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Second Quarter Financial Statement And Dividend Announcement 2018

Financials Archive

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Unaudited Financial Statements For The Second Quarter Ended 30 June 2018

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 June 2018

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 June 2018

Balance Sheet

Review of Performance

Review of the Group’s Performance for The Second Quarter Ended 30 June 2018 (“2Q2018”) as compared to that of the 2nd quarter ended 30 June 2017 (“2Q2017”)

Revenue

Revenue increased by approximately 3.4% or RMB21.5 million, mainly due to the increase of average sale price of LPG from RMB3,140 per tonne in 2Q2017 to RMB3,542 per ton in 2Q2018. This is partially offset by the decrease in the sales volume of LPG from 200,648 tonnes 2Q2017 to 183,961 tonnes in 2Q2018. Price competitiveness of LPG as compared to substitute products contributed to the increase of local demand during the period.

Gross Profit/(Loss)

Gross profit increased by RMB33.6 million as compared to gross loss of -RMB4.3 million in 2Q2017 due to margin increase and sales mix with domestic sales volume increased by 5.7% (174,218 tonnes vs corresponding period: 164,291 tonnes) whilst export volume was down by 26.3% (19,670 tonnes vs corresponding period: 26,695 tonnes) as result of canceling non profitable long term contract export customer. Correspondingly, gross profit margin improved from - 0.7% in 2Q2017 to 4.5% in 2Q2018.

Other operating income

Other operating income decreased by RMB3.1 million or 34.4% as compared to 2Q2017, mainly due to the foreign exchange gain of RMB3.3 million in 2Q2017.

Operating expenses

Operating expenses increased by RMB8.3 million or 40.1% mainly due to the following:

  1. Selling and distribution expenses decreased by approximately RMB6.8 million or 47.6% due to marine freight decrease driven by lesser export volume
  2. Administrative expenses decreased by RMB0.04 million or 0.6%
  3. Other operating expenses increased by RMB15.1 million mainly due to exchange loss 11.5million and letter of credit fees charged by bank.

Finance costs increased by approximately RMB1.8 million or 52.3% mainly due to decrease of interest expenses driven by the decrease in average loans from banks.

Review of the Group’s Financial Position as at 30 June 2018 and the Group’s Financial Position as at 31 December 2017

Current assets decreased by approximately RMB2.7 million or 0.6%. This is mainly due to decrease in due from related parties of RMB5.7 million, and pledged fixed deposits of RMB18.7million and partly offset by an increase in inventories of RMB10.1 million, increase in trade and other receivables of RMB7.7 million and increase in cash and cash equivalents of RMB3.9 million.

Current liabilities increased by approximately RMB15.9 million or 4.7%. This is mainly due to an increase in short term borrowings of RMB88.5 million and partially offset by decrease in the trade and other payables of RMB70.1 million.

For the six months ending 30 June 2018, the Group’s working capital decreased by RMB18.6 million or 26%, however, the Group’s shareholders’ equity increased by RMB5.9 million or 3.6%.

Review of the Group’s Cash Flow Statements for 2Q2018

The Group’s Operating profit before interest and depreciation was RMB9.2 million for 2Q2018. Net cash generated after working capital changes was RMB49.7 million during 2Q2018. This was mainly due to increase in Trade Payables of RMB93.1 million and Due from related parties of RMB21.8 million, partly offset by increases in Inventories of RMB39.9 million and Trade Receivables of RMB33.9 million.

Net cash outflow from investing activities amounted to RMB2.5 million due to purchase of fixed assets.

Net cash generated from financing activities amounted to RMB17.8 million mainly due to increase in short term borrowing RMB 28.0million, partially offset by repayment of long term bank borrowings RMB11.0million.

Commentary

International oil price has risen substantially recently and will most likely remain high as the OPEC countries continue to stick to their production quotas to boost oil prices and also the geopolitical tensions in the Middle East, particularly the United States sanctions on Iran. In addition, trade tensions will likely have some impact on the China economy and also the possibility of tariffs on our Company’s imports from the United States. The RMB was much weaker than expected and will most likely follow recent downward trend. The global economy and China economy remains positive although growth rate may be slower. Domestic demand for LPG was healthy and is likely to continue whilst exports may continue to be reduced. Our Group is keeping close watch over these market and global trends in managing our business risks, notwithstanding our better performance in first half of 2018 versus the corresponding period in 2017. Going forward, our Group remains cautiously optimistic and will focus on opportunities to improve our profitability and strengthen our financial position.