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Financials

Unaudited Financial Statements Announcement For The Third Quarter Ended 30 September 2018

Financials Archive

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Profit & Loss

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Balance Sheet

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Review of the Group's Performance

Q3 2018 vs. Q3 2017

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YTD Sep 2018 vs. YTD Sep 2017

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N/M: Not meaningful.

Revenue

Q3 2018 vs. Q3 2017

Revenue increased by S$1.4 million or 17.6% from S$7.7 million for the three months period ended 30 September 2017 ("Q3 2017") to S$9.1 million for the three months period ended 30 September 2018 ("Q3 2018"). The increase is attributed to:

YTD Sep 2018 vs. YTD Sep 2017

Revenue increased by S$3.9 million or 17.9% from S$22.0 million for the nine months period ended 30 September 2017 ("YTD Sep 2017") to S$25.9 million for the nine months period ended 30 September 2018 ("YTD Sep 2018"). The increase is attributed to:

Other Operating Income

Other operating income typically comprises government grants received and sponsorship income. Sponsorship income relates to income received from sponsors for public events and activities organised by the Company.

Q3 2018 vs. Q3 2017

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Other operating income decreased by S$91,000 or 82.0% for Q3 2018 as compared to Q3 2017. The decrease is due mainly to the absence of S$88,000 clinic rental rebates received from a lessor in Q3 2017.

YTD Sep 2018 vs. YTD Sep 2017

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Other operating income increased by S$1.2 million or more than 100.0% for YTD Sep 2018 as compared to YTD Sep 2017. The increase is due mainly to the receipt of S$1.25 million from the Company's former Lead Independent Director, Mr. Christopher Chong Meng Tak ("Mr. Chong"), for the full and final settlement arising from the dispute concerning the Company's claim for S$1.5 million from Mr. Chong for a transaction of the Company in which Mr. Chong was involved (the "Dispute").

Consumables and Medical Supplies Used

In general, our O&G, Cancer-related and Paediatrics segments use lesser consumables and medical supplies as compared to our Dermatology segment which requires more consumables and medical supplies such as skin care products.

Our Cancer-related segment uses the least consumables and medical supplies as our Cancer Specialists, who are Breast Surgeons and GynaeOncologist, perform their major procedures in the hospitals and thus, the consumables and medical supplies are taken care of and billed by the hospitals.

Q3 2018 vs. Q3 2017

Consumables and medical supplies used increased by S$0.3 million or 24.7% from S$1.1 million for Q3 2017 to S$1.4 million for Q3 2018. As the consumables and medical supplies used are a direct cost attributed to the Group's revenue, the increase parallels the increase in revenue for the corresponding period.

Consumables and medical supplies used as a percentage of the Group's revenue increased by 0.9% from 14.1% for Q3 2017 to 15.0% for Q3 2018 due mainly to higher consumables and medical supplies used by our Dermatology segment.

YTD Sep 2018 vs. YTD Sep 2017

Consumables and medical supplies used increased by S$0.7 million or 20.6% from S$3.1 million for YTD Sep 2017 to S$3.8 million for YTD Sep 2018. The increase parallels the increase in the Group's revenue for the corresponding same period.

Consumables and medical supplies used as a percentage of the Group's revenue increased by 0.4% from 14.3% for YTD Sep 2017 to 14.7% for YTD Sep 2018 due mainly to higher consumables and medical supplies used by our Dermatology segment.

Employee Remuneration Expense

Q3 2018 vs. Q3 2017

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Employee remuneration expense increased by S$0.3 million or 10.5% from S$3.0 million for Q3 2017 to S$3.3 million for Q3 2018. The increase is due mainly to:

Employee remuneration expense as a percentage of the Group's revenue decreased by 2.4% from 39.1% in Q3 2017 to 36.7% in Q3 2018 as the rate of increase in revenue contribution from our O&G and Cancer-related segments is higher than the rate of increase in employee remuneration expense.

