Financials

Quarterly Report For The Financial Period Ended 30 June 2018

Financials Archive

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Unaudited Condensed Consolidated Income Statement For The Quarter Ended 30 June 2018

Income Statement

Unaudited Condensed Consolidated Statement of Financial Position As At 30 June 2018

Balance Sheet

Performance Review

Current quarter against previous year corresponding quarter

Group revenue increased significantly to RM161.3 million compared with RM75.9 million for the corresponding quarter 2017, representing an increase in revenue by 112% or RM85.4 million. This was largely attributable to revenue from KPS-HCM Sdn Bhd ("KPS-HCM") of RM21.2 million and from the new subsidiaries, CPI (Penang) Sdn Bhd ("CPI") of RM39.7 million and King Koil Manufacturing West, LLC ("KKMW") of RM16.5 million.

For the current quarter ended 30 June 2018, the Group registered a profit before tax and zakat of RM41.6 million as compared to a profit before tax and zakat of RM37.6 million for the corresponding quarter 2017. Higher profit in current quarter mainly from CPI's contribution as well as higher share of profit from associates.

Performance of the respective operating business segments for the second quarter ended 30 June 2018 as compared to the preceding year corresponding quarter is analysed as follows:

  1. Manufacturing

    This sector contributed the highest increased in revenue mainly from the new subsidiaries; CPI of RM39.7 million and KKMW of RM16.5 million. Century Bond Bhd ("CBB") contributed revenue of RM46.7 million, higher than corresponding quarter 2017 by RM7.2 million. 47% or RM22.0 million of CBB's revenue was from paper packaging and the remaining was from plastic packaging and others.

    For the current quarter, this sector posted a profit before tax of RM11.9 million as compared to RM2.3 million in the corresponding quarter 2017, higher mainly due to consolidation of CPI's three months results of RM8.3 million.

  2. Trading

    Revenue of RM27.6 million was 11% or RM2.8 million higher than the corresponding quarter's revenue of RM24.8 million mainly from higher sales of water chemicals.

    For the current quarter, this sector posted a profit before tax of RM2.1 million, similar to the corresponding quarter 2017.

  3. Licensing

    This sector recorded RM7.4 million revenue to the Group during the current quarter as compared to RM8.3 million in the corresponding quarter 2017 mainly due to lower licensing revenue from the US licensees. For the current quarter, this sector posted a profit before tax of RM0.7 million as compared to profit before tax of RM0.3 million in the corresponding quarter 2017.

  4. Infrastructure and utilities

    Arising from acquisition of KPS-HCM in June 2017, the Group has consolidated the revenue of KPS-HCM by RM21.2 million. Infrastructure and utilities sector recorded a profit of RM40.3 million as compared to corresponding quarter 2017 with profit of RM41.3 million. SPLASH and Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd ("SPRINT") posted share of profit of RM40.6 million and share of loss of RM0.5 million respectively as compared to share of profit of RM23.8 million and share of loss of RM3.0 million respectively for the corresponding quarter 2017.

  5. Oil and gas

    NGC Energy Sdn Bhd ("NGC Energy") registered a profit after tax of RM8.7 million as compared to a profit after tax of RM4.6 million in the corresponding quarter of 2017 mainly due to the higher revenue from industrial and commercial ("I&C") segment. The Group's share of profit was RM3.5 million as compared to share of profit of RM1.8 million in the corresponding quarter 2017 due to higher price recorded from I&C segment.

  6. Telecommunication

    The Group's share of loss from Ceres Telecom Sdn Bhd ("Ceres") for the current quarter was RM0.2 million, as compared to a share of loss of RM0.7 million for the corresponding quarter 2017.

  7. Investment holding

    Investment holding recorded revenue of RM2.2 million as compared to RM15.1 million in the corresponding quarter 2017, mainly from dividend received during the corresponding period. Consequently, this sector recorded a loss before tax and zakat of RM15.8 million as compared to a profit before tax of RM2.9 million in the corresponding quarter 2017 coupled with the finance cost incurred in the current quarter in financing CPI acquisition.

