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First Quarter Financial Statement Announcement

BackApr 29, 2002

The Board of Directors of Qian Hu Corporation Limited is pleased to announce the results of the Group and of the Company for the three months ended 31 March 2002.
These figures have not been audited.

- -
Group
Company
-- --
S$'000
%
S$'000
%
- -
31/3/02
31/03/01
Change
31/3/02
31/3/01
Change
1.(a) Turnover
12,528
9,381
33.6%
10,313
7,805
32.1%
1.(b) Investment income
0
0
0
0
0
0
1.(c) Other income including interest income
1
2
(50.0%)
0
2
(100.0%)
2.(a) Operating profit before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
1,776
1,016
74.8%
1,430
1,067
34.0%
2.(b)(i) Interest on borrowings
(27)
(17)
58.8%
(25)
(13)
92.3%
2.(b)(ii) Depreciation and amortisation
(344)
(270)
27.4%
(208)
(194)
7.2%
2.(b)(iii) Foreign exchange gain/(loss)
1
32
(96.9%)
0
11
(100.0%)
2.(c) Exceptional items
0
0
0
0
0
0
2.(d) Operating profit before income tax, minority interests and extraordinary items but after interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
1,406
761
84.8%
1,197
871
37.4%
2.(e) Income derived from associated companies
5
5
0%
0
0
0
2.(f) Less income tax
(380)
(215)
76.7%
(280)
(180)
55.6%
2.(g)(i) Operating profit after tax before deducting minority interests
1,031
551
87.1%
917
691
32.7%
2.(g)(ii) Less minority interests
13
50
(74.0%)
0
0
0
2.(h) Operating profit after tax attributable to members of the company
1,044
601
73.7%
917
691
32.7%
2.(i)(i) Extraordinary items
0
0
0
0
0
0
2.(i)(ii) Less minority interests
0
0
0
0
0
0
2.(i)(iii) Extraordinary items attributable to members of the company
0
0
0
0
0
0
2.(i)(iv) Transfer to/from Exchange Reserve
0
0
0
0
0
0
2.(i)(v) Transfer to Capital Reserve
0
0
0
0
0
0
2.(i)(vi) Transfer to Reserve Fund
0
0
0
0
0
0
2.(j) Operating profit after tax and extraordinary items attributable to members of the company
1,044
601
73.7%
917
691
32.7%



Group Figures
31/3/02
31/03/01
3.(a) Earnings per share based on 2(h) above after deducting any provision for preference dividends:-
.
.
3.(a)(i) Based on existing issued share capital
1.24 cents
0.73 cents
3.(a)(ii) On a fully diluted basis
1.23 cents
0.72 cents
3.(b) Earnings per share based on 2(j) above:-
(i) Based on existing issued share capital
1.24 cents
0.73 cemts
(ii) On a fully diluted basis
1.23 cents
0.72 cents
3.(c) Net tangible asset backing per ordinary share
19.64 cents
16.84 cents




4.(a) Amount of any adjustment for under or overprovision of tax in respect of prior years

       

    NIL


4.(b) Amount of any pre-acquisition profits

    NIL



4.(c) Amount of profits on any sale of investments and/or properties


     

    Sale of investments/properties
    $Profit/(Loss)
    NIL



















4.(d) Any other comments relating to Paragraph 4

       

    NIL

5.(a) Review of the performance of the company and its principal subsidiaries

       



(i) BUSINESS SEGMENTS (The Group)

31/3/2002
Fish
$'000
Accessories
$'000
Others
$'000
Eliminations
$'000
Total
$'000
TURNOVER
External sales
5,478
5,545
1,505
-
12,528
Inter-segment sales
260
1,503
261
(2,024)
-
Total sales
5,738
7,048
1,766
(2,024)
12,528
RESULTS
Segment results
702
1,001
55
(39)
1,719
Unallocated expenses
(286)
1,433
Financial expenses - net
(27)
Share of profit of associated company
5
Taxation
(380)
Minority interests
13
Net profit for the period
1,044
ASSETS & LIABILITIES
Assets
11,225
11,798
5,258
-
28,281
Investment in associated company
320
Unallocated assets
113
Total assets
28,714
Liabilities
2,587
3,198
1,554
-
7,339
Unallocated liabilities
3,088
Total liabilities
10,427
OTHER INFORMATION
Capital expenditure
511
137
104
-
752
Depreciation and amortisation
142
119
83
-
344
Other non-cash expenses (income)
50
-
-
-
50


