Financial Statements And Related Announcement - Second Quarter Results

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Unaudited Second Quarter 2019 Financial Statements

Profit & Loss

* Included in other revenue of Q2FY18 was $191,000 and 1HFY18 was $370,000 that was reclassified from share of results of joint ventures.

Consolidated Statement Of Comprehensive Income

Balance Sheet

Review of Performance

Q2FY19

Revenue

The Group's sales revenue was 7.9% higher at S$63.7 million in Q2FY19 compared to S$59.0 million in Q2FY18. This was mainly due to improved sales in South East Asian markets.

Gross Profit and Gross Profit Margin

Gross profit was S$13.4 million in Q2FY19 compared to S$15.4 million in Q2FY18. Gross profit margin decreased from 26.1% in Q2FY18 to 21.0% in Q2FY19. This was mainly due to higher cost of sales in tyres and higher cost of wheel production.

Operating Expenses

Total operating expenses decreased by 4.6% to S$14.2 million in Q2FY19 compared to S$14.9 million in Q2FY18. The decrease was mainly due to write-back of inventory obsolescence and lower operating lease rentals, offset by higher marketing and distribution costs.

Share of Results of Joint Ventures

In Q2FY19, the share of results of joint ventures amounted to a net profit of S$87,000, compared to S$0.6 million in Q2FY18. This was mainly due to lower sales from both joint ventures.

Net Profit

The net profit of the Group was S$19,000 in Q2FY19, compared to S$1.6 million recorded in Q2FY18.

Financial Position

Property, plant and equipment decreased to S$66.2 million as at 31 October 2018 from S$69.2 million as at 30 April 2018.

Receivables decreased to S$58.5 million as at 31 October 2018 from S$60.2 million as at 30 April 2018.

Inventories increased to S$92.8 million as at 31 October 2018 from S$87.9 million as at 30 April 2018.

Trade payables and trust receipts increased to S$67.6 million as at 31 October 2018 from S$67.4 million as at 30 April 2018.

As at 31 October 2018, the Group's cash and cash equivalents stood at S$13.8 million compared to S$21.9 million as at 30 April 2018.

The Group's borrowings which comprise trust receipts, revolving credit, short-term secured loans as well as long-term secured loans stood at S$91.0 million as at 31 October 2018 compared with S$89.5 million as at 30 April 2018. The increase in borrowings was mainly due to higher trust receipts.

1HFY19

Revenue

The Group's sales revenue was 3.2% higher at S$121.7 million in 1HFY19 compared to S$118.0 million in 1HFY18. This was mainly due to improved sales in South East Asian markets and new sales in North Asia.

Gross Profit and Gross Profit Margin

Gross profit was S$26.2 million in 1HFY19 compared to S$31.1 million in 1HFY18. Gross profit margin decreased from 26.4% in 1HFY18 to 21.5% in 1HFY19. This was mainly due to higher cost of sales in tyres and higher cost of wheel production.

Operating Expenses

Total operating expenses decreased by 4.3% to S$28.1 million in 1HFY19 compared to S$29.3 million in 1HFY18. The decrease was mainly due to write-back of inventory obsolescence and lower operating lease rentals, offset by higher marketing and distribution costs.

Share of Results of Joint Ventures

In 1HFY19, the share of results of joint ventures amounted to a net profit of S$46,000, compared to S$1.0 million in 1HFY18, mainly due to net loss from our India joint venture.

Net Profit

The net profit of the Group was S$0.1 million in 1HFY19, compared to S$3.5 million recorded in 1HFY18.

Commentary

The operating environment in the tyre business remains challenging as a result of global oversupply and intense competition.

To mitigate the impact of this challenging environment, the Group will continue to optimize its product mix, manage operating costs and build on its core markets in South East Asia.