Financial Statements And Related Announcement - First Quarter Results

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Unaudited First Quarter 2019 Financial Statements

Profit & Loss

* Included in other revenue of Q1FY18 was $179,000 that was reclassified from share of results of joint ventures.

Consolidated Statement Of Comprehensive Income

Balance Sheet

Review of Performance

Q1FY19

Revenue

The Group’s sales revenue was 1.7% lower at S$58.0 million in Q1FY19 compared to S$58.9 million in Q1FY18. This was mainly due to lower sales in South East Asian markets.

Gross Profit and Gross Profit Margin

Gross profit was S$12.8 million in Q1FY19 compared to S$15.7 million in Q1FY18. Gross profit margin decreased from 26.7% in Q1FY18 to 22.1% in Q1FY19. This was mainly due to higher cost of sales in tyres and higher cost of wheel production.

Operating Expenses

Total operating expenses decreased by 4.0% to S$13.8 million in Q1FY19 compared to S$14.4 million in Q1FY18. The decrease was mainly due to write-back of inventory obsolescence and lower staff costs, offset by higher marketing and distribution costs.

Share of Results of Joint Ventures

In Q1FY19, the share of results of joint ventures amounted to a net loss of S$41,000, compared to S$0.4 million in Q1FY18. This was mainly due to lower sales from both joint ventures and the strengthening of the Renminbi during the period.

Net Profit

The net profit of the Group was S$0.1 million in Q1FY19, compared to S$1.9 million recorded in Q1FY18.

Financial Position

Property, plant and equipment decreased to S$67.6 million as at 31 July 2018 from S$69.2 million as at 30 April 2018.

Receivables decreased to S$57.4 million as at 31 July 2018 from S$59.9 million as at 30 April 2018.

Inventories decreased to S$87.8 million as at 31 July 2018 from S$87.9 million as at 30 April 2018.

Trade payables and trust receipts decreased to S$62.6 million as at 31 July 2018 from S$67.4 million as at 30 April 2018.

As at 31 July 2018, the Group’s cash and cash equivalents stood at S$16.2 million compared to S$21.9 million as at 30 April 2018 mainly due to reduction in payables.

The Group's borrowings which comprise trust receipts, revolving credit, short-term secured loans as well as long-term secured loans stood at S$88.5 million as at 31 July 2018 compared with S$89.5 million as at 30 April 2018. The decrease in borrowings was mainly due to the repayment of trust receipts.

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.