 

31/3/2001
Fish
$'000
Accessories
$'000
Others
$'000
Eliminations
$'000
Total
$'000
TURNOVER
External sales
4,355
3,659
1,367
-
9,381
Inter-segment sales
116
889
51
(1,056)
-
Total sales
4,471
4,548
1,418
(1,056)
9,381
RESULTS
Segment results
473
353
106
(52)
880
Unallocated expenses
(102)
778
Financial expenses - net
(17)
Share of profit of associated company
5
Taxation
(215)
Minority interest
50
Net profit for the period
601
ASSETS & LIABILITIES
Assets
10,324
7,612
4,216
-
22,152
Investment in associated company
329
Unallocated assets
1,002
Total assets
23,483
Liabilities
2,895
2,774
1,521
-
7,190
Unallocated liabilities
1,843
Total liabilities
9,033
OTHER INFORMATION
Capital expenditure
64
54
98
-
216
Depreciation and amortisation
116
102
52
-
270
Other non-cash expenses (income)
-
-
-
-
-



(ii) GEOGRAPHICAL SEGMENTS (The Group)

Turnover
Turnover
Assets
Assets
Capital expenditure
Capital expenditure
31/3/2002
$'000
31/3/2001
$'000
31/3/2002
$'000
31/3/2001
$'000
31/3/2002
$'000
31/3/2001
$'000
Singapore
7,261
5,514
21,679
17,613
259
113
Overseas
5,267
3,867
7,035
5,870
493
103
Total
12,528
9,381
28,714
23,483
752
216



COMMENTARY

Turnover

1st Quarter 2002 vs
1st Quarter 2001
1 Qtr 2002
$'000
1 Qtr 2001
$'000
Increased
$'000
%
Fish
5,478
4,355
1,123
25.8
Accessories
5,545
3,659
1,886
51.5
Plastic & others
1,505
1,367
138
10.1
12,528
9,381
3,147

For the period ended 31 March 2002, our ornamental fish activities and distribution of accessories continued to be our core activities, which together accounted for 88% of our total turnover. Geographically, our Singapore market continued to be our main market accounting for 58% of our total turnover for the period ended 31 March 2002.

Our turnover increased by $3.1 million or 33.6% from $9.4 million for the period ended 31 March 2001 to $12.5 million for the period ended 31 March 2002. All activities registered growth in turnover. Turnover for ornamental fish, accessories, and plastics and other business increased by $1.1 million or 25.8%, $1.9 million or 51.5% and $0.1 million or 10.1%, respectively in the 1st quarter of FY 2002 as compared to its corresponding period in FY 2001.

The increase in the turnover of ornamental fish is due to increase in sales of ornamental fish to the local fish retailers and to visitors patronizing our in-house retail outlet. One of our subsidiaries in Thailand, which commenced its operations in January 2002, has contributed to the turnover ornamental fish in FY 2002.

In addition, with effect from FY 2002, the Taiwanese government has allowed the import of licensed Dragon Fish. Since January 2002, we have started export Dragon Fish to Taiwan to take advantage of the change in regulation. The sales of Dragon Fish to Taiwan accounted for approximately 35% of the increase in sales of ornamental fish.

Our Malaysia & Thailand subsidiaries has contributed approximately 60% of the increase in turnover of accessories as a result of market share gained from these countries towards the end of FY 2001. In the domestic market, we continue to expand and penetrate our distribution network to more local retailers and supermarkets, which has also resulted in the increase in sales of our accessories products.

Following the shift into our new factory location in May 2001, with the increase in production capacity and capabilities, our turnover for plastic and others experienced growth by focusing on more high-value items and expanding our distribution channel to outside Singapore.

On a geographical basis, turnover from Singapore grew 31.7% mainly as a result of improved sales to local fish retailers and sales generated from our in-house retail outlet. Turnover from overseas grew by 36.2% for the 3 months ended 31 March 2002 compared to the corresponding period in FY 2001. Our constant effort in expanding into overseas' untapped markets contributed to the increased in overseas turnover.


