USP Group sinks into the red for Q3 with S$380,000 loss

MAINBOARD-LISTED USP Group has reported a net loss of S$380,000 for the third quarter ended Dec 31, 2018, from a net profit of S$806,000 a year ago. Loss per share was at 0.48 Singapore cent, compared to earnings per share of 1.07 Singapore cents a year earlier.

For the nine months ended Dec 31, net loss widened to S$1.24 million from a year-ago, which was S$352,000 in deficit.

According to the company, revenue for the third quarter grew by 15.1 per cent to S$11 million from S$9.6 million for the same period last year. This was driven by stronger performance of the group's marine sector business which grew 22.7 per cent compared to the year before.

However, this growth was offset by lower revenue from USP Group's recycling of waste oil sector which fell to S$0.3 million for the quarter from S$0.5 million due to lower selling prices, as global palm oil commodity price fell during the period.

The company also saw a S$0.1 million increase in selling and distribution expenses for the quarter from logistics overheads resulting from an increase in sales activities. General and admin expenses also dipped 13.8 per cent to S$3.4 million from S$3.9 million for the year-ago period, due to the settlement of a November 2017 legal suit with associated company MSV Systems and Services.

Third-quarter finance cost increased to S$0.5 million from S$0.4 million the year before, due to higher effective borrowing rates and borrowings. Loss after tax was at S$0.4 million in Q3 2019, compared to a profit for Q3 2018 S$1.0 million. This was largely due to a smaller gain on revaluation of quoted securities and the absence of an exceptional gain on the disposal of MSV amounting to S$1.16 million which took place in the previous corresponding period.

As a result, Ebitda (earnings before interest, taxes, depreciation, and amortisation) dipped to S$0.9 million for Q3 2019 from S$2.0 million for Q3 2018 . The company added that the current period would have exhibited a slight increase had the revaluation gain on the quoted securities and one-off gain on the disposal of MSV and its related costs been excluded, for the three months ended December 2017. This would mean the adjusted Ebitda would be at S$0.7 million as compared to the current quarter of S$0.71 million.

In terms of current assets, the company saw inventories decrease by S$2.5 million to S$11.4 million from S$13.9 million. This was largely due to the increase in marine sales and stronger inventory management. Trade and other receivables increased by S$1.4 million to S$7.0 million for the current period from S$5.6 million, while investment securities depreciated to $0.9 million due to the recognition of fair value loss on its holdings in quoted securities.

Overall liabilities also decreased by $1.2 million, largely due to repayment of loan and borrowings. For cash flow during the current period, the group spent S$1.6 million to replenish its inventory which was reflected in the net drawdown on S$1.4 million of loan and borrowings.