  8. Property Investment

    Property investment recorded nil revenue as compared to RM1.2 million in the corresponding quarter 2017, lower revenue due to no leasing income at Quality Hotel City Centre starting from current quarter. This sector recorded a loss before tax and zakat of RM0.8 million as compared to a profit before tax of RM0.5 million in the corresponding quarter 2017.

Current year to-date against previous year to-date

For the six months ended 30 June 2018, the Group registered revenue of RM257.1 million as compared to RM152.7 million in the corresponding period 2017, representing an increase in revenue by RM104.4 million or 68%. The significant increase was mainly due to revenue from KPS-HCM which was consolidated from July 2017, CPI which was acquired in March 2018 and KKMW which commenced operations in May 2018.

The Group's profit before tax and zakat for the current period of RM57.1 million was 5% lower or RM2.8 million than the corresponding period 2017 of RM59.9 million mainly due to higher finance cost in current period.

Performance of the respective operating business segments for the six months ended 30 June 2018 as compared to the preceding year corresponding period is analysed as follows:

  1. Manufacturing

    The manufacturing sector contributed a revenue of RM146.9 million and profit before tax of RM13.7 million as compared to corresponding period 2017 revenue of RM79.1 million and profit before tax of RM6.3 million. Higher revenue and profit before tax in current period is mainly due to three months contributions from CPI and one month results from KKMW.

  2. Trading

    Trading sector posted a profit before tax of RM4.2 million on the back of total revenue of RM53.9 million. The current period revenue was higher by 8% or RM4.0 million due to higher revenue from sale of chemicals.

  3. Licensing

    The licensing sector recorded revenue of RM15.2 million as compared to corresponding period 2017 of RM17.1 million on the back of lower licensing revenue from US licensees. Profit before tax was RM1.0 million as compared to corresponding period 2017 of RM0.8 million.

  4. Infrastructure and utilities

    This sector recorded consolidated revenue of RM36.2 million as compared to nil in the corresponding quarter 2017 as the consolidation of KPS-HCM results only started from July 2017. Profit from the infrastructure and utilities sector for the current period of RM60.7 million was 2% lower than corresponding period's profit of RM61.9 million mainly due to lower share of profits contributed by the associated companies.

  5. Oil and gas

    For the current period, NGC Energy registered profit after tax of RM20.1 million which translated into the Group's share of profit of RM8.1 million as compared to share of profit of RM5.3 million for the corresponding quarter 2017 due to higher price recorded from I&C segment.

  6. Telecommunication

    The Group's share of losses for the current period in Ceres was RM0.7 million, lower by RM0.5 million as compared to share of losses of RM1.2 million for the corresponding period 2017, mainly due to lower expenses incurred.

  7. Investment holding

    Investment holding sector recorded lower revenue of RM4.4 million as compared to RM18.3 million in the corresponding period 2017 due to dividend income received during the corresponding period. Consequently, this sector recorded a higher loss before tax of RM28.1 million as compared to a loss before tax of RM4.3 million in the corresponding period 2017 coupled with the finance cost incurred in the current quarter in financing CPI acquisition.

  8. Property Investment

    Property investment sector recorded lower revenue of RM0.6 million as compared to RM2.2 million in the corresponding period 2017, lower revenue due to no leasing income at Quality Hotel City Centre starting from current quarter. This sector recorded a loss before tax of RM1.3 million as compared to a profit before tax of RM0.8 million in the corresponding period 2017.

Commentary On Prospects

  1. Manufacturing

    CBB's primary focus would be on growing its paper bags business. To propel growth in the Malaysian market, CBB plans to strengthen its position in the non-cement sector which has recently generated strong demand and better margins.

    Regionally, CBB plans to tap into the opportunity of the increasing infrastructure spending and capital projects in South East Asia, which presents growth opportunities for CBB.

    The King Koil group of companies ("King Koil Group") had its first manufacturing plant in the US commence its operations in May 2018. By end of June, the Arizona-based plant has commence delivery of King Koil beds and foundations to customers primarily in California, including a major client ranked in the Top 100 US Furniture Retailers (per Furniture Today). Market reception to the products and service level has been positive and will pave the way for continuing revenue growth under the manufacturing segment.