YTD Sep 2018 vs. YTD Sep 2017

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Employee remuneration expense increased by S$1.2 million or 13.3% from S$8.6 million for YTD Sep 2017 to S$9.8 million for YTD Sep 2018. The increase is due to:

Employee remuneration expense as a percentage of the Group's revenue decreased by 1.6% from 39.4% for YTD Sep 2017 to 37.8% for YTD Sep 2018 as the rate of increase in revenue contribution from our O&G and Cancerrelated segments is higher than the rate of increase in employee remuneration expense.

Depreciation of Plant and Equipment

Q3 2018 vs. Q3 2017

Depreciation of plant and equipment increased by S$8,000 or 6.8% from S$127,000 for Q3 2017 to S$135,000 for Q3 2018. The increase is attributed mainly to the depreciation charge arising from:

Depreciation as a percentage of the Group's revenue decreased slightly by 0.1% from 1.6% for Q3 2017 to 1.5% for Q3 2018 as the rate of increase in revenue contribution from our O&G and Cancer-related segment is higher than the rate of increase in depreciation.

YTD Sep 2018 vs. YTD Sep 2017

Depreciation of plant and equipment increased by S$48,000 or 13.2% from S$367,000 for YTD Sep 2017 to S$415,000 for YTD Sep 2018. The increase is attributed mainly to the depreciation charge arising from:

Depreciation as a percentage of the Group's revenue decreased slightly by 0.1% from 1.7% for YTD Sep 2017 to 1.6% for YTD Sep 2018 as the rate of increase in revenue contribution from our O&G and Cancer-related segment is higher than the rate of increase in depreciation.

Other Operating Expense

Q3 2018 vs. Q3 2017

Other operating expense increased by S$43,000 or 5.5% from S$781,000 for Q3 2017 to S$824,000 for Q3 2018. The increase is attributed mainly to:

Other operating expense as a percentage of the Group's revenue decreased slightly by 1.0% from 10.1% for Q3 2017 to 9.1% for Q3 2018 as the rate of increase in revenue contribution from our O&G and Cancer-related segments is higher than the rate of increase in other operating expense.

YTD Sep 2018 vs. YTD Sep 2017

Other operating expense increased by S$0.3 million or 16.4% from S$2.2 million for YTD Sep 2017 to S$2.5 million for YTD Sep 2018. The increase is attributed mainly to:

Other operating expense as a percentage of the Group's revenue decreased slightly by 0.1% from 9.9% for YTD Sep 2017 to 9.8% for YTD Sep 2018 as the rate of increase in revenue contribution from our O&G and Cancer-related segments is higher than the rate of increase in other operating expense.

Finance Income

Finance income relates to the interest income earned from the placement of cash surplus with financial institutions. The funds are placed mainly in fixed deposit arrangements. The Group does not invest in any sophisticated financial products or derivatives.

Q3 2018 vs. Q3 2017

Finance income increased by S$2,000 or 15.3% from S$15,000 for Q3 2017 to S$17,000 for Q3 2018. The increase is due to more cash being placed in fixed deposit.

YTD Sep 2017 vs. YTD Sep 2016

Finance income increased by S$9,000 or 22.9% from S$40,000 for YTD Sep 2017 to S$49,000 for YTD Sep 2018. The increase is due to more cash being placed in fixed deposit.

Finance Expense

Finance expense relates to the unwinding of the discount implicit (i.e. non-cash flows item) in the second and third cash tranche consideration of S$4.0 million for each tranche due on 1 January 2017 and 1 January 2018 respectively (the "contingent consideration") for the acquisition of the entire rights, title and interest of Dr. Joyce Lim Teng Ee and in the business and medical practices of JL Laser & Surgery Centre Pte. Ltd., JL Esthetic Research Centre Pte. Ltd. and JL Dermatology Pte. Ltd. on 1 January 2016 (the "JL Acquisition").

