Financials

Full Year Financial Statement And Dividend Announcement For The Period Ended 31 December 2018

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Profit & Loss

Income Statement Income Statement

Statement of group comprehensive income

Income Statement Income Statement

Balance Sheet

Income Statement Income Statement

Review of Performance

Revenue for the financial year ended 31 December 2018 ("FY2018") was US$284.3 million, a year-on year ("yoy") increase of 5.5% compared with the US$269.5 million revenue recorded in FY2017. The Group's net profit after tax increased 33.3% to US$17.7 million for FY2018 as compared to US$13.3 million in FY2017.

On a quarterly basis, revenue for the fourth quarter ended 31 December 2018 ("4Q2018") decreased 5.6% from US$74.1 million to US$70.0 million. Net profit after tax for the quarter was US$2.6 million as compared to a net loss after tax of US$3.3 million for 4Q2017.

Revenue by Markets (US$'000)

Revenue by Markets (US$'000) Revenue by Markets (US$'000)

In FY2018, sales in the Group's largest market, Russia, increased by volume but revenue decreased by 2.9% to US$113.3 million as compared to US$116.7 million in FY2017 due to further depreciation of the Russian Ruble against the US dollar. In the Group's Ukraine market, sales increased by 17.6% from US$21.8 million in FY2017 to US$25.7 million in FY2018 due to restructuring in the Group's distributorship and higher sales volume. In the Group's Kazakhstan and CIS markets, sales increased by 5.8% from US$35.1 million in FY2017 to US$37.1 million in FY2018 mainly due to higher sales volume. In the Group's Indochina market, sales increased by 32.9% from US$37.9 million in FY2017 to US$50.4 million in FY2018 due to higher sales volume.

On a quarterly basis, the Group's revenue in 4Q2018 was US$70.0 million, a decrease of 5.6% compared to 4Q2017. Sales in the Group's Kazakhstan and CIS markets decreased by 19.2% mainly due to lower translated revenue in view of the depreciation of the Kazakhstan Tenge against the US dollar. Sales in the Group's Russia market decreased by 6.4% from US$29.0 million in 4Q2017 to US$27.1 million in 4Q2018 due to depreciation of the Russian Ruble against the US dollar.

Profitability

For FY2018, the Group's net profit after tax increased by 33.3% to US$17.7 million mainly due to higher sales and margin coupled with the absence of impairment of investment, loan and share of losses by its Korean associate, Caffebene, partly offset by higher advertising and promotion expenses, manpower cost, foreign exchange losses and higher allowance for doubtful debts.

For 4Q2018, the Group's net profit after tax was US$2.6 million as compared to a net loss after tax of US$3.3 million for 4Q2017. This was mainly due to the absence of impairment of investment, loan and share of higher losses by its Korean associate, Caffebene partly offset by lower sales and margin coupled with higher allowance for doubtful debts and foreign exchange losses.

For FY2018, selling and distribution expenses increased by US$8.3 million from US$39.5 million in FY2017 to US$47.8 million. The increase was attributed to higher advertising and promotion expenses and manpower costs. For 4Q2018, selling and distribution expenses remain relatively stable at US$11.5 million.

For FY2018, general and administrative expenses increased by US$6.7 million from US$34.7 million in FY2017 to US$41.4 million. For 4Q2018, general and administrative expenses increased by US$4.2 million from US$9.2 million in 4Q2017 to US$13.4 million. The increase was mainly attributed to higher allowance for doubtful debts, higher manpower and transportation costs.

The Group recorded a foreign exchange loss of US$3.5 million in FY2018 as compared to a foreign exchange gain of US$1.1 million in FY2017. For FY2018, the Ukrainian Hryvnia strengthened from 28.1 Hryvnia per US dollar on 31 December 2017 to 27.7 Hryvnia per US dollar on 31 December 2018. Over the same period, the Russian Ruble weakened to 69.5 Ruble per US dollar on 31 December 2018, compared with 57.6 Ruble per US dollar on 31 December 2017. As the Group is economically exposed to both markets, it was affected by the revaluation of its outstanding trade receivables denominated in currencies other than the US dollar.

Balance Sheet & Cashflow

Trade receivables decreased US$7.1 million to US$32.6 million as at 31 December 2018 mainly due to lower receivables from the Group's Malaysia Klang, Kazakhstan and Ukraine operations coupled with higher allowance for doubtful debts.

Trade payables and accruals decreased US$5.6 million to US$29.7 million as at 31 December 2018 mainly due to lower procurement.

Property, plant and equipment increased US$4.3 million to US$68.9 million as at 31 December 2018 mainly due to the Group's subsidiary, Indus Coffee's expansion of its manufacturing facility in India.

The Group's net operating cash inflow position decreased, with a net operating cash flow of US$15.7 million in FY2018 compared to US$29.8 million in FY2017 mainly due to higher working capital requirements. The Group's cash and cash equivalents was US$42.2 million as at 31 December 2018, compared to US$42.8 million as at 31 December 2017.

The Group's net assets as at 31 December 2018 were US$175.5 million. The net asset value per ordinary share (excluding non-controlling interests) as at 31 December 2018 was 33.00 US cents as compared to 31.45 US cents as at 31 December 2017.

Commentary

Global macroeconomic uncertainties and heightened trade tensions have resulted in currency fluctuations in the Group's key markets of Russia, Ukraine, Kazakhstan and CIS countries. Accordingly, these have impacted the Group's financial results although performance in local currency terms remains strong. We expect to see continued growth across our core markets.

For the upcoming period, the Group will continue to focus on strengthening its presence in core markets as well as to develop new products and markets with the objective of generating sustainable future growth through diversification. The Group is also working on the construction of its second India coffee plant to ensure it meets the delivery milestones.