Operating profit before taxation

1st Quarter 2002 vs
1st Quarter 2001
1 Qtr 2002
$'000
1 Qtr 2001
$'000
Increased/
(Decreased)
$'000
%
Fish
699
471
228
48.4
Accessories
1,001
348
653
187.6
Plastic & others
56
109
(53)
(48.6)
Unallocated corporate expenses
(345)
(162)
183
113.0
1,411
766
645

Our operating profit increased by $0.6 million or 84.2% to $1.4 million for the quarter ended 31 March 2002 as compared to $0.8 million for the quarter ended 31 March 2001. Profit after taxation increased by 73.7% from $0.6 million for the 3 months ended 31 March 2001 to approximately $1.05 million for the 3 months ended 31 March 2002.

Although the sales of ornamental fish yielded consistent gross profit margin during the first quarter of FY 2002 as compared to its corresponding period in FY 2001, our operating profit from ornamental fish registered growth in FY 2002 as a result of the surge in sales volume. As our operating expenses remained relatively stable, the increase in sales has resulted in improve in profitability.

During the first quarter of FY 2001, our accessories activities experienced low profit as a result of high purchase costs and operating losses due mainly to set-up and restructuring costs incurred by our Thailand subsidiary (dealing with accessories) which could only resumed operations in May 2001 due to regulatory compliances.

In the first quarter of FY 2002, with a higher sales volume and better gross profit margin achieved, we managed to grow our operating profit from the accessories business as compared to the corresponding period in FY 2001. In addition, our Thailand subsidiary has managed to be operationally profitable by the end of FY 2001.

Despite the increase in turnover, our plastics and other business recorded a dip in profitability. This was as a result of higher operating costs experienced following the shift to our new factory location, coupled with losses incurred by one of our subsidiaries in PRC.

Unallocated corporate expenses relate to staff costs and administrative expenses incurred in relation to the overseeing of the Group's operations both locally and overseas. The increase was in line with additional headcount and corporate expenses.


5.(b) A statement by the Directors of the Company on whether "any item or event of a material

    or unusual nature which would have affected materially the results of operations of the
    Group and Company has occurred between the date to which the report refers and the
    date on which the report is issued". If none, to include a negative statement.

       

In the opinion of the Directors, no item, transaction or event of a material or unusual nature has arisen since the period under review to the date of this report which would materially effect the results of the Group and of the Company for the 3 months ended 31 March 2002.

6. Commentary on current year prospects

       

In FY 2002, while the Group's core business will continue to grow healthily at our home base in Singapore due to the growing domestic market, we expect the bulk of our growth to be from our overseas operations such as our newly formed subsidiary in Thailand, Thai Qian Hu, and our new fish division in Malaysia.

We expect to sustain the growth rate in our subsidiary in Malaysia, Guan Guan, during the current year, especially with the contributions from the newly set up fish division from March 2002.

One of our subsidiaries in Thailand, Qian Hu Marketing, suffered losses in first half of FY 2001 mainly due to restructuring costs incurred, managed to be operationally profitable at the end of FY 2001. With the newly formed Thai Qian Hu, we believe the turnover from our Thailand entities should increase and remain profitable in FY 2002.

We intend to increase our investment in our Guangzhou-based associate company, Wan Jiang, a joint venture with a Taiwanese company specializing in the manufacture of accessories, by raising the stake from 50% to 60%. We are currently in the process of undertaking the necessary filings with the relevant regulatory authorities in the PRC. Upon receiving the requisite PRC approval, Wan Jiang will then become a subsidiary of the Group, which will enable us to recognise its turnover and increase our profit share to be included in the Group's consolidated financial performance.

We have also entered into a joint venture agreement to set up a joint venture company in Taiwan, under the name of Jin Jien Hsing Enterprise Co., Ltd ("Jin Jien Hsing"). Its principal activities relate to the distribution of pet food and accessories. The registered capital and total investment amount of Jin Jien Hsing is NT$1 million, which we have subscribed to 50% of the registered capital.

In addition, with effect from 1 January 2002, the Taiwanese government has finally allowed the import of licensed Dragon Fish. Since January 2002, we have started export Dragon Fish to Taiwan to take advantage of the change in regulation.

As we do not expect to carry further restructuring and start-up costs of our overseas subsidiaries in FY 2002, we expect positive contributions from our Group's overseas operations in Malaysia, Thailand and China. Accordingly, we envisage our Group's turnover and profit will continue to increase in FY 2002.

