Preliminary Unaudited Announcement for the year ended 31 March 2018

Transcription

1 QEX Logistics Limited (NXT: QEX) Preliminary Unaudited Announcement for the year ended 31 March 2018 Commentary AUCKLAND, New Zealand, 31 May 2018 The Board of QEX Logistics Limited (NXT: QEX) is pleased to announce the preliminary unaudited results of the business for the financial year ended 31 March 2018 (FY18). Results for Announcement to the Market Reporting Period 12 months to 31 March 2018 Previous reporting period 12 months to 31 March 2017 Amount for this reporting period (000s) Amount for previous reporting period Revenue from ordinary activities Profit from ordinary activities after tax attributable to shareholders Net profit attributable to shareholders $NZ 31,524,578 $NZ 22,233,833 $NZ 1,249,787 $NZ 1,875,939 $NZ 1,249,787 $NZ 1,875,939 Interim/Final Dividend Amount per share Imputed amount per share The company does not propose to pay a dividend at this time. Not applicable Not applicable Record Date Dividend Payment Date Not applicable Not applicable Comments: See below 1

2 QEX Logistics Limited (NXT: QEX) Preliminary Unaudited Announcement for the year ended 31 March 2018 The Board of QEX Logistics Limited is pleased to release the preliminary unaudited results for the financial year ended 31 March 2018 (FY18). FY18 Results The Group s focus in FY18 was the continued growth in revenue through growing existing markets and the development of new market opportunities; and the listing of the Company on the NXT. QEX was listed on the NXT on 15 February Since listing, there has been active trading in the Company s shares and QEX now has more than 160 shareholders. The listing has raised the profile of the group and created a number of new business opportunities. Total revenue for the year increased by 42% to $31.5 million. Milk powder revenue increased by 49%. This growth was funded by bank borrowings and from the $2.575 million raised through the issue of new equity prior to listing. This additional funding enabled the Group to purchase and sea freight higher volumes of infant formula to Shanghai. As a result, the Group was better placed to meet customer demand with a lower cost landed product, as well as providing protection against shortages in the availability of milk powder. The market for dairy products continues to be very competitive with customers being sensitive to pricing, availability and freshness of the products. The Group s revenues from logistics and customs clearance remained stable. Reductions in international parcel revenues in New Zealand, due to competitive pricing pressures, were offset by new logistics revenues from Australian and Chinese customers. The Group achieved a gross margin of $5.066 million (16.1%), an increase of $1.2 million on FY17. Higher costs as a result of the listing and the business growth resulted in a decrease in net profit before tax to $1.85 million (FY17: $2.59 million). Employee costs have increased by 106%. This is a combination of the increase in employees for the New Zealand operations, as well as the employee costs for Shanghai Ditu which were not part of the group in the last financial year. Also, in January the Group moved into new premises near Auckland Airport providing better facilities for ongoing growth and opportunities for new revenues from warehousing services. The table below shows how we reconcile reported profit after tax and the underlying EBITDA for the years ended 31 March 2018 and 31 March The reconciliation adjusts for the costs incurred in FY18 as a result of the decision to list the Company, the cost of the share option scheme which was developed in association with the listing, and in FY17, the gain on acquisition which was a gain that 2

3 arose on acquisition of the Company s subsidiary, Shanghai Ditu International Freight Forwarder Co., Limited ( Shanghai Ditu ). EBITDA Reconciliation For the year ended 31 March $ $ Net profit after tax per Financial Statements 1,189,885 1,875,939 Plus: net interest and financing cost 119,484 (46,039) Plus: tax expense 656, ,112 Plus: depreciation 86,360 65,028 EBITDA per Financial Statements 2,051,913 2,611,040 Plus: NXT initial listing related costs 579,317 - Plus: share option cost 136,324 - Less: gain on acquisition of subsidiary - (47,879) Underlying EBITDA 2,767,554 2,563,161 Cash flows The Consolidated Statement of Cash Flows shows a net cash out flow from operations of $3.18 million. This net cash out flow is a result of the rapid expansion of the business, with increases in inventory levels, prepayments for inventory and increasing receivables in line with the QEX Group s strong revenue growth. These cash flows have been funded by bank funding and from the issue of new share capital prior to listing which has enabled the Group to purchase and ship greater volumes of inventory, resulting in higher levels of more profitable sales. New Subsidiaries and Associates QEX purchased the Shanghai based company, Shanghai Ditu on 31 March 2017 (as previously disclosed in the 2017 financial statements). Therefore the financial comparatives for FY17 in the Consolidated Statement of Profit or Loss & Other Comprehensive Income shown below do not include the financial performance of Shanghai Ditu. During the 2018 financial year, QEX incorporated a wholly owned subsidiary in Australia, New Y (AUS) Pty ( New Y (AUS) ). This subsidiary is responsible for the Group s operations in Australia. The impact of Shanghai Ditu s and New Y (AUS) s performance on the Group s 2018 results is detailed in the segmental analysis below. In March 2018, QEX and two other shareholders incorporated ANZ Brand House Limited with each shareholder having a 33% interest in the company. The shareholders are currently finalising a joint venture agreement. ANZ Brand House has just been granted the New Zealand distribution rights for Munchkin Grass Fed Infant Formula and Munchkin Accessory products. Munchkin is a California- 3

