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UNAUDITED RESULTS FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 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 (loss)/gain and fair value gain/ (loss) on derivatives have been included in other operating expenses

A Statement of financial Position

Review Of Performance

Income Statement Review

For 3Q2018, the Group achieved RM239.5 million in total revenue, a 27.5% increase as compared to RM187.8 million in 3Q2017. With the increase in total revenue, the cost of sales had increased by 41.2% to RM193.4 million in 3Q2018. The Group's gross profit reduced 9.2% year-on-year (yoy) from RM50.8 million to RM46.1 million

The Group's other income had a marginal reduction to RM0.7 million in 3Q2018 mainly due to lower interest income.

Selling and distribution expenses increased by 20.6% yoy to RM4.3 million in 3Q2018 mainly due to increase in marketing expenses.

General and administrative expenses decreased by 13.2% to RM5.4 million yoy mainly due to a reduction in performance incentives.

Other operating expenses has a reduction of 131.4% from RM1.7 million in 3Q2017 to credits of RM0.5 million in 3Q2018 due to the foreign exchange gain.

The Group's effective tax rate was at 14.0% due to availability of tax incentives. Income tax expenses decreased to RM5.2 million as a result of lower taxable income.

Overall for the 3Q2018, the Group's profit before tax reduced by 5.8% to RM37.4 million and profit after tax decreased by 6.5% to RM32.1 million when compared to 3Q2017.

Balance Sheet Review

As at 30 September 2018, non-current assets which consist of Property, plant and equipment (PPE) and deferred tax asset, increased to RM474.0 million from RM429.6 million. PPE increased to RM464.3 million from RM419.8 million mainly on acquisition of RM74.7 million coupled with foreign exchange adjustment of RM0.3 million offset by the depreciation charge and PPE written off/ disposals of RM30.4 million and RM0.1 million respectively. The deferred tax asset increased marginally to RM9.8 million mainly due to the availability of reinvestment allowances.

Trade receivables and inventories increased from RM142.5 million to RM148.1 million and RM71.1 million to RM89.8 million as at 30 September 2018 respectively mainly due to increase in sales and higher production volume. As a results of refund from Goods and services tax, other receivables reduced to RM13.7 million as at 30 September 2018 from RM15.4 million. Prepayments increased from RM2.4 million to RM5.0 million as at 30 September 2018 mainly due to prepayment of Malaysian government levy for foreign workers.

Cash and cash equivalents reduced to RM106.2 million as at 30 September 2018 from RM114.3 million as at 31 December 2017. For the 3Q2018, the Group generated RM44.7 million in net cash flows from operating activities and net cash flows used in investing activities amounting to RM31.0 million were mainly for the purchase of PPE. The Group has net cash flows used in financing activities in 3Q2018 amounting to RM1.5 million for the repayment of bank borrowings.

Current liabilities increased to RM125.6 million as at 30 September 2018 from RM115.5 million as at 31 December 2017. This was mainly due to higher payables and accruals from RM101.6 million to RM113.1 million and derivatives of RM0.6 million as at 30 September 2018. Provision for taxation was RM5.9 million as at 30 September 2018, reduced from RM7.9 million as at 31 December 2017.

Non-current liabilities declined to RM25.8 million as at 30 September 2018 from RM30.3 million mainly due to the repayment of bank borrowings of RM4.5 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.

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.