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UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
Review of Performance
Review of the Group’s Performance for the full year ended 31 December 2017 (“FY2017”) as compared to that for the full year ended 31 December 2016 (“FY2016”)
Revenue recorded an increase of approximately 21.1% or RMB460.7 million in 2017 mainly due to the increase in average sale price of LPG from RMB2,625 per tonne in 2016 to RMB 3,527 per tonne in 2017 as international oil price recovered from its low point. This is partially offset by a drop in sales volume from 830,541 tonnes in 2016 to in 750,876 tonnes in 2017 as a result of increased competition due to alternative energy products. In addition, average LPG price in 2017 is not as competitive as compare to natural gas, resulting a drop in total volume.
Gross profit slightly decreased by RMB42.8 million to RMB113.6 million in FY2017 as compared to FY2016. Correspondingly, gross profit margin decreased from 7.18% to 4.30% due to higher purchase costs in 2017 as well as higher competition in the international market as compared to that in the prior year.
Other operating income
Other operating income increased by RMB 9.6 million or 123.8% in FY2017 as compared to FY2016 mainly due to the foreign exchange gain of RMB 11.46 million as a results of strengthening of RMB against USD. This is partly offset by the decrease of ship rental income of RMB1.15 million.
Operating expenses decreased mainly due to:
Finance costs decreased by approximately RMB3.64 million or 20.56% mainly due to the decrease in interest expense for bank loans.
Profit attributable to equity holders
As a result of the above, the Group recorded a net profit attributable to equity holders of RMB36.63 million in FY2017 compare to a net profit of RMB40.97 million in FY2016.
Review of the Group’s Financial Position as at 31 December 2017
Non-current assets decreased by approximately RMB11.96 million or 7.35% mainly due to fixed assets depreciation RMB14.98 million, which was partially offset by purchase of new assets of RMB3.04 million.
Current assets decreased by approximately RMB37.41 million or 8.44% in FY 2017 from RMB443.13 million to RMB405.72 million mainly due to the decrease in inventories of RMB16.89 million, decrease in trade and other receivables and due from related parties of RMB44.40 million and decrease in held to maturity investment of RMB14.11 million. This is partially offset by an increase of cash and cash equivalents of RM36.71 million.
Current liabilities decreased by approximately RMB144.42 million or 30.12% in FY 2017 from RMB479.56 million to RMB335.13 million mainly due to the decrease short-term borrowings of RMB247.05 million. This is partially offset by the increase in the trade and other payables of RMB102.15 million, and the increase in due to a related party of RMB0.57 million.
Review of the Group’s Cash Flow Statements for the financial year ended 31 December 2017
Net cash generated from operating activities amounted to approximately RMB216.88 million due mainly to the profit before income tax of RMB36.63 million, net cash inflow of working capital RMB164.28 million and less net interest paid of RMB13.92 million.
Net cash inflows from working capital arose mainly from an increase in inventories of RMB16.89 million, increase in trade and other receivable of RMB9.02 million and due from related parties of RMB35.38 million, increase in trade and other payables of RMB102.15 million.
Net cash inflows generated from investing activities amounted to RMB9.47 million mainly due to the sale of held to maturity investments of RMB12.51 million, partially offset by the purchase of property, plant and equipment of RMB3.04 million.
Net cash outflows from financing activities amounted to RMB189.79 million mainly due to decrease in pledged fixed deposits of RMB0.74 million, repayment of bank borrowing of RMB1,136.1 million. This is partially offset by the proceeds from bank borrowings of RMB947 million.
On the macro perspective, the improvement of the economic situation will stimulate the development of commodity trading as well as the transaction volume of bulk commodities. At the same time, the demand for energy products will also increase due to the increased living standard and demand for energy such as liquefied petroleum gas, natural gas, gasoline and diesel oil will also be on the rise.
For 2018 and over the next 12 months, the group is optimistic that international oil price is likely to move up and LPG should be on the uptrend from 3Q 2018 onwards. Although crude oil is expected to have limited upside, it is still capable of sustaining liquefied gas prices in 2018.
On the supply side, with the increase of domestic refining capacity, the domestic LPG supply will maintain a relatively steady or moderate increase. At the same time, the downstream of liquefied petroleum gas will be based on factor such as the existing deep processing capacity. The anticipated new demand has also accelerated the amplification of the market supply gap and the import volume of LPG will maintain at steady growth rate.
Although natural gas prices have risen sharply as a result of the reduced supply, natural gas will still be in great demand and continue to gain market share in the downstream markets of the region.
In 2018, the overall average price of liquefied gas is expected to continue to rise, and will show an obvious seasonal trend but the price trend is relatively difficult to predict and control. Our Group will continue to be prudent even though overall outlook is much better compare to 2017. The Group continue to be careful in managing our business risks and operating costs and strive to further improve our profitability in 2018.