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Quarterly Report For The Financial Period Ended 31 December 2017

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Unaudited Condensed Consolidated Statements Of Comprehensive Income
For The Fourth Quarter Ended 31 December 2017

 Income Statement
 

Unaudited Condensed Consolidated Statements Of Financial Position
As At 31 December 2017

Financial Position
 

Review of Performance

Review of Performance

Performance review for the current quarter three (3) months ended 31 December 2017

The Group's revenue for the current quarter three (3) months ended 31 December 2017 ("4Q2017") was recorded lower by approximately RM1.61 million, representing a decrease of 12.37% as compared to the preceding year corresponding quarter ended 31 December 2016 ("4Q2016"). The decrease in revenue was mainly due to the decrease in sales of petrochemicals products by 52.05% and recycled paint and solvent products by 86.56%, partly offset with the increase in sales of recycled oil products by 11.99% as compared to 4Q2016.

The Group's gross profit margin has reduced by 1.28% from 23.56% recorded in the preceding year corresponding quarter 4Q2016. The marginal drop in gross profit margin was mainly due to product mix and increase in raw material price and labour cost.

The administrative expenses has reduced by 11.84% as compared to 4Q2016 mainly due to the decrease in staff cost in the 4Q2017.

The selling and distribution cost has decreased by 79.74% as compared to 4Q2016. This was mainly due to the rationalisation of distribution channel which had resulted in the savings of transportation costs.

The finance cost has reduced by 32.63% as compared to 4Q2016 mainly due to refinancing activity and loan settlement in the second half of 2016.

Resulting from the above, the Group's has recorded a profit before taxation of RM1.10 million for the current quarter as compared to a profit before taxation of RM1.22 million in the 4Q2016.

Performance review for the FYE 31 December 2017

For the FYE 31 December 2017, the Group's revenue has increased by RM12.80 million or 44.50% as compared to the FYE 31 December 2016 as a result of the increase in sales of recycled oil products by 147.48%.

The Group's gross profit margin stood at 23.80%, representing a decrease of approximately 5.68% as compare to 29.48% recorded in the FYE 31 December 2016. The lower gross profit margin was primarily resulted from product mix follow by the decrease in profit margin of the scheduled waste collection services due to the increase in labour cost and service mix. The scheduled waste collection services contributed approximately 19.32% of the Group's total revenue and experiencing decrease in gross profit margin by 4.84% as compared to FYE 31 December 2016 and thus impacted the overall gross margin of the Group.

The administrative expenses has increased by 11.58% as compared to FYE 31 December 2016 mainly due to the impairment loss on trade receivables amounted to RM0.84 million and stamp duty paid for the title transfer of properties amounted to RM0.29 million in the 3Q2017 and partly offset by the decrease in staff cost in the FYE 31 December 2017.

The selling and distribution cost has reduced by 41.06% as compared to FYE 31 Decemeber 2016. This was mainly due to the rationalisation of distribution channel which had resulted in the savings of transportation costs.

The finance cost has reduced by 17.39% as compared to FYE 31 December 2016 mainly due to refinancing activity and loan settlement in the second half of 2016, partly offset by the increase in overdraft and finance lease interest incurred in the FYE 31 December 2017.

Resulting from the above, the Group's has recorded a profit before taxation of RM1.88 million as compared to the profit before taxation of RM1.04 million in the FYE 31 December 2016. The increase in profit before tax was mainly due to increase in revenue and saving in selling and distribution and finance cost.

Prospects

The outlook for the financial year ending 31 December 2018 remains challenging due to uncertainty of the oil prices and global economy. This in turn may affect the demand for the Group's products and services and correspondingly assert a downward pressure on the Group's revenue and margins. Nonetheless, the Group is constantly undertaking continuous enhancements in production efficiencies, overhead and production cost management. In addition, the Group intends to enhance its product offerings to overseas market, which is expected to generate better sales and profitability.