     

7. Dividend

    (a) Any dividend declared for the present financial period? None
    (b) Any dividend declared for the previous corresponding period? None


(c) Date payable

      Not Applicable




(d) Books closing date

      Not Applicable




(e) Any other comments relating to Paragraph 7

      NIL

8. Details of any changes in the company's issued share capital


      During the 1st quarter of FY 2002, 365,000 share options were exercised pursuant to the terms of the Qian Hu Pre-IPO Share Option Scheme. There was no share options granted during the period to subscribe for unissued ordinary shares.

      As at 31 March 2002, there were 2,203,000 unexercised share options issued pursuant to the terms of the Qian Hu Pre-IPO Share Option Scheme at the exercise price of $0.24 per share.

      In addition, in March 2002, the Company issued 8,312,700 ordinary shares of $0.10 each pursuant to a bonus issue on the basis of 1 bonus share for every 10 existing ordinary shares of $0.10 each held on book closure date through the capitalization of the share premium account. The bonus shares rank pari passu in all respects with the existing shares of the Company, except that they are not entitled to any dividend declared in respect of the financial year ended 31 December 2001.

9. Comparative figures of the group's borrowings and debt securities

(a) Amount repayable in one year or less, or on demand

      As at 31/03/2002
      As at 31/12/2001
      Secured
      Unsecured
      Secured
      Unsecured
      1,384,601
      NIL
      1,000,181
      NIL



(b) Amount repayable after one year

      As at 31/03/2002
      As at 31/12/2001
      Secured
      Unsecured
      Secured
      Unsecured
      843,093
      NIL
      881,747
      NIL



(c) Any other comments relating to Paragraph 9

      NIL

10. Balance sheet

Group
Group
Company
Company
31/3/2002
$
31/3/2001
$
31/3/2002
$
31/3/2001
$
Share capital and reserves
Share capital
9,143,970
8,276,200
9,143,970
8,276,200
Reserves
9,093,387
6,158,847
7,601,657
5,318,283
18,237,357
14,435,047
16,745,627
13,594,483
Minority interest
50,027
14,683
-
-
18,287,384
14,449,730
16,745,627
13,594,483
Fixed assets
8,186,261
6,840,639
5,272,951
5,152,312
Subsidiaries
-
-
2,450,844
2,188,706
Associates
319,542
328,521
327,931
327,931
Quoted equity investments
3,993
-
-
-
Trademarks/customer acquisition cost, product listing fees
57,424
218,308
51,710
218,308
Land use rights
224,619
278,097
-
-
Advance for investment
28,722
28,722
28,722
28,722
Current assets
Stocks
6,679,463
5,227,767
3,631,331
2,836,793
Trade debtors
9,258,893
7,101,372
6,734,494
5,110,709
Other debtors, deposits and prepayments
708,720
644,967
291,706
281,221
Due from
- subsidiaries (trade)
-
-
2,827,405
1,878,168
- subsidiaries (non-trade)
-
-
922,414
131,398
- holding company (non-trade)
550
-
550
-
- associates (trade)
900,725
-
900,725
-
- associates (non-trade)
712,873
104,992
712,873
104,992
Fixed deposits
97,839
374,783
21,393
268,926
Cash and bank balances
1,534,398
2,335,035
781,799
1,585,983
19,893,461
15,788,916
16,824,690
12,198,190
Current liabilities
Trade creditors
3,025,321
3,589,916
2,044,981
2,248,629
Bills payable to bank, secured
1,102,864
1,029,641
1,102,864
1,029,641
Other creditors and accruals
2,411,023
1,741,684
1,806,904
1,201,573
Due to
- subsidiaries (trade)
-
-
69,259
15,171
- directors (non-trade)
2,309
316,109
-
-
Hire purchase creditors,
current portion
246,459
174,155
90,796
80,764
Term loan, current portion
200,000
200,000
200,000
200,000
Provision for taxation
1,381,487
1,122,377
1,042,233
958,775
Bank overdrafts, secured
938,142
-
938,142
-
9,307,605
8,173,882
7,295,179
5,734,553
Net current assets
10,585,856
7,615,034
9,529,511
6,463,637
Non-current liabilities
Hire purchase creditors, non-current portion
(489,478)
(233,114)
(338,427)
(168,114)
Term loan, non-current portion
(353,615)
(545,019)
(353,615)
(545,019)
Deferred taxation
(275,940)
(81,458)
(224,000)
(72,000)
18,287,384
14,449,730
16,745,627
13,594,483



