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Latest Financial Announcement

FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2016

Financials Archive

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Income Statement

Balance Sheet

Review of Performance

Statement of Comprehensive Income

Revenue

Revenue had decreased by $10.7 million or 44.3% from $24.2 million in 4QFY2015 to $13.5 million in 4QFY2016. The decrease was mainly due to a decrease in revenue from customers in the Energy Sector which resulted from an oil supply glut. Revenue from such customers had decreased by $7.3 million or 44.8% from $16.2 million in 4QFY2015 to $8.9 million in 4QFY2016.

Correspondingly, the same reason had also contributed to the year on year decrease in revenue of $41.1 million or 37.4% from $109.9 million in FY2015 to $68.8 million in FY2016. Revenue from customers in the Energy Sector had decreased by $43.2 million or 51.8% from $83.4 million in FY2015 to $40.2 million in FY2016 whilst revenue had increased in all other sectors. Despite the decrease, the Energy Sector remains the main contributor at 58.4% of the total revenue generated in FY2016.

Geographically, despite being the main contributor at 58.0% of the revenue generated in FY2016, the Singapore market saw the largest decline in revenue of $16.8 million or 29.6% from $56.7 million FY2015 to $39.9 million in FY2016. Revenue had decreased across all markets with the exception of Malaysia and Europe, which saw an increase of $2.0 million or 120.3% and $1.6 million or 220.3% respectively in FY2016 as compared to FY2015.

Gross Profit and Gross Profit Margin

Corresponding to the decrease in revenue, gross profit had decreased by $1.8 million or 40.8% from $4.4 million in 4QFY2015 to $2.6 million in 4QFY2016. However, gross profit margin had improved marginally by 1.1 percentage point from 18.0% in 4QFY2015 to 19.1% in 4QFY2016 from a decrease in cost of sales which resulted from a reduction in the value-added services requested by customers.

Year on year, gross profit had decreased by $4.7 million or 23.7% from $19.6 million in FY2015 to $14.9 million in FY2016. On the other hand, gross profit margin had improved by 3.9 percentage points from 17.8% in FY2015 to 21.7% in FY2016 as per the reason contributing to the quarter on quarter improvement as well as a result of stringent costs management.

Financial Income and Expense

Financial income in 4QFY2016 had increased by $5 thousand from interest earned on fixed deposits. Year on year, financial income had increased by $40 thousand from $15 thousand in FY2015 to $55 thousand in FY2016 from both interest earned on fixed deposits as well as gains on investment in a financial asset.

Financial expense had decreased by $0.2 million or 57.1% from $0.3 million in 4QFY2015 to $0.1 million in 4QFY2016 mainly from lower interest paid on reduced borrowings. The same reason accounted for the year on year decrease of $0.7 million or 50.5% from $1.4 million in FY2015 to $0.7 million in FY2016.

Operating Expenses

In tandem with the decrease in revenue, distribution costs had decreased by $0.2 million or 9.0% from $1.6 million in 4QFY2015 to $1.4 million in 4QFY2016, however, to a lower extent as a result of certain fixed operating expenditure such as manpower costs. Year on year, distribution costs had decreased by $2.0 million or 24.7% from $8.1 million in FY2015 to $6.1 million in FY2016 as a result of the reasons as aforesaid.

Administrative expenses had decreased by $0.2 million or 9.0% from $1.9 million in 4QFY2015 to $1.7 million in 4QFY2016 through implementation of cost-cutting measures which also accounted for the year on year decrease of $0.4 million or 5.9% from $7.6 million in FY2015 to $7.2 million in FY2016.

Depreciation expense had increased by $0.2 million or 11.7% from $1.3 million in 4QFY2015 to $1.5 million in 4QFY2016 mainly from higher depreciation on properties. Likewise, depreciation expense, year on year, had increased by $1.2 million or 26.5% from $4.4 million in FY2015 to $5.6 million in FY2016.

Other Charges/Credits

Other charges had increased by $6.9 million from a credit of $1.1 million in 4QFY2015 to a charge of $5.8 million in 4QFY2016 mainly due to provision for slow-moving inventories. Year on year, other charges had increased by $4.8 million from a credit of $0.6 million in FY2015 to a charge of $4.2 million in FY2016 which was also attributable to the provision for slow-moving inventories.

(Loss)/Profit Before Income Tax

A loss before income tax of $7.9 million was incurred in 4QFY2016 as compared to a profit of $0.5 million in 4QFY2015 due to reasons as aforementioned which also accounted for the year on year loss which had increased by $7.4 million or 546.2% from $1.4 million in FY2015 to $8.8 million in FY2016.

