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Financials

Second Quarter Results Financial Statement And Related Announcement

Financials Archive

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Unaudited Second Quarter Financial Statement Announcement for the Financial Period Ended 30 June 2018

Income Statement

Consolidated Statement of Comprehensive Income

Review of Performance

Q2 2018

Group turnover from continuing operations increased by 271.0% to $40.0 million for Q2 2018 as compared to Q2 2017 mainly due to turnover of $32.3 million from newly acquired logistics businesses, offset by a decrease in shipping revenue from a reduced fleet of 3 bulk carriers.

The increase in cost of sales, distribution, administrative and finance expenses were mainly due to the newly acquired logistics businesses.

Share of profit of an associated company of $0.6 million was mainly due to share of profit from newly acquired 40% shareholdings in PT Ocean Global Shipping.

The Group recorded loss from discontinued operations of $22.7 million for Q2 2017. The discontinued operations relates to the Group's shipyard business in China which was disposed in Q4 2017.

Overall, the Group recorded net profit attributable to equity holders of $2.4 million for Q2 2018 as compared to a loss of $20.8 million for Q2 2017.

1H 2018

The Group recorded profit from continuing operations in logistics, dry bulk shipping and other businesses of $5.4 million on turnover of $80.7 million for 1H 2018.

Group turnover from continuing operations increased by 263.3% to $80.7 million for 1H 2018 as compared to 1H 2017 mainly due to turnover of $64.4 million from newly acquired logistics businesses, offset by a decrease in shipping revenue from a reduced fleet of 3 bulk carriers.

Other gains and losses for 1H 2018 were gains of $3.6 million (1H 2017: losses of $17.5 million) mainly due to foreign exchange gain of $3.4 million.

The increase in cost of sales, distribution, administrative and finance expenses were mainly due to the newly acquired logistics businesses.

Share of profit of an associated company of $1.2 million was mainly due to share of profit from newly acquired 40% shareholdings in PT Ocean Global Shipping.

The Group recorded loss from discontinued operations of $157.3 million for 1H 2017. The discontinued operations relates to the Group's shipyard business in China which was disposed in Q4 2017.

Overall, the Group recorded net profit attributable to equity holders of $5.3 million for 1H 2018 as compared to a loss of $99.7 million for 1H 2017.

Balance Sheet
(30 June 2018 vs 31 December 2017)

Cash and cash equivalents increased from $58.5 million to $115.3 million mainly due to the proceeds from the disposal of subsidiaries, partially offset by the net cash out flow for the acquisition of newly acquired logistics businesses.

Trade and other receivables decreased $277.4 million to $31.5 million mainly due to decrease in amount due from fellow subsidiaries following the receipt of the proceeds from the disposal of subsidiaries, offset by trade and other receivables acquired for the newly acquired subsidaries.

Property, plant and equipment increased by $493.3 million to $533.9 million mainly due to the fair values of the property, plant and equipment acquired for the newly acquired subsidiaries.

Intangible assets include goodwill of $99.0 million and other intangible assets of $34.8 million. The Group has recognised a provisional goodwill of $99.0 million based on provisional fair values of assets and liabilities of Cogent Holdings Limited. In accordance with SFRS(I) 3 "Business Combinations", the Group is required to perform a purchase price allocation ("PPA") exercise within 12 months after completion of the acquisition of Cogent Holdings Limited. The fair values of the acquired identifiable assets and liabilities have been provisionally determined pending finalisation of the PPA exercise.

Trade and other payables increased by $17.3 million to $64.1 million mainly due to the trade and other payables assumed for the newly acquired subidiaries.

Total borrowings increased by $198.9 million to $198.9 million mainly due to the borrowings procured to finance the acquisition of Cogent Holdings Limited and borrowings assumed for the newly acquired subsidiaries.

Shareholder's equity increased by $6.9 million mainly due to the profits in 1H 2018 and an increase in currency translation reserves.

Cash Flow

Q2 2018

Net cash provided by operating activities for Q2 2018 was $0.9 million. This was mainly due to operational cash inflow.

Net cash provided by investing activities for Q2 2018 was $47.0 million. This was mainly due to the proceeds from the disposal of subsidiaries.

Net cash used in financing activities for Q2 2018 was $289.9 million. This was mainly due to the repayment of bank borrowings and interest during the quarter.

1H 2018

Net cash used in operating activities for 1H 2018 was $1.9 million. This was mainly due to cash outflow from working capital changes.

Net cash provided by investing activities for 1H 2018 was $22.2 million. This was mainly due to the proceeds from the disposal of subsidiaries and decrease in restricted cash balance, partially offset by cash outflow for acquisition of subsidiaries.

Net cash provided by financing activities for 1H 2018 was $33.8 million. This was mainly due to net proceeds from borrowings.

Commentary

Through its wholly-owned subsidiary, Cogent Holdings Limited ("Cogent"), the Company has established a logistics network in Singapore, Malaysia and Indonesia.

The Company aims to expand its logistics network in South and Southeast Asia through acquisitions and investments and continues to explore potential targets to acquire and investment opportunities, taking into consideration the targets' business scale and scope, historical performance, growth potential and synergy with the Group's operations.

The Company's ultimate holding company, China COSCO Shipping Corporation Limited, has a well-established logistics business network throughout the People's Republic of China ("PRC"), which the Company will be able to leverage on this existing logistics business platform to potentially develop new business opportunities in the logistics sector in South and Southeast Asia, taking advantage of the "Belt and Road Initiative" formulated by the PRC Government in 2013. The Company will also be able to offer end-to-end services to its customers with logistical needs in Singapore and Malaysia, thereby increasing the Company's competitive edge in relation to its global competitors and entrenching its customers.

In relation to the claim filed by Borneo Motors (Singapore) Pte Ltd against Cogent Automotive Logistics Pte Ltd ("CAL"), a subsidiary of Cogent, legal advice has been sought and CAL will vigorously defend the claim. This matter is still pending and the Company will make announcements of any significant developments at the appropriate junctures.

With respect to the Group's shipping business, the Company's subsidiary, COSCO Singapore Pte Ltd, currently has a total of 3 vessels with a total tonnage of 163,000 tons and with an average age of approximately 13 years. In the second quarter of 2018, the international dry bulk shipping market showed an improvement over the same period in 2017. The Baltic Dry Index averaged 1260 points in the second quarter of 2018, an increase of 25.3% from the average of 1006 points in the second quarter of 2017, with the highest point for the quarter being 1476 and the lowest point being 948. Industry peers generally believe that the dry bulk market in 2018 will show a slight improvement over 2017.

Moving forward as one team, the Group is expected to create overall synergy by engaging in cross sales and business optimization with its related companies. This will also help the Group to achieve economies of scale and scope.

Balance Sheet


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