Gaylin International

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Unaudited First Quarter Financial Statements And Related Announcement For The Period Ended 30 June 2017

Financials Archive

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Consolidated Income Statements

Income Statement

Consolidated Statements of Comprehensive Income

Statements of Comprehensive Income

Statements of Financial Position

Statements of Financial Position

Review of the Group's Performance

Revenue

For the three months ended 30 June 2017 ("3M FY2018"), the Group's revenue was S$18.4 million with a decrease of S$2.2 million or 10.7% compared to S$20.6 million for the corresponding period ended 30 June 2016 ("3M FY2017"). The decrease was mainly due to a decline of S$3.4 million in the rigging and lifting segment due to the continued weakness in the oil and gas ("O&G") industry offset by the increase of S$1.2 million in the ship chandling segment.

Gross profit

Gross profit decreased by S$1.0 million or 22.2% from S$4.5 million in 3M FY2017 to S$3.5 million in 3M FY2018. The corresponding gross profit margin decreased from 21.9% to 19.1%. The decrease was mainly due to the tighter product margins.

Other income

3M FY2018 vs 3M FY2017

Other income in 3M FY2018 did not vary significantly from that of 3M FY2017.

Distribution costs

3M FY2018 vs 3M FY2017

Distribution costs increased by S$0.1 million or 7.2% in 3M FY2018 compared to 3M FY2017 mainly due to an increase in freight and commission of S$0.1 million.

Administrative expenses

3M FY2018 vs 3M FY2017

Administrative expenses decreased by S$0.3 million or 7.7% in 3M FY2018 compared to 3M FY2017 mainly due to a decrease in staff related expenses of S$0.3 million. This is in line with the Group’s cost control measures.

Other operating expenses

3M FY2018 vs 3M FY2017

Other operating expenses decreased by S$0.4 million or 52.5% in 3M FY2018 compared to 3M FY2017. The decrease was mainly due to lower allowance for doubtful trade receivables of S$0.7 million which is offset by an increase of foreign exchange loss of S$0.2 million in 3M FY2018.

Interest expense

3M FY2018 vs 3M FY2017

Interest expense in 3M FY2018 did not vary significantly from that of 3M FY2017.

Loss before income tax

As a result of the above reasons, loss before income tax was S$1.9 million for 3M FY2018.

Review of statement of financial position and cash flows

Current assets

The current assets decreased by S$9.1 million from S$157.9 million as at 31 March 2017 to S$148.8 million as at 30 June 2017. The decrease was mainly due to: (i) a decline in cash and cash equivalents of S$3.6 million, (ii) a decline in trade receivables of S$2.6 million due to lower sales in 3M FY2018, (iii) a decline in inventories of S$2.6 million due to sales, and (iv) decrease in other receivables of S$0.3 million in 3M FY2018 due to collection of remaining profit guarantee monies from the vendor.

Non-current assets

The non-current assets decreased by S$0.9 million from S$38.5 million as at 31 March 2017 to S$37.6 million as at 30 June 2017. The decrease was mainly due to: (i) a drop in PPE of S$1.0 million due to depreciation of S$1.1 million and disposal of PPE with net book value of S$0.3 million offset by additions of PPE of S$0.7 million, and (ii) amortisation of intangible assets of S$0.2 million.

Current liabilities

The current liabilities decreased by S$31.8 million from S$96.4 million as at 31 March 2017 to S$64.5 million as at 30 June 2017. The decrease was mainly due to a decrease in bank borrowings of S$30.3 million caused by a reclassification of bank borrowings of S$24.3 million from current to non-current as the outstanding due in respect of the related loan was settled and the remaining balances were restructured, and repayment of S$6 million. This was offset by a decrease in trade payables of S$1.5 million due to lower purchases during the quarter.

Non-current liabilities

Non-current liabilities increased by S$24.0 million from S$6.1 million as at 31 March 2017 to S$30.2 million as at 30 June 2017 mainly due to reclassification of bank borrowings as explained above.

Capital, reserves and non-controlling interests

The decrease in shareholder's equity of S$2.3 million was mainly attributable to loss of S$2.1 million during the period and decrease in translation reserve of S$0.2 million.

Cash Flows

3M FY2018 ended 30 June 2017

Net cash from operating activities

In 3M FY2018, we have operating cash outflows of S$0.1 million from operating activities before changes in working capital.

Our net working capital inflow amounted to S$3.4 million. This was mainly due to: (i) a decrease in trade receivables of S$2.5 million due to collections during the period, (ii) a decrease in inventories of S$2.3 million due to sales, (iii) decrease in other receivables of S$0.2 million, offset by (i) decrease in trade payable of S$1.4 million and (ii) decrease in bank bills payable of S$0.7 million due to repayment of bank borrowings.

We paid interest for bank bills of S$0.1 million and income tax paid of S$0.3 million.

Overall, our net cash generated from operating activities amounted to S$3.1 million.

Net cash used in investing activities

Net cash used in investing activities amounted to S$0.6 million in 3M FY2018 mainly due to the payments for PPE of S$0.9 million offset by proceeds on disposal of PPE of S$0.2 million.

Net cash used in financing activities

Net cash used in financing activities amounted to S$6.0 million in 3M FY2018. This was mainly due to: (i) the repayment of bank borrowings and related interest of S$5.9 million, and (ii) the repayment of obligations under finance leases of S$0.2 million.

Commentary

Against a weak oil and gas ("O&G") backdrop, the operating climate remains challenging for the Group, whose products and services demands are generally driven by the overall performance of the O&G sector.

The Group believes its fundamentals remain intact and it is in a stable position to ride out this industry cycle. The Group will place its focus on operational efficiency and financial prudence, while it continues to build on its momentum and market higher value services in Europe which has seen encouraging results so far.