First Quarter Financial Statement And Dividend Announcement for the Period Ended 31 March 2018
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Profit & Loss
Statement of group comprehensive income
Review of Performance
Revenue for the first quarter ended 31 March 2018 (“1Q2018”) was US$72.1 million, a year-on-year (“yoy”) increase of 15.5% compared with the US$62.4 million revenue recorded in 1Q2017. The Group reported a net profit after tax of US$7.1 million for 1Q2018 as compared to US$6.1 million for 1Q2017.
In 1Q2018, sales in the Group’s largest market, Russia, increased by 2.2% to US$30.6 million compared to US$29.9 million mainly due to appreciation of the Russian Ruble against the US dollar in 1Q2018 compared to 1Q2017.
In the Group’s Ukraine market, sales increased by 29.4% from US$4.4 million in 1Q2017 to US$5.7 million in 1Q2018 due to restructuring in the Group’s distributorship and higher sales volume.
In the Group’s Kazakhstan and CIS markets, sales increased by 5.4% from US$9.2 million in 1Q2017 to US$9.7 million in 1Q2018 mainly due to higher sales volume.
In the Group’s Indochina market, sales increased by 78.1% from US$7.0 million in 1Q2017 to US$12.5 million in 1Q2018 due to higher sales volumes and difference in timing of festive season.
Sales in the Group’s Other Markets increased by 14.9% from US$11.8 million in 1Q2017 to US$13.6 million in 1Q2018 mainly due to higher sales contribution from the Group’s non-dairy creamer plant and snacks manufacturing facility in Malaysia.
For 1Q2018, the Group recorded a net profit after tax of US$7.1 million as compared to US$6.1 million in 1Q2017 mainly due to higher sales and margin and absence of loss from our Korean associate, Caffebene, offset by higher expenses for advertising and promotion activities coupled with higher manpower cost, transportation expenses and lower exchange gain.
For 1Q2018, selling and distribution expenses increased by US$2.3 million from US$9.6 million in 1Q2017 to US$11.9 million. The increase was mainly attributed to higher advertising and promotion expenses coupled with higher manpower cost.
For 1Q2018, general and administrative expenses increased by US$0.8 million from US$8.0 million in 1Q2017 to US$8.8 million. The increase was mainly attributed to higher manpower cost and transportation expenses.
For 1Q2018, the Ukrainian Hryvnia strengthened from 28.1 Hryvnia per US dollar on 31 December 2017 to 26.6 Hryvnia per US dollar on 31 March 2018. Over the same period, the Russian Ruble strengthened marginally to 57.3 Ruble per US dollar on 31 March 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
Property, plant and equipment increased from US$64.6 million as at 31 December 2017 to US$65.7 million as at 31 March 2018 mainly due to addition of a new warehouse and equipment for the Group’s instant coffee plant in India coupled with the addition of machinery for the Group’s snack manufacturing facility in Malaysia.
Trade receivables increased from US$39.7 million as at 31 December 2017 to US$44.2 million as at 31 March 2018 mainly due to higher receivables from the Group's Russia markets.
Prepaid operating expenses and other debtors increased from US$5.7 million as at 31 December 2017 to US$7.7 million as at 31 March 2018 mainly due to deposit for the purchase of machineries and material coupled with higher prepaid advertising and promotion and insurance expenses.
Inventories increased from US$47.5 million as at 31 December 2017 to US$49.2 million as at 31 March 2018 due to stock-up of inventories in anticipation of higher sales.
Trade payables and accruals increased US$2.7 million to US$38.0 million as at 31 March 2018 mainly due to higher accruals of staff costs, advertising and promotion and value-added tax (“VAT”) expenses.
The Group’s net operating cash inflow declined from US$5.7 million in 1Q2017 to US$5.0 million in 1Q2018. The Group’s cash and cash equivalents was US$45.2 million as at 31 March 2018, compared to US$42.8 million as at 31 December 2017.
The Group’s net assets as at 31 March 2018 were US$175.6 million. The net asset value per ordinary share (excluding non-controlling interests) as at 31 March 2018 was 32.99 US cents as compared to 31.45 US cents as at 31 December 2017.
The fluctuation of currencies in the Group’s key markets of Russia, 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 capture greater shareholder value by replicating its proven business model to other growth regions of Asia.
Specifically in February 2018, the Group also announced plans to open its second manufacturing facility in Andhra Pradesh, India. This venture, with the support of Enterprise Singapore and the Government of Andhra Pradesh, should provide the Group with further growth prospects upon its due completion.