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Financial Results

SECOND QUARTER AND HALF YEAR FINANCIAL STATEMENTS ANNOUNCEMENT FOR THE PERIOD ENDED 30 JUNE 2018

Financials Archive

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STATEMENT OF PROFIT OR LOSS FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2018


STATEMENT OF COMPREHENSIVE INCOME FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2018


STATEMENTS OF FINANCIAL POSITION

REVIEW OF GROUP PERFORMANCE

Revenue

6 months 2018 vs 6 months 2017

For the six months ended 30 June 2018, the ornamental fish and accessories activities continued to be our core business segments, which together accounted for approximately 87.3% of the total revenue. Our overall revenue registered of $43.6 million for the six months ended 30 June 2018 was approximately $0.3 million or 0.6% higher than that of its corresponding period in 2017.

On a geographical basis, revenue from Singapore grew by approximately 2.7% in the 1st half of 2018, while revenue from overseas remained relatively consistent, as compared to its corresponding period in 2017.

2Q 2018 vs 2Q 2017

Although the revenue from our ornamental fish activities registered growth in the 2nd quarter of 2018 as compared to its corresponding period in 2017, the reduction in our accessories revenue has sliced off the increase in overall revenue in the current quarter as compared to its corresponding period in 2017.

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 an increase in revenue contribution during the current quarter from this business segment, which was approximately $0.8 million or 9.2% higher than its corresponding period in 2017.

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.

During the 2nd quarter of 2018, we saw a dip in revenue contribution from our accessories business by approximately $0.5 million or 4.8% as we experienced the loss of sales due to the announcement made on 16 May 2018 in relation to the abolishment of the implementation of Goods and Services Tax (GST) in Malaysia with effect from 1 June 2018. This has affected the sentiment of the retailers in Malaysia during the month of May, with a majority of our customers deferring buying until on or after 1 June. Nonetheless, the sales orders rebounded in June 2018 following the aftermath of the abolishment of the GST.

Plastics

Revenue from our plastic business remained relatively consistent in the current quarter, comparable to that of the corresponding period in 2017.

2Q 2018 vs 1Q 2018

Although the revenue from our ornamental fish activities registered a reduction of $0.5 million or 5.3% quarter-on-quarter, the increase in our accessories and plastics revenue by approximately $0.5 million and $0.3 million respectively has resulted in an increase in overall revenue by approximately $0.3 million or 1.6% in the current quarter as compared to the previous quarter.

Fish

Moving into 2nd quarter of 2018, despite the sales generated from our newly incorporated subsidiary in the Hainan Province (China), we saw a reduction in our ornamental fish revenue contribution by $0.5 million or 5.3% 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 was 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. This year, the FIFA World Cup football tournament, which was held in June and July, also constituted to the lower ornamental fish purchases made by customers from many countries over the world.

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. This had resulted in an increase in revenue contribution registered by this business segment of approximately $0.5 million or 5.6% in the current quarter as compared to the previous quarter.

The above increase was partially offset by the loss in sales due to the timing of the announcement on the abolishment of the implementation of GST in Malaysia as mentioned earlier.

Plastics

With the enlarged customer base and product mix, our revenue contribution from our plastic activities managed to register a steady increase of approximately $0.3 million or 11.7% in the 2nd quarter of 2018 as compared to the previous quarter.

Profitability

6 months 2018 vs 6 months 2017

In line with the higher revenue contribution registered, our overall operating profit increased by approximately $0.2 million or 66.8% for the six months ended 30 June 2018 as compared to its corresponding period in 2017, mainly due to the considerable improvement in profit margins generated from our core businesses.

2Q 2018 vs 2Q 2017

Fish

The surge in the operating profit from our ornamental fish business in the current quarter as compared to its corresponding period in 2017 was in line with the higher revenue recorded and the better margin yielded from the sales of our self-bred Dragon Fish and our ornamental fish export business, notwithstanding the initial start-up costs incurred in relation the Group’s second aquaculture farm in the Hainan Province.

Accessories

Despite the lower revenue contribution in the 2nd quarter of 2018, the better profit yielded from our accessories activities in the current quarter was 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 consistent revenue registered by the plastic activities, coupled with the gradual increase in overall operational costs has affected its probability in the 2nd: quarter of 2018, as compared to its corresponding period in 2017.

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.

2Q 2018 vs 1Q 2018

Fish

The flat growth in profitability despite a reduction in revenue registered by the ornamental fish business in the 2nd quarter of 2018 as compared to its previous quarter was a result of the difference in sales mix, coupled with the reliance and resilience of our ornamental fish export business, which continued to turn in stable revenue and generate respectable profit margins.

Accessories

The better profit yielded from our accessories activities were in accordance with the steady increase in revenue from 1st quarter 2018 to 2nd quarter of 2018 as well as the sales of more proprietary brand of innovative products with better margins.

Plastics

Notwithstanding the higher revenue registered by the plastic business in the current quarter, the profitability of the plastics business was affected by the gradual increase in overall operational costs 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 Ornamental Fish of the highest value;
  3. - to establish our “Ocean Free” and “OF” brands as the most recognisable amongst 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 visions of the Group were announced in detail in our Full Year Financial Statements and Dividend Announcement dated 12 January 2018.

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 consumer market so as to build our new aquaculture business to be many times bigger than our existing businesses. Barring unforeseen circumstances, the Group will continue to grow its revenue and be profitable in the current financial year.


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