Statement of Changes in Equity (The Group)

Share
Capital
$
Share premium
$
Revenue reserve
$
Translation reserve
$
Total
$
Balance 1 Jan 2001
8,275,000
2,081,887
3,361,160
25,546
13,743,593
Currency translation differences
-
-
-
87,275
87,275
Net profit for the period
-
-
601,299
-
601,299
Issue of new shares
1,200
1,680
-
-
2,880
Balance at 31 Mar 2001
8,276,200
2,083,567
3,962,459
112,821
14,435,047
Currency translation differences
-
-
-
9,008
9,008
Net profit for the period
-
-
1,124,896
-
1,124,896
Payment of final dividends
-
-
(312,426)
-
(312,426)
Balance at 30 Jun 2001
8,276,200
2,083,567
4,774,929
121,829
15,256,525
Currency translation differences
-
-
-
(41,603)
(41,603)
Net profit for the period
-
-
497,302
-
497,302
Balance at 30 Sept 2001
8,276,200
2,083,567
5,272,231
80,226
15,712,224
Currency translation differences
-
-
-
124,944
124,944
Net profit for the period
-
-
1,334,872
-
1,334,872
Balance at 31 Dec 2001
8,276,200
2,083,567
6,607,103
205,170
17,172,040
Currency translation differences
-
-
-
(65,870)
(65,870)
Net profit for the period
-
-
1,043,587
-
1,043,587
Issue of new shares
36,500
51,100
-
-
87,600
Capitalisation of share premium for bonus shares
831,270
(831,270)
-
-
-
Balance at 31 Mar 2002
9,143,970
1,303,397
7,650,690
139,300
18,237,357


11. Consolidated Cash Flow Statement

1/1/2002 to 31/3/2002
$
1/1/2001 to 31/3/2001
$
Cash flows from operating activities
Profit before taxation and minority interest
1,410,665
766,482
Adjustments for:
Depreciation of fixed assets
296,463
223,596
Amortisation of land use rights
2,689
2,250
Amortisation of trademarks/customer acquisition costs, product listing fees
45,142
43,708
Provision for doubtful debts (trade)
50,000
-
Share of profit of associated companies
4,593
4,900
Interest expense
27,402
16,984
Interest income
(635)
-
Net effect of exchange differences
(44,136)
28,180
Operating profit before working capital changes
1,792,183
1,086,100
(Increase) decrease in:
Stocks
(34,374)
(426,510)
Trade debtors
(503,381)
(889,711)
Other debtors, deposits and prepayments
128,628
237,949
Due from
- holding company (non-trade)
(550)
-
- associates (trade)
(484,806)
-
- associates (non-trade)
(155,736)
(104,992)
Increase (decrease) in:
Trade creditors
(527,228)
285,810
Bills payable to bank, secured
(50,135)
125,954
Other creditors and accruals
(80,682)
(191,428)
Due to directors (non-trade)
-
(176,485)
Cash generated from (used in) operations
83,919
(53,313)
Income tax paid
(11,690)
(124,914)
Interest paid
(27,402)
(16,984)
Interest received
635
-
Net cash generated from (used in) operating activities
45,462
(195,211)
Cash flows from investing activities
Purchase of fixed assets
(636,360)
(177,132)
Advance for investment
-
(28,722)
Payment for trademarks/customer acquisition cost, product listing fees
(4,894)
(10,100)
Net cash used in investing activities
(641,254)
(215,954)
Cash flows from financing activities
Repayment of hire purchase creditors
(82,841)
(62,871)
Repayment of term loan
(49,998)
(49,998)
Proceeds from issue of new shares
87,600
2,880
Net used in financing activities
(45,239)
(109,989)
Net decrease in cash and cash equivalents
(641,031)
(521,154)
Cash and cash equivalents at beginning of period
1,335,126
3,230,972
Cash and cash equivalents at end of period
694,095
2,709,818
Cash and cash equivalents comprises :
Fixed deposits
97,839
374,783
Cash and bank balances
1,534,398
2,335,035
Bank overdrafts
(938,142)
-
694,095
2,709,818



12. Contingent Liability


As at 31 March 2002, the Group and the Company has no contingent liability.




BY ORDER OF THE BOARD

Kenny Yap Kim Lee
Executive Chairman and Managing Director
29/04/2002