4 based infant product company with its infant formula produced by New Zealand dairy processing company, Synlait. QEX will benefit from its share of ANZ Brand House s profits, revenues from providing logistics services to the joint venture company and access to Munchkin infant formula for sale to QEX s customers. Share Options In November 2017 and in anticipation of its listing, QEX issued 2,600,000 share options to Directors and senior management. Earnings per Share The earnings per share are shown below in the Consolidated Statement of Profit & Loss and Other Comprehensive Income. To provide meaningful and relevant reporting to shareholders and investors, two calculations of earnings per share are provided. The first is calculated using the weighted average shares issued for the year to 31 March. The second calculation uses the total shares on issue at balance date. In accordance with IAS 33: Earnings per Share, the earnings per share calculations reflect the impact of the November 2017 share split as if it occurred at the beginning of the 2017 comparative period. The diluted earnings per share incorporates the 2,600,000 share options on issue. There were no options on issue in FY17. Audit The Consolidated Financial Statements are in the process of being audited. It is considered they are not likely to be subject to qualification. Future Events Event Date Annual report due 30 June 2018 FY19 First Quarter Business Update 28 July 2018 ENDS Authority for this announcement Name of senior manager or director authorised to make this announcement: Ronnie XUE Contact phone number: Contact address: ronnie.x@qexpress.co.nz Date of release: 31 May

5 QEX shares can be traded on the NXT Market. QEX is required to disclose information under the NXT Market Rules. Information about the NXT Market and QEX is available at or from the company s website at 5

6 QEX Logistics Limited Consolidated statement of profit or loss & other comprehensive income for the year ended 31 March (unaudited) (audited) $ $ Revenue 31,524,578 22,233,833 Cost of sales (26,458,843) (18,388,798) Gross profit 5,065,735 3,845,035 Other Income Interest Received 23,109 54,982 Expenses Administrative expenses (1,544,302) (557,001) Employee benefits expenses (1,469,520) (724,874) Depreciation expenses (86,360) (65,028) Finance costs (142,593) (8,942) (3,242,775) (1,355,845) Gain on acquisition of subsidiary - 47,879 Profit before tax 1,846,069 2,592,051 Income tax expense (656,184) (716,112) Profit for the year 1,189,885 1,875,939 Other comprehensive income Exchange differences on translating foreign operations 59,902 - Total comprehensive income for the year 1,249,787 1,875,939 Attributable to: Owners of the company 1,249,787 1,875,939 Earnings per share (from continuing operations) * Based on weighted average shares to 31 March Basic (per share) Diluted (per share) Based on total shares issued at 31 March Basic (per share) Diluted (per share) * the preliminary announcement commentary provides an explanation of the calculation of earnings per share. 6

7 QEX Logistics Limited Consolidated statement of financial position at 31 March (unaudited) (audited) $ $ Current Assets Cash 1,751, ,091 Trade and other receivables 4,336,546 1,866,235 Prepayments 1,882, ,806 Inventories 3,781,635 1,275,999 Loan to shareholder - 1,431,000 Total Current Assets 11,752,923 5,212,131 Non-Current Assets Property, plant and equipment 442, ,997 Intangible assets 5,320 - Deferred tax 69,909 50,769 Total Non-Current Assets 517, ,766 Total Assets 12,270,429 5,695,898 Current Liabilities Trade and other payables 2,894,339 1,902,522 Borrowings 2,319, ,861 Tax payable 839, ,216 Total Current Liabilities 6,053,020 3,439,599 Total Liabilities 6,053,020 3,439,599 Net Assets 6,217,409 2,256,298 Capital Share capital 2,575, Share based payment reserve 136,324 - Retained earnings 3,446,082 2,256,197 Foreign currency translation reserve 59,902 - Total Equity 6,217,409 2,256,298 Net tangible assets per share $0.12 $1.47 7

