Quarterly Report For The Financial Period Ended 31 March 2018

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Unaudited Condensed Consolidated Income Statement For The Quarter Ended 31 March 2018

Income Statement

Unaudited Condensed Consolidated Statement of Financial Position As At 31 March 2018

Balance Sheet

Performance Review

Current quarter against previous year corresponding quarter

Group revenue increased significantly to RM95.8 million compared with RM76.8 million for the corresponding quarter 2017, representing an increase in revenue by 25% or RM19.1 million. This was largely attributable to revenue from the infrastructure business, KPS-HCM Sdn Bhd (“KPS-HCM”) of RM15.0 million. The revenue from manufacturing business of Century Bond Bhd (‘’CBB”) recorded a higher revenue by RM4.4 million.

For the current quarter ended 31 March 2018, the Group registered a profit before tax of RM15.5 million as compared to a profit before tax of RM22.3 million for the corresponding quarter 2017. Lower profit in current quarter mainly due to one-off financial charges of RM3.7 million incurred for the acquisition of CPI and lower profit from manufacturing segment.

Performance of the respective operating business segments for the first quarter ended 31 March 2018 as compared to the preceding year corresponding quarter is analysed as follows:

  1. Manufacturing

    CBB contributed revenue of RM44.0 million, higher than corresponding quarter 2017 by RM4.4 million. 77% or RM34.0 million of the sector’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 RM2.6 million as compared to RM4.1 million in the corresponding quarter 2017 due to the higher raw material cost.

  2. Trading

    Revenue of RM26.3 million was 4% or RM1.1 million higher than the corresponding quarter’s revenue of RM25.2 million.

    For the current quarter, this sector posted a profit before tax of RM2.0 million as compared to RM2.2 million in the corresponding quarter 2017 due to the higher raw material cost.

  3. Licensing

    RM7.8 million revenue to the Group during the current quarter as compared to RM8.8 million in the corresponding quarter 2017 mainly due to the strengthening of MYR against USD. For the current quarter, this sector posted a loss before tax of RM0.4 million as compared to profit before tax of RM0.5 million in the corresponding quarter 2017 due to the higher personnel and marketing and administrative expenses.

  4. Infrastructure and utilities

    Arising from acquisition of KPS-HCM in June 2017, the Group has consolidated the results of KPSHCM and Smartpipe Technology Sdn Bhd with consolidated revenue of RM15.0 million. Infrastructure and utilities sector recorded a profit of RM20.3 million as compared to corresponding quarter 2017 with profit of RM20.6 million. SPLASH and Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (“SPRINT”) posted share of profit of RM20.2 million and share of loss of RM0.9 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 RM11.4 million as compared to a profit after tax of RM8.7 million in the corresponding quarter of 2017 mainly due to the higher sales to industrial and commercial (“I&C”) segment. The Group’s share of profit was RM4.6 million as compared to share of profit of RM3.5 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 RM0.5 million, similar with the corresponding quarter 2017.

  7. Investment holding

    Investment holding recorded revenue of RM2.8 million as compared to RM4.2 million in the corresponding quarter 2017. This sector recorded a higher loss before tax of RM12.8 million as compared to a loss before tax of RM6.9 million in the corresponding quarter 2017. Higher losses in current quarter was mainly due to finance cost on financing for CPI acquisition.

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 on 1 May 2018 started operating its manufacturing plant in the US. The plant will be supplying to retailers in 11 states in the Western region of the US, including the state of Arizona where it is located. With the new plant, the King Koil Group will also be able to expand its export program, catering to international demand for ultra-premium Made-in USA mattresses.

    CPI being the latest addition to Perangsang Selangor family will continue to focus on their high precision plastic injection moulding segment which currently contributes majority of revenue to-date. At the same time, we foresee the box-build segment realising its tremendous potential to grow and contribute a bigger portion to CPI’s top line. This is in-line with the demand for electronic manufacturing services anticipated to grow at over 5% Compound Annual Growth Rate between 2016 to 2021, providing CPI with ample potential opportunities to tap on.

  2. Trading

    Aqua Flo had been awarded three (3) new contracts in May 2016 from PNSB Water Sdn Bhd, Konsortium ABASS Sdn Bhd and Konsortium Air Selangor Sdn Bhd, respectively, with a cumulative total value of RM98.0 million over a period of two years of which RM89.8 million had been delivered as at 31 March 2018. In anticipation of expiry of these contracts in May 2018, Aqua Flo had participated in the tender for the renewal of the contracts in March 2018 of which the result of the tender is pending decision from Pengurusan Air Selangor Sdn Bhd (“Air Selangor”). In addition, Aqua Flo received a letter of extension on 3 May 2018 from Air Selangor for the period extension of the contracts to 31 October 2018. The total estimated value for the period extension of the contracts is RM25.1 million.

    Aqua Flo is also continuously bidding for other contracts for supply of water treatment chemicals and monitoring equipment. Concurrently, Aqua Flo is embarking on strategic initiatives to enhance 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 registered as G7 contractor with Construction Industry Development Board which enables SPT to undertake the water and sewerage projects for both conventional and compact pipe technology. SPT is constantly engaging with 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. The Group plan to replicate this success locally.

    In November 2017, SPT entered into an agreement with Pengurusan Air Selangor Sdn Bhd for a pilot rehabilitation project using compact pipe technology. The pilot project covers a length of 0.5km in Taman Bukit Anggerik, Cheras and is expected to be completed by Q3 2018.

    On the infrastructure and utilities, 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 years ending 20172019. 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.