Other Comprehensive Income/Loss

Other comprehensive income had decreased by $1.8 million or 52.2% quarter on quarter, from $3.4 million in 4QFY2015 to $1.6 million in 4QFY2016, mainly due to lower upward revaluations of the leasehold properties of the Group performed in August 2016. The same reason accounted for the year on year decrease of $1.9 million or 53.8% from $3.5 million in FY2015 to $1.6 million in FY2016.

Statement of Financial Position

Non-Current Assets

Non-current assets had decreased by $2.6 million or 7.9% from $33.2 million as at 30 September 2015 to $30.6 million at 30 September 2016 mainly due to depreciation charged in the current financial year.

Current Assets

Current assets had decreased by $32.3 million or 22.0% from $147.0 million as at 30 September 2015 to $114.7 million as at 30 September 2016. The decrease was mainly due to a decrease in both trade and other receivables and inventories. Trade and other receivables decreased by $9.2 million or 35.4% from $26.0 million as at 30 September 2015 to $16.8 million as at 30 September 2016, following the decrease in revenue generated. Inventories had decreased by $15.1 million or 16.0% from $93.9 million as at 30 September 2015 to $78.8 million as at 30 September 2016 from both provision for slow-moving inventories and stricter inventory management controls. Notwithstanding the decrease in current assets, the Group's current ratio has improved from 3.00 as at 30 September 2015 to 4.71 as at 30 September 2016.

Non-Current Liabilities

Non-current liabilities had decreased by $2.9 million or 33.9% from $8.6 million as at 30 September 2015 to $5.7 million as at 30 September 2016 mainly from repayments of long-term borrowings which decreased by $2.3 million or 47.0% from $4.8 million as at 30 September 2015 to $2.5 million as at 30 September 2016.

Current Liabilities

Similarly, current liabilities had also decreased by $24.5 million or 50.2% from $48.9 million as at 30 September 2015 to $24.4 million as at 30 September 2016, primarily from a decrease in trade and other payables and other financial liabilities. Trade and other payables had decreased by $3.1 million or 25.9% from $11.9 million as at 30 September 2015 to $8.8 million as at 30 September 2016 from repayments. Other financial liabilities, which consist of short-term borrowings and current portion of long-term borrowings, had also decreased substantially by $21.6 million or 58.5% from $36.9 million as at 30 September 2015 to $15.3 million as at 30 September 2016. With the decrease, the Group's gearing ratio (defined as total liabilities to equity) has improved from 0.47 as at 30 September 2015 to 0.26 as at 30 September 2016.

Equity

Total equity decreased by $7.4 million or 6.0% from $122.6 million as at 30 September 2015 to $115.2 million as at 30 September 2016 mainly from the loss incurred in FY2016.

Statement of Cash Flows Review

Cash Flows (used in)/from Operating Activities

Cash used in operating activities had increased by $3.7 million from an inflow of $2.0 million in 4QFY2015 to an outflow of $1.7 million in 4QFY2016 mainly due to trade and other payables payments and decrease in customers' receipts. Year on year, cash used in operating activities had decreased by $8.9 million or 94.1% from $9.5 million in FY2015 to $0.6 million in FY2016 mainly from comparatively lower repayments of borrowings.

Cash Flows used in Investing Activities

Cash used in investing activities had decreased marginally by $26 thousand from $107 thousand in 4QFY2015 to $81 thousand in 4QFY2016 due to minimal capital expenditure for the quarter. Year on year, cash used in investing activities had decreased by $6.6 million or 91.8% from $7.2 million in FY2015 where the warehouse at 36 Tuas Crescent Singapore 628724 was purchased, to $0.6 million in FY2016 which was incurred for replacement of old commercial vehicles and purchase of overhead cranes.

Cash Flows from/(used in) Financing Activities

Cash from financing activities had increased by $3.4 million from an outflow of $1.5 million in 4QFY2015 to an inflow of $1.9 million in 4QFY2016 from draw-downs of short-term loans. Year on year, cash used in financing activities had increased by $15.4 million or 178.4% from an inflow of $8.6 million in FY2015 which arose from a placement of new shares which was completed in March 2015, to an outflow of $6.8 million in FY2016 that resulted from both repayments of bank borrowings and payment of dividends.

Commentary

We expect revenue generation to continue to be impacted by the persisting volatility and intense local and global competition in the Energy industry, and our 1QFY2017 financial performance may be adversely affected accordingly.

In view of this, we will keep our focus on cost management of our operations and to market our services to identify new potential markets or suitable opportunities for growth while remaining vigilant in the management of the Group's business activities.