Financial Statements And Related Announcement - Third Quarter Results
Unaudited Third Quarter Financial Statements Announcement
Consolidated Statement Of Comprehensive Income For The Third Quarter And Nine Months Ended 30 September 2017
Review Of Performance
STATEMENTS OF FINANCIAL POSITION
Comparing 30 September 2017 with 31 December 2016 figures:
- The decrease in property, plant and equipment was due mainly to depreciation in 9M 2017.
- The decrease in investment properties was due to disposal of a strata industrial unit in 2Q 2017 and reclassification of 4 strata industrial units to assets held for sale in 3Q 2017 which are expected to be disposed in 4Q 2017. These strata units are held at 63 Hillview Avenue, Lam Soon Industrial Building.
- The decrease in other investments was due to repayment of shareholder's loan of $5.2 million from Carros Project Management Pte Ltd ("CPM").
- The decrease in inventories was due mainly to lower inventory level maintained by the recycling business as a result of relocation of recycling plant and warehouse took place in 2Q 2017.
- The decrease in trade and other receivables was due mainly to lower receivables in construction business after completion of the construction project at 60 Jalan Lam Huat during 9M 2017.
- The increase in assets held for sale relates to the committed disposal of 4 strata industrial units at 63 Hillview Avenue held by the Company's subsidiaries, QF 1 Pte Ltd and QF 8 Pte Ltd, during 3Q 2017, partially offset by disposal of 2 strata industrial units held for sale in 1Q 2017.
- The decrease in loans and borrowings was attributed mainly to repayments of term loans, trust receipts and loan repayment by the Group upon disposal of 3 strata industrial units held at 63 Hillview Avenue during 1H 2017, partially negated by newly obtained revolving capital loan of $6.5 million.
- Trade and other payables were lower due mainly to repayment of loan to a related company and settlement of other creditors balances.
- As at 30 September 2017, the Group's current liabilities exceeded its current assets by $55.16 million. Notwithstanding this, the financial statements of the Group have been prepared on a going concern basis because the Board of Directors, having assessed the financial position and funding options of the Group, believes that the Group has adequate resources to continue as a going concern for the foreseeable future. The liquidity requirements of the Group are expected to be met through cash inflows from operating activities, proceeds from proposed disposal of a subsidiary and other investments, and continued financial support from the major shareholder of the Company. The Group will monitor and manage financial position closely in meeting its commitments when fall due.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Comparing 3Q/9M 2017 figures with 3Q/9M 2016 figures:
- For 9M 2017, revenue decreased by $29.9 million or 38% from $79.5 million to $49.6 million while for 3Q 2017, revenue decreased by $6.8 million or 34% from $20.3 million to $13.5 million. The decrease was due mainly to the lower revenue recognised by the Group's joint operation with SB Procurement Pte Ltd (as announced via SGXNET on 18 May 2014) under construction business as the construction project has completed in 2Q 2017 and temporary slow down in recycling business as a result of relocation of recycling plant in 2Q 2017.
- The Group's gross profit dropped by $1.9 million or 12% from $15.8 million to $13.9 million was due mainly to lower gross profit in construction business from the joint operation with SB Procurement Pte Ltd (as announced via SGXNET on 18 May 2014) after completion of the construction project in 2Q 2017 and the absence of property tax refund in the investment properties business during 9M 2017. This is partially off set by better gross profit margin achieved from the Group's recycling businesses.
- Other income for 3Q/9M 2017 was lower due to absence of gain on disposal of other investment and lower gain on disposal of plant and equipments.
- The increase of other expenses due mainly to fair value loss of 5 strata industrial units held at 63 Hillview Avenue, Lam Soon Building, partially negated by reduced Plastic to Fuel preoperation expenses resulted from temporary cease on start-up of refining production.
- Selling and distribution expenses, general and administrative expenses and finance costs for 3Q/9M 2017 were generally comparable to 3Q/9M 2016.
CONSOLIDATED STATEMENT OF CASH FLOWS
Comparing 3Q/9M 2017 figures with 3Q/9M 2016 figures:
- The net cash inflows from operating activities for 9M 2017 were comparable year-on-year.
- Net cash inflows from investing activities were higher in 3Q/9M 2017 due to the proceeds from disposal of 3 strata industrial units at 63 Hillview Avenue held by a subsidiary of the Group, QF 1 Pte Ltd, and repayment of quasi-equity loan from a related company.
- The increase of net cash outflows from financing activities in 9M 2017 was due to repayment of loans to a related company and a related party in 9M 2017. The lower net cash outflows in 3Q 2017 was due to lower repayment of loans and borrowings.
Commentary On Current Year Prospects
Under the current uncertain economic environment, the Group will continue to control operating costs, improve productivity and rationalise its operations.