8 QEX Logistics Limited Consolidated statement of changes in equity for the year ended 31 March 2018 Share capital Share based payment reserve Retained earnings Foreign Currency Translation Reserve Total $ $ $ $ $ Balance at 1 April , ,358 Profit for the year - - 1,875,939-1,875,939 Other comprehensive income Total comprehensive income for the year - - 1,875,939-1,875,939 Issue of ordinary shares Distributions to owner Balance at 31 March 2017 and 1 April 2017 (Audited) 101-2,256,197-2,256,298 Profit for the year - - 1,189,885-1,189,885 Other comprehensive income: Exchange differences on translating foreign operations ,902 59,902 Total comprehensive income for the year - - 1,189,885 59,902 1,249,787 Issue of ordinary shares 2,575, ,575,000 Share options issued - 136, ,324 Distributions to owners Balance at 31 March 2018 (Unaudited) 2,575, ,324 3,446,082 59,902 6,217,409 8

9 QEX Logistics Limited Consolidated statement of cash flows for the year ended 31 March (unaudited) (audited) $ $ Cash flows from operating activities Receipts from customers 29,472,130 21,863,801 Payments to suppliers and employees (31,891,755) (21,297,107) Cash generated from operations (2,419,625) 566,694 Interest received 23,109 Interest paid (141,796) (8,942) Income taxes paid (641,588) (149,557) Net cash generated by operating activities (3,179,900) 408,195 Cash flows from investing activities Payments for property, plant and equipment (112,896) (332,792) Cash received on acquisition of subsidiary - 72,535 Net cash used in investing activities (112,896) (260,257) Cash flows from financing activities Proceeds from trade finance 1,592, ,861 Payment for purchase of subsidiary (720,800) - Proceeds from issue of shares 2,575,001 - Proceeds from shareholder loan 1,477, ,115 Payment to shareholder on loan (34,317) (1,652,812) Net cash used in financing activities 4,889,319 (335,836) Net (decrease)/increase in cash and cash equivalents 1,596,523 (187,898) Cash and cash equivalents at the beginning of the year 154, ,989 Effects of exchange rate changes on the balance of cash held in foreign currencies 1,362 - Cash and cash equivalents at the end of the year 1,751, ,091 9

10 Reporting of Segments The following sets out information by major segment. The Group specialises in delivering parcels to China for online business sellers in New Zealand, as well as the sale of milk powder that is delivered into China. Revenue from major products and services The Group has identified its operating segments based on how the Chief Operating Decision Maker (CODM) reviews internal reports in order to assess the performance of the Group. The CODM of the Group is the Chief Executive Officer. For management purposes the Group reports on revenues for the different product and services. Apart from the cost of milk powder, expenses are not allocated by segment. The unallocated operating expenses include freight costs and overheads. Management does not prepare a calculation of profit by segment. Parcel delivery, logistics & Sales of Milk Other / Total customs Powder Unallocated 2018 clearance $ $ $ $ Revenue 11,831,687 19,692,891-31,524,578 Cost of milk powder (17,838,885) (17,838,885) Operating expenses (11,633,779) (11,633,779) EBITDA 2,051,913 Depreciation (86,360) Net finance income (costs) (119,484) Gain on acquisition of subsidiary - Profit before income tax 1,846,069 Income tax (656,184) Profit after tax 1,189,885 Inventories of $3,781,635 (2017: $1,275,999) disclosed in the consolidated statement of financial position solely relate to the purchase and sale of milk powder. Borrowings of $2,319,265 (2017: $726,861) are used to fund the purchase of this milk powder. All other assets and liabilities are not allocated to a particular segment. Parcel delivery, logistics & Sales of Milk Other / Total customs Powder Unallocated 2017 clearance $ $ $ $ Revenue 9,020,642 13,213,191-22,233,833 Cost of milk powder (11,846,516) (11,846,516) Operating expenses (7,824,156) (7,824,156) EBITDA 2,563,161 Depreciation (65,028) Net finance income (costs) 46,039 Gain on acquisition of subsidiary 47,879 Profit before income tax 2,592,051 Income tax (716,112) Profit after tax 1,875,939 10

11 Geographical information During the financial year the Group provided its services to customers in New Zealand, Australia and China. (2017: At balance date, following the acquisition of Shanghai Ditu International Freight Forwarder Co., Limited, the Group held assets and liabilities in New Zealand and China) New Zealand Australia China Total $ $ $ $ Total segment revenue 27,910,595 2,439,275 1,174,708 31,524,578 Total segment non-current assets* 446, , New Zealand Australia China Total $ $ $ $ Total segment revenue 22,233, ,233,833 Total segment non-current assets* 429,939-3, ,997 * non-current assets exclude deferred tax assets. Information about major customers For the year ended 31 March 2018 there were 2 customers who individually accounted for more than 10% of the Group's total sales. The sales to these customers were $3.4 million and $3.3 million respectively. The customers purchased international parcel delivery services and milk powder products. In 2017, 2 customers individually accounted for more than 10% of total sales. Sales to these customers were $4.4 million and $3.4 million. Each of these customers purchased international parcel delivery services and milk powder products. 11