singapore, Malaysia and Thailand remains relatively stable, we are in the midst of developing more diverse markets in the regional countries, such as Indonesia.
  
  Towards the end of FY 2024, Qian Hu has teamed up with N&E Innovations Pte Ltd, a Singaporebased deep technology company with an established patented antimicrobial resistance (“AMR”) technology – a biodegradable, food-based solution derived from fruit waste which is approved for human consumption. In the coming year, we plan to launch an AMR-based pet product line comprising of cat litter, wet wipes, anti-odour sprays and other related products containing these sustainable ingredients.
• Plastics business
  With its stable operations in Singapore, our plastics business segment is looking to expand its operations into Malaysia and venture into new products variety, such as biodegradable plastics products.

OUTLOOK

While unrelentless in pursuing new growth opportunities and capabilities, we remain steadfast in enhancing our competitiveness and agility, as well as focusing on our core strengths and long-term business sustainability.

We have completed our cloud based “One Qian Hu” digital platform in FY 2024 as we successfully rolled out to all of our subsidiaries in the region which enable us to automate all processes on a single platform across the Group. Going forward, Qian Hu will continue to explore how better we can incorporate artificial intelligence (AI) into our operations and how it can enhance efficiency and effectiveness.

Backed by the Group’s culture of resilience, we have been diligent in the strengthening of our balance sheet and business fundamentals. Throughout the years, Qian Hu’s priority has been to generate healthy cash flow while managing evolving risks. Meanwhile, we will also lookout for suitable investment opportunities while reducing bank borrowings when appropriate.

Barring any unforeseen circumstances, the Group expects FY 2025 to be a profitable year despite external challenges.