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Quarterly Report For The Financial Period Ended 30 June 2017

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Unaudited Condensed Consolidated Statements Of Comprehensive Income
For The Second Quarter Ended 30 June 2017

 Income Statement
 

Unaudited Condensed Consolidated Statements Of Financial Position
As At 30 June 2017

Financial Position
 

Review of Performance

Review of Performance

Performance review for the FPE 31 March 2017 versus the FPE 31 March 2016

The Group's revenue for the current quarter three (3) months ended 30 June 2017 ("2Q2017") was recorded higher by approximately RM3.36 million, representing an increase of 63.35% as compared to the preceding year corresponding quarter ended 30 June 2016 ("2Q2016"). The increase in revenue was mainly due to the increase in sales of recycled oil products by 336.23% and scheduled waste collection services by 21.92%, partly offset by the reduced in sales of petrochemicals products by 43.50% as compared to 2Q2016.

The Group's gross profit margin has decreased by 4.81% from 33.67% recorded in the preceding year corresponding quarter 2Q2016. The lower gross profit margin was mainly due to the increase in raw material price and labour cost.

The administrative expenses has increased by 26.64% as compared to 2Q2016 mainly due to the impairment loss on trade receivables amounted to RM0.43 million in the 2Q2017.

The selling and distribution cost has reduced by 40.80% as compared to 2Q2016. This was mainly due to the rationalisation of distribution channel which had resulted in the travelling and transportation cost savings.

The finance cost has reduced by 12.54% as compared to 2Q2016 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 RM0.29 million for the current quarter as compared to a loss before taxation of RM0.19 million in the 2Q2016.

Performance review for the FPE 30 June 2017 versus the FPE 30 June 2016

For the FPE 30 June 2017, the Group's revenue has increased RM9.89 million or 98.60% as compared to the FPE 30 June 2016 as a result of the increase in sales of recycled oil by 304.39%.

The Group's gross profit margin stood at 22.34%, representing a decrease of approximately 0.72% as compare to 33.21% recorded in the FYE 30 June 2016. The lower gross profit margin was contributed from the scheduled waste collection services due to the increase in labour cost and service mix. The scheduled waste collection services contributed approximately 16.92% of the Group's total revenue and experiencing decrease in gross profit margin by 25.62% as compared to FPE 30 June 2016 and thus impacted the overall gross margin of the group.

The administrative expenses has increased by 8.86% as compared to FPE 30 June 2016 mainly due to the impairment loss on trade receivables amounted to RM0.43 million in the FPE 30 June 2017.

The selling and distribution cost has reduced by 37.17% as compared to FPE 30 June 2016. This was mainly due to the rationalisation of distribution channel which had resulted in the travelling and transportation cost savings.

The finance cost has reduced by 13.64% as compared to FPE 30 June 2016 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 RM0.46 million as compared to a loss before taxation of RM0.72 million in the FPE 30 June 2016. This 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 2017 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.