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UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2018

Financials Archive

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Income Statement

Consolidated Statement of Comprehensive Income

N/M Not Meaningful
* Denote amount less than RM500
# The net foreign exchange gain/ (loss) and fair value (loss)/ gain on derivatives have been included in other operating expenses

Balance Sheet

Review Of Performance

Income Statement Review

For 2Q2018, the Group achieved RM214.2 million in total revenue, a 0.5% increase as compared to RM213.2 million in 2Q2017. Cost of sales was at RM166.0 million in 2Q2018 reduced by 2.1% despite marginal increase in total revenue. The Group's gross profit rose 10.6% from RM43.7 million in 2Q2017 to RM48.3 million in 2Q2018. The Group's gross profit margin improved from 20.5% to 22.5%.

The Group's other income decreased to RM0.8 million in 2Q2018 mainly due to lower interest income.

Selling and distribution expenses increased by 2.3% year-on-year (yoy) to RM3.6 million in 2Q2018 mainly due to increase in marketing expenses.

General and administrative expenses decreased by 0.1% to RM5.5 million yoy mainly due to a reduction in performance incentives.

Other operating expenses has a reduction of 86.7% from RM3.5 million in 2Q2017 to RM0.5 million in 2Q2018. The decrease was mainly due to the foreign exchange gain.

The Group's effective tax rate was at 14.5% due to availability of tax incentives. Income tax expenses increased to RM5.7 million as a result of higher taxable income.

Overall for the 2Q2018, the Group's profit before tax and profit after tax increased by 23.9 % recorded at RM39.2 million and RM33.6 million respectively.

Balance Sheet Review

As at 30 June 2018, non-current assets which consist of Property, plant and equipment (PPE) and deferred tax asset, increased to RM452.9 million from RM429.6 million. PPE increased to RM443.0 million from RM419.8 million mainly on acquisition of RM43.7 million coupled with foreign exchange adjustment offset by the depreciation charge and PPE written off/ disposals of RM20.2 million and RM0.3 million respectively. The deferred tax asset increased by RM0.2 million to RM9.9 million mainly due to the availability of reinvestment allowances.

Inventories increased from RM71.1 million to RM95.3 million as at 30 June 2018 mainly due to higher sales volume. Trade receivables reduced by RM3.0 million and other receivables decreased to RM13.3 million as at 30 June 2018 as a result of better collection. Prepayments increased from RM2.4 million to RM5.2 million as at 30 June 2018 mainly due to prepayment of Malaysian government levy for foreign workers.

Cash and cash equivalents reduced to RM92.5 million as at 30 June 2018 from RM114.3 million as at 31 December 2017. For the 2Q2018, the Group generated RM26.3 million in net cash flows from operating activities and net cash flows used in investing activities amounting to RM24.2 million were mainly for the purchase of PPE. The Group has net cash flows used in financing activities in 2Q2018 amounting to RM43.7 million for the payment of dividends and repayment of bank borrowings.

Current liabilities increased to RM120.5 million as at 30 June 2018 from RM115.5 million as at 31 December 2017. This was mainly due to derivatives at RM2.9 million as at 30 June 2018. Provision for taxation was RM10.6 million as at 30 June 2018, increased from RM7.9 million as at 31 December 2017.

Non-current liabilities declined to RM26.9 million as at 30 June 2018 from RM30.3 million due mainly to a reduction in bank borrowings of RM3.0 million.

Commentary On Current Year Prospects

Phase 5 expansion plan is progressively being carried out in Taiping, Perak, Malaysia. By the end of December 2018 our Group will have a total annual production capacity of 9.0 billion gloves.

In addition, the Group has plans to add another 1.4 billion pieces of gloves by the end of 2019 as Phase 6, giving the Group a total annual production capacity of 10.4 billion pieces of gloves. Further details will be announced in due course.

The foreign currency fluctuations particularly in US Dollars, volatile raw material prices, increase in overall production costs and competition from the other glove manufacturers remain challenging for the Group.