First Quarter Financial Statements and Dividend Announcement for Financial Period Ended 31 March 2018
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Statement of Comprehensive Income
Review of Performance
Review of Performance
Results for 1Q2018 versus 1Q2017
Revenue and Gross Profit
The Group achieved revenue of S$47.0 million in 1Q2018 as compared to S$45.6 million in 1Q2017. This was driven by a 20% increase in average selling price which more than compensated a 14% reduction in sales volume. The Group handled lesser export volume in 1Q2018 which led to the overall decline in sales volume as compared to previous corresponding quarter.
The Group recorded gross profit of S$2.6 million in 1Q2018, a slight increase compared to gross profit of S$2.5 million attained in 1Q2017. Gross profit margin decreased to 5.4% in 1Q2018 from 5.6% in 1Q2017 as a result of tough competition and higher weighted average cost of inventory.
Other Operating Income
Other operating income decreased to S$2.0 million in 1Q2018 from S$2.5 million in 1Q2017. The decrease was mainly attributed to the decline in warehousing and rental income of S$0.2 million and absence of fair value gain from forward currency contracts of S$0.3 million in 1Q2018.
Distribution, Administrative, Other Operating and Finance Expenses
The Group's distribution expenses increased by S$0.1 million in 1Q2018 due to higher demand for out-sourced logistics services to handle higher volume of local sales.
Other operating expenses decreased by 21% from S$3.2 million in 1Q2017 to S$2.6 million in 1Q2018, mainly due to the decrease in foreign exchange loss of S$0.6 million.
There were no significant changes in administrative expenses and finance costs in 1Q2018 as compared to previous corresponding quarter.
The Group posted a net loss after tax of S$0.37 million in 1Q2018 compared to a net loss after tax of S$0.33 million in 1Q2017 due to reasons afore-mentioned and the absence of share of profits from associates.
The Group's non-current assets increased to S$17.0 million as at 31 March 2018 compared to S$12.5 million as at 31 December 2017. The increase was mainly attributed to the investment in corporate bonds of which S$4.5 million is pledged as security for trade facilities granted by a bank.
As at 31 March 2018, the Group's inventory on hand increased to S$20.9 million as compared to S$17.6 million as at 31 December 2017. This was a result of stock replenishment to support the projected growth on sales volume.
Trade and other receivables increased to S$53.2 million as at 31 March 2018 as compared to S$44.3 million as at 31 December 2017 in line with increase in sales activities since 4Q2017.
Trade and other payables increased to S$24.9 million as at 31 March 2018 compared to S$14.5 million as at 31 December 2017 in line with increase in inventory volume.
There were no outstanding bank borrowings as at 31 March 2018.
Statement of Cash Flows
The net cash flows used in operating activities was S$2.6 million in 1Q2018 as compared to net cash flows used in operating activities of S$7.8 million in 1Q2017. This was mainly attributable to the increase in trade and other receivables and inventories of S$3.9 million and S$8.9 million respectively, offset by increase in trade and other payables of S$10.4 million.
Net cash flows used in investing activities for 1Q2018 was S$0.5 million, mainly due to purchase of investment securities of S$4.5 million after offsetting bank deposit pledged with banks of S$4.1 million.
Net cash flows used in financing activities for 1Q2018 was S$0.06 million for repayment of finance leases.
The Group's cash and cash equivalents was S$25.8 million as at 31 March 2018 in comparison to S$23.0 million as at 31 March 2017.
Based on the advance estimates released by the Ministry of Trade and Industry, Singapore economy grew by 4.3% on a Y-O-Y basis in the 1st quarter of 2018. However, the construction industry continued to shrink for the 6th consecutive quarter, reporting a negative growth of 4.4% on a Y-O-Y basis in the 1st quarter of 2018. Despite this, the overall market outlook for the construction industry for 2018 is perceived to be positive on anticipation of rising construction activities for the private residential properties. Meanwhile, the marine and oil & gas industries are expected to continue experiencing slow recovery. In view of the aforementioned, the Group remains cautions about the outlook and business environment of the steel industry amid intensified local competition and continued global geopolitical uncertainties.
Following the divestment of our investment in two associated companies in the last quarter of 2017, the Group continues to work on further rationalising its business operations and growing its core business while seeking every opportunity to grow its business organically. The Group will also seek to optimise its inventory holding and align its purchasing activities to take advantage of any potential recovery in demand.