Financials

Second Quarter and First Half Financial Statement And Dividend Announcement for the Period ended 30 June 2018

Financials Archive

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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 first half ended 30 June 2018 (“1H2018”) was US$141.5 million, a year-on-year (“yoy”) increase of 12.9% compared with the US$125.2 million revenue recorded in 1H2017. The Group’s net profit after tax remained flat at US$9.4 million for 1H2018.

On a quarterly basis, revenue for the second quarter ended 30 June 2018 (“2Q2018”) increased 10.4% from US$62.8 million to US$69.3 million. Profit after tax for the quarter decreased by 29.7% to US$2.3 million.

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

In 1H2018, sales in the Group’s largest market, Russia, increased by 1.6% to US$57.5 million compared to US$56.6 million mainly due to higher sales volume partly offset by lower translated revenue due to the depreciation of the Russian Ruble against the US dollar.

In the Group’s Ukraine market, sales increased by 20.4% from US$9.8 million in 1H2017 to US$11.8 million in 1H2018 due to restructuring in the Group’s distributorship and higher sales volume.

In the Group’s Kazakhstan and CIS markets, sales increased by 9.1% from US$16.9 million in 1H2017 to US$18.4 million in 1H2018 mainly due to higher sales volume.

In the Group’s Indochina market, sales increased by 60.5% from US$16.5 million in 1H2017 to US$26.5 million in 1H2018 due to higher sales volume.

Sales in the Group’s Other Markets increased by 7.0% from US$25.5 million in 1H2017 to US$27.3 million in 1H2018, mainly due to higher sales contribution from the Group’s non-dairy creamer plant and snacks manufacturing facility in Malaysia.

On a quarterly basis, the Group’s revenue in 2Q2018 was US$69.3 million, an increase of 10.4% compared to 2Q2017. Sales in the Group’s Indochina market increased by 47.3% mainly due to higher sales volume.

Profitability

For 1H2018, the Group’s net profit after tax remained flat at US$9.4 million despite recording higher sales and margin. This was mainly due to foreign exchange losses recorded in 1H2018 coupled with higher expenses incurred for advertising and promotion activities and higher manpower cost. For 2Q2018, the Group’s net profit after tax was US$2.3 million compared with net profit after tax of US$3.2 million in 2Q2017 mainly due to foreign exchange losses coupled with higher expenses incurred for advertising and promotion activities.

For 1H2018, selling and distribution expenses increased by US$5.0 million from US$19.3 million in 1H2017 to US$24.3 million. For 2Q2018, selling and distribution expenses increased by US$2.7 million from US$9.7 million in 2Q2017 to US$12.4 million. The increase was mainly attributed to higher advertising and promotion expenses coupled with higher manpower cost.

For 1H2018, general and administrative expenses increased by US$1.3 million from US$17.0 million in 1H2017 to US$18.3 million. For 2Q2018, general and administrative expenses increased by US$0.5 million from US$9.0 million in 2Q2017 to US$9.5 million. The increase was mainly attributed to higher manpower cost.

The Group recorded a foreign exchange loss of US$1.6 million in 1H2018 as compared to a foreign exchange gain of US$1.0 million in 1H2017. For 1H2018, the Ukrainian Hryvnia strengthened from 28.1 Hryvnia per US dollar on 31 December 2017 to 26.2 Hryvnia per US dollar on 30 June 2018. Over the same period, the Russian Ruble weakened to 62.8 Ruble per US dollar on 30 June 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 from US$39.7 million as at 31 December 2017 to US$37.9 million as at 30 June 2018 mainly due to lower receivables from the Group's Kazakhstan and Ukraine markets.

Prepaid operating expenses and other debtors increased from US$5.7 million as at 31 December 2017 to US$7.3 million as at 30 June 2018 mainly due to prepayment for machineries, material, advertising and promotion expenses coupled with a prepayment made for the leasehold land partially offset by lower deposit for machineries by the Group's India operation in relation to the Freeze Dried Project.

Inventories increased from US$47.5 million as at 31 December 2017 to US$55.6 million as at 30 June 2018 due to stock-up of inventories in anticipation of higher sales.

Trade payables and accruals increased US$3.6 million to US$38.9 million as at 30 June 2018 mainly due to higher procurement in anticipation of higher sales and higher accruals for staff costs and advertising and promotion expenses.

The Group’s net operating cash inflow declined from US$12.1 million in 1H2017 to US$7.6 million in 1H2018. The Group’s cash and cash equivalents was US$41.8 million as at 30 June 2018, compared to US$42.8 million as at 31 December 2017.

The Group’s net assets as at 30 June 2018 were US$171.4 million. The net asset value per ordinary share (excluding non-controlling interest) as at 30 June 2018 was 32.21 US cents as compared to 31.45 US cents as at 31 December 2017.

Commentary

The fluctuation of currencies in the Group’s key markets of Russia, Ukraine, Kazakhstan, CIS countries and Malaysia will continue to impact the results of the Group.

For the coming fiscal year, the expansion into new geographical markets outside that of its core markets remains a key focal area for the Group. By building on its successful market diversification efforts in Indochina, the Group seeks to increase long-term shareholder value by replicating its successful business model to other growth regions of Asia.