    CPI (Penang) Sdn Bhd ("CPI"), being the latest addition to Perangsang Selangor family, will continue to focus on its high precision plastic injection moulding segment which currently contributes the majority of its revenue to-date, while gradually exploring the tremendous potential that the box-build segment possesses. With the recent land acquisition made in Bayan Lepas, Penang, CPI is committed in bolstering its presence into becoming one of the prominent players in the industry whilst maintaining its competitive edge by providing end-to-end solutions to the market.

  2. Trading

    Aqua-Flo had participated in the tender for the supply and delivery of water treatment chemicals to water treatment plants under Air Selangor for a duration of two years with an optional extension for another year in March 2018. Pending the outcome of the tender results, Aqua-Flo had received a letter of extension on 3 May 2018 from Air Selangor for the extension of the existing contracts to 31 October 2018, valued at RM25.1 million.

    Aqua-Flo also continuously bid for other contracts for the supply and delivery of water treatment chemicals and monitoring equipment. Concurrently, Aqua-Flo is embarking on strategic initiatives to improve future profitability by strengthening operational efficiency and venturing into other water related businesses.

  3. Licensing
  4. While the King Koil Group changes direction for its licensing business in the US market, it remains focused on growing the International licensing segment. Growth from this segment will be driven by i) continuous engagement with the licensees and supporting their market expansion efforts; and ii) adding more territories to the King Koil network, which already covers over 80 countries worldwide. Strengthening the brand power in the US is expected to have positive impact on the International licensing segment by increasing the brand value in other markets, and attracting manufacturers of high calibre and capabilities to join the King Koil group of licensees.

  5. Infrastructure and utilities

    The outlook for the water services sector is expected to be positive with opportunities arising from the State Government's consolidation exercise to provide a holistic water services in Selangor, Kuala Lumpur and Putrajaya. In the light of this opportunity, the Group through its wholly-owned subsidiary Nadi Biru Sdn Bhd, has ventured into the water pipe rehabilitation business through its subsidiary, Smartpipe Technology Sdn Bhd ("SPT"). SPT had obtained the product certification and C1 license from Suruhanjaya Perkhidmatan Air Negara and is registered as a G7 contractor with the Construction Industry Development Board which enables SPT to undertake water and sewerage projects for both conventional and Compact Pipe ® technology.

    SPT is constantly engaging various parties and state water agencies to promote the Compact Pipe ® technology, where it has proven to be a success in several countries including Hong Kong. This success has recently been replicated locally – in July 2018, SPT had successfully completed the installation of Compact Pipe ® as part of a pilot rehabilitation project in Cheras, Kuala Lumpur as per its agreement with Pengurusan Air Selangor Sdn Bhd. With the completion of this pilot project, being the first of its kind its Malaysia, SPT has demonstrated its readiness in employing this cutting-edge technology in the Malaysian market.

    On the infrastructure and utilities, KPS-HCM Sdn Bhd ("KPS-HCM") was awarded with an infrastructure work for Pulau Indah Industrial Park by the main contractor, Central Spectrum Sdn Bhd. It is envisaged that the current order book of KPS-HCM will contribute positively to the Group's results for the financial year ending 2018. Going forward, KPS-HCM will actively identify and bid for similar projects to enhance the performance of the Group's infrastructure and utility segment.

    With the imminent takeover of the Group's 30% equity interest in Syarikat Pengeluar Air Selangor Sdn Bhd held through Viable Chip (M) Sdn Bhd, a wholly owned subsidiary of the Company, the Group is continuously assessing business opportunities in sectors where it already has existing investments as well as new business sectors or areas to ensure sustainability of the Group.

  6. Oil and gas

    The Group remains confident in the long-term prospects of the oil and gas sector as the Group expects an increase in demand for liquefied petroleum gas in the industrial and commercial sector while demand from domestic sectors shall remain strong over the next few years.

  7. Telecommunication
  8. Ceres, a 34.35% associated company, is currently pursuing several initiatives to streamline its business and improve its financial performance; refocusing of its market segment, introducing new products and extending its network of distributors. Efforts are continuously being pursued in order to ensure that Ceres contributes positively to the results of the Group in the future.