Financial Statement Announcement for the First Quarter Ended 31 March 2019
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Profit & Loss
Consolidated Statement of Comprehensive Income
Review of Performance
CONSOLIDATED INCOME STATEMENT
January - March 2019 ("1Q19")
The Group's revenue decreased 5.6% year-on-year ("yoy") from $169 million for 1Q18 to $159.5 million for 1Q19.
Revenue from the Group's Automotive segment decreased 14.5% yoy to $59.3 million mainly due to a decrease in orders from customers as a result of weakening demand across global automotive markets, certain projects reaching end-of-life and delays in new project launches.
Revenue from the Group's Consumer/IT and Healthcare segments remained stable for 1Q19 as compared to 1Q18.
The 2.3% yoy increase in revenue from the Mould Fabrication segment was mainly due to more orders recognised in profit and loss during the period.
The Group's gross profit decreased 19.4% yoy from $21.4 million for 1Q18 to $17.3 million for 1Q19. Correspondingly, the gross profit margin declined from 12.7% for 1Q18 to 10.8% for 1Q19. This was mainly due to lower utilisation levels as a result of the decline in orders from the Automotive segment.
The decrease in other income was due to a decrease in rental income after the disposal of the Group's factory in Zhongshan, China during 4Q18 and lower government grants received.
The decrease in other expenses was mainly due to the Group reporting foreign exchange losses of $0.9 million for 1Q19 as compared to $5.2 million for 1Q18.
The increase in finance costs was due to accounting for finance costs from right-of-use assets ("ROUA") of $0.2 million and an increase in borrowings.
The Group achieved a net profit of $0.8 million for 1Q19 compared to a net profit of $1.9 million for 1Q18. Excluding the impact from foreign exchange losses, retrenchment costs, loss/(gain) on the disposal of property, plant and equipment ("PPE") and finance costs on ROUA, net profit would have been $2.1 million for 1Q19 and $7.1 million for 1Q18, representing a 70.3% yoy decline.
CONSOLIDATED BALANCE SHEET
On adoption of SFRS(I) 16, the Group recognised right-of-use assets and lease liabilities of $20,630,000 respectively for its leases previously classified as operating leases and reclassified land use rights of $2,784,000 from property, plant and equipment to right-of-use assets as of 1 January 2019.
The Group's property, plant and equipment ("PPE") amounted to $188.2 million as at 31 March 2019 as compared to $190.4 million as at 31 December 2018. PPE was stated net of depreciation charges of $7.2 million (1Q18: $7.5 million), partially offset by currency re-alignment, reclassified land use rights to right-of-use assets and additions of $7.2 million (1Q18: $13.2 million) in PPE.
The decrease in trade and other receivables was due to the proceeds on disposal of the property sold for $28.2 million collected on 3 January 2019.
The Group maintained a cash balance of $114.2 million as at 31 March 2019 (31 December 2018: $88.7 million). This resulted in a net cash position of $9.5 million (31 December 2018: net debt position of $21.0 million) after accounting for loans and borrowings amounting to $104.7 million (31 December 2018: $109.7 million). The increase in net cash was mainly due to a foreign currency translation gain of $0.6 million on the opening balance of cash and cash at banks, the collection of proceeds from the disposal of the property and cash generated from operations.
CONSOLIDATED CASHFLOW STATEMENT
January - March 2019 ("1Q19")
Net cash flows from operating activities amounted to $11.8 million for 1Q19 as compared to $6.9 million for 1Q18. Net cash flows from investing activities amounted to $19.1 million for 1Q19 as compared to net cash flows used in investing activities of $10.6 million for 1Q18 due to higher net proceeds from the disposal of property, plant and equipment and less payments for the purchase of property, plant and equipment for 1Q19.
Net cash flows used in financing activities amounted to $6.2 million for 1Q19 as compared to net cash flows from financing activities of $3.0 million for 1Q18.
Commentary On Current Year Prospects
Similar to 4Q2018, the Group continues to face pressure in the form of rising labour costs, price pressure and negative market sentiment. In addition, the Group continues to be impacted by a slowdown in the automotive market, especially in China.
While still in the initial start-up phase of its operations, the Group expects production and utilisation at its Penang facility to gradually improve in 2H2019. Similarly, the Group has accelerated the shift of its operations from Shanghai to the lower-cost region of Chuzhou. Completion of this shift is expected to take place by 3Q2019.
The Group's technological capabilities and global manufacturing footprint have led to business queries from both new and existing customers. Despite the downturn in the Automotive segment, the Group continues to garner momentum in the Consumer/IT and Healthcare segments as it has secured multiple new projects from customers.
The Group's continued improvements in tightening cost controls and enhancing operational efficiency have translated to improved margins from the lows of 4Q2018. The Group expects margin pressure to ease in the coming quarters as it continues its emphasis on controlling costs and boosting productivity. While remaining vigilant of the headwinds, the Group remains confident in its resilient business model as the long-term sustainability of its operations remains on track.