As at 31 December 2017, the contingent consideration for the JL Acquisition was fully paid. Accordingly, there is no finance expense in 2018.

Profit Before Income Tax

Q3 2018 vs. Q3 2017

As a result of the above, profit before income tax increased by S$0.7 million or 24.9% from S$2.8 million for Q3 2017 to S$3.5 million for Q3 2018.

YTD Sep 2018 vs. YTD Sep 2017

Profit before income tax increased by S$3.1 million or 40.4% from S$7.7 million for YTD Sep 2017 to S$10.8 million for YTD Sep 2018.

Income Tax Expense

Q3 2018 vs. Q3 2017

Income tax expense increased by S$0.1 million or 33.3% due mainly to higher profits for Q3 2018.

YTD Sep 2018 vs. YTD Sep 2017

Income tax expense increased by S$0.5 million or 39.4% due mainly to higher profits for YTD Sep 2018.

Review of the Group's Financial Position

Non-Current Assets

As at 30 September 2018, non-current assets amounted to S$28.3 million or 55.7% of the Group's total assets. Non-current assets consist of the following:

Current Assets

As at 30 September 2018, current assets amounted to S$22.5 million or 44.3% of the Group's total assets. Current assets consist of the following:

Non-Current Liabilities

As at 30 September 2018, non-current liabilities amounted to S$0.1 million or 2.3% of the Group's total liabilities. Non-current liabilities consist of only deferred tax liabilities.

Deferred tax liabilities arose from the timing differences in temporary differences of the Group's plant and equipment.

Current Liabilities

As at 30 September 2018, current liabilities amounted to S$6.1 million or 97.7% of the Group's total liabilities. Current liabilities consist of the following:

Shareholders' Equity

As at 30 September 2018, shareholder's equity of S$44.6 million comprises of the following:

Review of the Group's Cash Flows

Net Cash Generated from Operating Activities

For Q3 2018, there was a net cash inflow of S$3.7 million from operating activities. This comprises operating cash inflows before changes in working capital of S$3.6 million, net working capital inflows of S$0.7 million and income tax paid of S$0.6 million. The net working capital inflow of S$0.7 million is due mainly to the increase in accrual of S$0.7 million for Q3 2018 incentive bonus for our specialist medical practitioners.

For YTD Sep 2018, the Group generated a net cash inflow from operating activities of S$9.8 million, which is an increase of S$3.1 million or 47.2%, as compared to S$6.7 million in the previous corresponding period. The increase is due mainly to higher profit before taxation of S$3.1 million as compared to the previous corresponding period

Net Cash Used in Investing Activities

For Q3 2018, the net cash inflows from investing activities amounted to S$10,000 which was attributed to:

For YTD Sep 2018, the net cash used in investing activities amounted to S$77,000 which was attributed to:

Net Cash used in Financing Activities

For Q3 2018, the net cash used in financing activities amounted to S$3.8 million which was attributed to the FY 2018 interim dividend paid to shareholders in August 2018.

For YTD Sep 2018, the net cash used in financing activities amounted to S$8.0 million which was attributed to the FY 2017 final dividend of $4.2 million and FY 2018 interim dividend of S$3.8 million paid to shareholders in May 2018 and August 2018 respectively

Commentary

As at the date of this Announcement, the Board of Directors are not aware of any significant change in trends and competitive conditions that will significantly affect the Group's operations and businesses. The Singapore Government has not changed its policy on or actions in encouraging population growth nor has there been any macro health risks, such as Severe Acute Respiratory, Middle East Respiratory Syndrome and Zika virus, which could severely affect private healthcare visitations.

With the recent publication of the fee benchmarks for surgical procedures in private hospitals by Ministry of Health, the Group is of the opinion that these are generally fair and they will not have any negative impact to the Group's results.

Barring any unforeseen circumstances, the Board of Directors expects the Group to remain profitable in the next reporting period and the next 12 months.