Unaudited Financial Statements and Dividend Announcement for the Half Year Ended 30 June 2018 ("1H2018")
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Profit & Loss
Review of Performance
Review of results of operations
The Group’s revenue for 1H2018 decreased by 3.7% or US$0.2 million to US$4.7 million, from US$4.9 million for 1H2017. This was mainly due to lower revenue contribution by the Ports and Offshore segment of US$1.2 million. However, the decrease was partially offset by the increase in revenue contribution by the Renewables segment of US$0.9 million which represents an increase of approximately 100% as compared to 1H2017.
Gross profit and gross profit margin
The Group’s gross profit for 1H2018 had increased by 31.1% or US$0.5 million to US$1.9 million, as compared to US$1.5 million for 1H2017. The increase in gross profit was mainly due to lower staff costs.
The Group’s gross profit margin for 1H2018 increased by 10.7 percentage points, from 29.9% for 1H2017 to 40.6% for 2H2018.
The Group’s distribution expenses increased by US$0.1 million or 31.6%, from US$0.2 million in 1H2017 to US$0.3 million in 1H2018. The increase was largely due to higher business development costs incurred in securing projects.
The Group’s administrative expenses decreased significantly by US$1.1 million or 44.8%, from US$2.4 million in 1H2017 to US$1.3 million in 1H2018 primarily due to the decrease in staff costs and office related costs, such as office rental.
One-off NauticAWT PSP cost
This was pertaining to the cost of 21,367,632 shares issued to employees of the Company pursuant to the grant of share awards under the NauticAWT PSP during 1H2018.
Other income decreased by US$16,000 or 21.7%, from US$72,000 in 1H2017 to US$56,000 in 1H2018. In 1H2018, the other income comprised primarily the government subsidy.
The Group’s finance costs decreased by US$0.1 million or 26.8%, from US$0.3 million in 1H2017 to US$0.2 million in 1H2018. The decrease was mainly due to lower interest expense due to the repayments of bank borrowings.
Income tax credit
The Group recorded income tax credit of US$42,000 in 1H2018, mainly due to the reversal of deferred tax liabilities.
Loss after tax
As a result of the above, the Group suffered a loss for the period from continuing operations of US$0.2 million in 1H2018 after a one off PSP cost of USD0.5 million, significantly improved by USD1.1million as compared to the losses of US$1.3 million in 1H2017.
Review of Consolidated Statement of Financial Position
Loss for the period from discontinued operations
The Group’s loss for the period from discontinued operations increased by US$20,000 or 25.2%, from US$84,000 in 1H2017 to US$0.1 million in 1H2018. The increase is mainly due to higher interest expenses suffered from a US$1.4 million bank loan drawdown in 2H2017 which remain outstanding during 1H2018.
The Group’s non-current assets increased by US$0.1 million, from US$8.9 million as at 31 December 2017 to US$9.0 million as at 30 June 2018. The increase was mainly due to the increase in intangibles of US$0.5 million in relation to the Company’s UHPC materials development which was partially offset by the decrease in property, plant and equipment of US$0.4 million as a result of the depreciation charge.
The Group’s current assets increased by US$30,000, from US$6.53 million as at 31 December 2017 to US$6.55 million as at 30 June 2018. The increase was mainly due to an increase in inventories of US$0.2 million. The increase was partially offset by the following:
- a decrease in trade and other receivables of US$53,000; and
- a decrease in cash and bank balances of US$0.2 million (please refer to the review of cash flows below).
The Group’s non-current liabilities increased by US$1.7 million, from US$5.1 million as at 31 December 2017 to US$6.8 million as at 30 June 2018. The increase was mainly due to US$1.7 million increase in other payables arising from the unsecured loans from staff and lenders and US$0.2 million increase in loan from directors.
The Group’s current liabilities decreased by US$1.8 million, from US$9.5 million as at 31 December 2017 to US$7.8 million as at 30 June 2018. The decrease was mainly due to the following:
- a decrease in trade and other payables of US$0.7 million; and
- a decrease in liabilities for trade bills discounted with recourse, and bank loan and advances of US$0.1 million and US$0.8 million respectively due to repayments during 1H2018.
Working capital and going concern assessment
The Group reported a negative working capital of US$1.2 million as at 30 June 2018 as compared to US$3.0 million as at 31 December 2017. As at the date of this announcement, the Board is of the opinion that the continuing use of the going concern assumption in the preparation of the financial information is appropriate on the basis that the Group has continuous support from the existing bankers, is able to generate cash flows from its operations based on the internal budget, as well as assuming the Group is able to dispose a wholly owned subsidiary which has been classified as assets held for sale. Furthermore, the Group is currently negotiating with certain third parties to secure additional funding for the Group. The Company will update shareholders when necessary.
Review of cash flows
Net cash from operating activities in 1H2018 amounted to US$0.2 million as compared to US$1.8 million in 1H2017. The Group had a net cash inflow of US$0.8 million from its operating activities before changes in working capital. Working capital movement included a decrease in trade and other receivables of US$59,000, partially offset by a decrease in trade and other payables of US$30,000, a decrease in trade bills discounted with recourse of US$70,000 and increase in inventories of US$0.2 million. The Group also paid interest of US$0.3 million during 1H2018.
Net cash used in investing activities in 1H2018 amounted to US$0.5 million as compared to US$1.5 million in 1H2017, mainly due to the acquisition of intangibles pertaining to the Company’s UHPC materials development.
Net cash from financing activities for 1H2018 amounted to US$0.5 million, mainly due to proceeds from third party loans of US$1.1 million which was partially offset by the repayment of bank borrowings of US$0.8 million.
As a result of the above, the Group’s cash and cash equivalents increased by US$0.2 million, from a deficit of US$0.2 million as of 31 December 2017 to a surplus of US$27,000 as of 30 June 2018.
Commentary On Current Year Prospects
The Renewables segment, through the sales of UHPC materials for wind turbine foundations, continues to contribute significantly in the 1H2018 as compared to 1H2017. Barring unforeseen circumstances, we are positive on the business outlook of this segment.
In addition, we expect the sales from civil construction and the downhole markets to take place in 2H2018 or FY2019.
The Group’s recent rebranding exercise from NauticAWT to NAUTEC aligns our focus in UHPC materials together with the renewed emphasis on the technologies that allows us to drive the business forward.