Comprehensive Income Statement
The Group’s revenue for 1QFY18 increased by RMB 29.6 million or 6.1% year on year (“y-o-y”), due mainly to
the increase in revenue of our corn refining segment by 6.1%.
For 1QFY18, sales volume for the corn refining segment increased slightly from 247K (“K”=1,000) tonnes to
248K tonnes or about 0.6% y-o-y, due mainly to the increase in the sales volume of by-products of about 5.1%,
partially offset by the decrease in the sales volume of corn starch of about 2K tonnes.
The prices of the corn refining products decreased by 3.7% y-o-y due to stiff competition. This decrease was
attributable to the decreases in price of corn sweeteners and by-products of about 1.1% and 15.3%
The Group’s export revenue in 1QFY18 decreased by 10.4% y-o-y due to the lower selling price as a result of
stiff price competition from the export market, while export revenue as a percentage of total revenue decreased
from 3.2% in 1QFY17 to 2.7% in 1QFY18.
During 1QFY18, gross profit decreased by 0.3% y-o-y to RMB 63.5 million. Revenue increased by 6.1% y-o-y,
while the cost of sales increased to a larger extent by 7.0%. Group gross profit margin decreased by 0.8 percentage points or 6.1% y-o-y to 12.3%. This was mainly due to the increase in corn raw material prices of
about 12.9% and the decrease in price of corn refining products.
The Group has stopped the production of animal feed products since 1QFY16 to minimise our net loss.
The others segment including our Hongzhou subsidiary made a gross profit of RMB 0.5 million in 1QFY18.
Other operating income
Other operating income decreased by 21.4% from RMB 6.7 million in 1QFY17 to RMB 5.3 million in 1QFY18,
due mainly to the decrease in government grant and subsidies.
- Selling and distribution expenses
Selling and distribution expenses decreased by 9.9% from RMB 34.4 million in 1QFY17 to RMB 31.0 million in
1QFY18. This was mainly attributable to the decrease in transportation costs.
- Administrative expenses
The Group’s administrative expenses decreased by 17.9% from RMB 26.4 million in 1QFY17 to RMB 21.7
million in 1QFY18. This was partly due to the reclassification of certain depreciation charge and other
manufacturing overheads to operating expenses as a result of production halts of certain products.
- Other operating expenses
The Group’s other operating expenses increased by about RMB 0.3 million from RMB 0.4 million in 1QFY17 to
about RMB 0.7 million in 1QFY18. This was mainly due to the adjustment to the accrued corn added-value tax
for prior year.
The Group’s finance expenses decreased by 14.5% from RMB 13.3 million in 1QFY17 to RMB 11.4 million in
1QFY18. This was attributable to the decrease in interest costs as a result of the decrease in bank loans.
The increase in income tax expense was due to the increase in net profit generated from our Shaanxi subsidiary.
In addition, certain loss-making subsidiaries did not recognise deferred tax assets due to the uncertainty of their
future taxable profits. Therefore, the effective tax rate in 1QFY18 was higher than the statutory tax rate.
Total comprehensive loss
The Group’s total comprehensive income increased by 168.5% from a net loss of RMB 4.4 million in 1QFY17 to
a net profit of RMB 3.0 million in 1QFY18, due mainly to the decreases in administrative expenses, selling and
distribution expenses and finance expenses.
Statement of Financial Position
(i) Current assets
Current assets increased by RMB 28.3 million from RMB 602.3 million as at 31 December 2017 to RMB 630.6
million as at 31 March 2018, due mainly to the increase in inventories of RMB 19.8 million, the increase in trade
receivables of RMB 6.7 million, and the increase in other receivables, deposits and prepayments of RMB 8.8
million, which were partially offset by the decrease in cash and cash equivalents of RMB 6.3 million. Trade
receivable turnover days was 32 days in 1QFY18, remaining the same as last year. Inventory turnover days
was higher at 40 days in 1QFY18 as compared with 36 days for FY17.
(ii) Non-current assets
The decrease in non-current assets of RMB 19.1 million was mainly due to the depreciation of RMB 20.6 million
and the disposal of plant and equipment of RMB 2.4 million, which were partially offset by the capital
expenditure of RMB 3.9 million.
(iii) Current liabilities
Current liabilities increased by RMB 20.3 million from RMB 568.1 million as at 31 December 2017 to RMB 588.4
million as at 31 March 2018, due mainly to the increase in trade payables of RMB 32.3 million, which was
partially offset by the decrease in other payables and accruals of RMB 12.5 million. Trade payable turnover
days was higher at 53 days, compared with 48 days for FY17.
The Group’s debt equity ratio was 8.07 times as at 31 March 2018 compared with 8.46 times as at 31
December 2017, and the net debt equity ratio was 6.20 times as at 31 March 2018 (31 December 2017: 6.47
times). This was due to the decrease of RMB 13.0 million in total interest-bearing loans and borrowings and the
increase of RMB 3.0 million in total equity resulting from the net profit in 1QFY18.
(iv) Non-current liabilities
Non-current liabilities decreased by RMB 14.1 million due to the decrease in long-term interest-bearing loans of
RMB 13.0 million and the decrease in deferred income of RMB 1.1 million.
(v) Shareholders' equity
As at 31 March 2018, shareholders’ equity was higher than that as at 31 December 2017 due to the net profit of
RMB 3.0 million in 1QFY18.
For 1QFY18, the Group had net operating cash inflow of RMB 18.9 million. This comprised operating profit
before changes in working capital of RMB 34.1 million, adjusted for increase in working capital of RMB 15.1
million and income tax paid of RMB 0.2 million.
The changes in working capital were mainly the result of:
i) an increase in inventory of RMB 19.8 million;
ii) an increase in trade receivables of RMB 6.7 million;
iii) an increase in other receivables, deposits and prepayments of RMB 8.8 million; and
iv) a decrease in other payables and accruals of RMB 12.5 million,
which were partially offset by
v) an increase in trade payables of RMB 32.3 million.
Net cash used in investing activities amounted to RMB 0.8 million in 1QFY18. This was mainly due to the
equipment upgrading expenditure and purchase of packaging containers for our finished products. These cash
outflows were partially mitigated by the cash inflow arising from proceeds from the disposal of plant and
equipment of RMB 2.5 million.
Net cash used in financing activities was RMB 24.3 million, mainly due to the interest expense of RMB 11.3
million and the net decrease in total bank loans of RMB 13.0 million.