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THIRD QUARTER & NINE MONTHS FINANCIAL STATEMENTS ANNOUNCEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2018

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STATEMENT OF PROFIT OR LOSS FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2018


STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2018


BALANCE SHEET

REVIEW OF GROUP PERFORMANCE

Revenue

9 months 2018 vs 9 months 2017

For the nine months ended 30 September 2018, the fish and accessories activities continued to be our core business segments, which together accounted for approximately 86.7% of the total revenue. Our overall revenue registered of $65.0 million for the nine months ended 30 September 2018 was approximately $0.8 million or 1.2% lower than that of its corresponding period in 2017.

On a geographical basis, revenue from Singapore grew marginally by 1.7% while revenue from overseas dipped by approximately 2.3% for the nine months ended 30 September 2018 as compared to its corresponding period in 2017.

3Q 2018 vs 3Q 2017

Despite marginally higher revenue contribution from our plastics business, our overall revenue decreased by $1.0 million or 4.7% in the 3rd quarter of 2018 as compared to its corresponding period in 2017 mainly due to the reduction in revenue registered by both the fish and accessories segments during the current quarter.

Fish

With the sales generated from our newly incorporated subsidiaries in the Hainan Province (China), which deal in the farming of antibiotic-free edible fish, as well as our continuous 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, it has given rise to the positive growth in our fish revenue contribution. The improvement, however, was offset by the following factors, hence, resulting in a reduction in the revenue from this business segment by approximately $0.4 million or 4.0% in the current quarter as compared to its corresponding period in 2017 :-

  1. The FIFA World Cup football tournament held in June to July this year has affected the export of our ornamental fish to many countries over the world as it has been the norm that customers do not actively make ornamental fish related purchases during the duration of the tournament; and
  2. The intense price competition from the sales of Dragon Fish since the beginning of the year has resulted in a continuous decline in its selling price, albeit our concerted marketing efforts to sell more quantity of these fish. This has, to some extent, affected the overall fish revenue contribution in current quarter as compared to its corresponding period in 2017.
Accessories

Over the past years, 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 3rd quarter of 2018, we saw a dip in revenue contribution from our accessories business by approximately $0.7 million or 7.0%. 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 purchasing sentiments experienced globally. Our customers grew to be more vigilant in their procurement requirements citing the volatility of the trading currencies and sentiments were further compounded by the unpredictability on the outcome of the on-going trade war during the current quarter.

Plastics

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

3Q 2018 vs 2Q 2018

Our revenue decreased by approximately $0.5 million or 2.3% from $21.9 million in the 2nd quarter of 2018 to $21.4 million in the 3rd quarter of 2018 as both our core business segments – fish and accessories – registered reduction in revenue contribution during the current quarter as compared to the previous quarter.

Fish

Moving into 3rd quarter of 2018, despite the sales generated from our newly incorporated subsidiaries in the Hainan Province (China), we saw a reduction in our fish revenue contribution by approximately $0.3 million or 3.9% as compared to the previous quarter. This was mainly due to the summer holidays in Europe, which started in June and extended 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.

In addition, the continuous decline in the selling price of the Dragon Fish as mentioned above had, to some extent, affected the overall fish revenue contribution in the current quarter.

Accessories

Revenue from our accessories business shrunk by approximately $0.3 million or 3.5% in the current quarter as compared to the previous quarter. The reduction was mainly due to lower revenue contribution registered by the accessories export activities as a result of the weakening purchasing sentiments experienced globally. Our customers grew to be more vigilant in their procurement requirements citing the volatility of the trading currencies and sentiments were further compounded by the unpredictability on the outcome of the on-going trade war during the current quarter.

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 6.2% in the 3rd quarter of 2018 as compared to the previous quarter.

Profitability

9 months 2018 vs 9 months 2017

Notwithstanding the lower revenue contribution, our operating profit increased by approximately $0.2 million or 27.1% for the nine months ended 30 September 2018 as compared to its corresponding period in 2017, mainly due to the improvement in profit generated from our core business segments.

3Q 2018 vs 3Q 2017

Fish

Despite a reduction in revenue contribution, as well as the initial start-up costs incurred in relation to the Group’s second aquaculture farm in the Hainan Province, the growth in profitability registered by our fish business in the 3rd quarter of 2018 as compared to its corresponding period in 2017 was a result of the difference in sales mix, coupled with the reliance and resilience of our ornamental fish export business, which continued to generate respectable profit margins.

Accessories

Despite the lower revenue contribution, the better profit yielded from our accessories activities in the 3rd quarter of 2018 as compared to its corresponding period in 2017 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 profitability in the 3rd 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.

3Q 2018 vs 2Q 2018

Fish

As mentioned above, notwithstanding the lower revenue contribution registered by our fish business in the 3rd quarter of 2018, the difference in sales mix, coupled with the reliance and resilience of our ornamental fish export business, which continued to generate respectable profit margins, has lifted the profitability of the fish business during the current quarter as compared to its previous quarter.

Accessories

The decrease in profitability from our accessories business in the current quarter as compared to the previous quarter was in line with the lower revenue contribution.

Plastics

With the higher revenue registered in the current quarter, the profitability of the plastics business increased gradually 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 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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