FULL YEAR UNAUDITED FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016
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Consolidated Statement of Comprehensive Income
Statements of Financial Position
Review of Financial Performance
Group revenue increased by $12.5 million or 15.3% from $81.7 million for FY2015 to $94.2 million for FY2016. Revenue from the Group’s R&R business decreased by $14.2 million or 26.1% from $54.5 million for FY2015 to $40.3 million for FY2016, due to slower and lower revenue recognition. This was derived largely from projects awarded by Pasir Ris-Punggol Town Council, SKK (S) Pte Ltd, Housing & Development Board ("HDB"), Tanjong Pagar Town Council and Tampines Town Council. Revenue contribution from the Group’s Addition and Alteration ("A&A") business segment increased by $7.0 million or 40.1% from $17.4 million for FY2015 to $24.4 million for FY2016. This was derived largely from Pasir Ris-Punggol Town Council, Marine Parade Town Council, Tampines Town Council, Chua Chu Kang Town Council and Bishan-Toa Payoh Town Council. Revenue from the Group's Coating and Painting ("C&P") business segment has contributed $11.8 million. This was derived largely from projects awarded by Welltech Construction Pte Ltd, Sato Kogyo (S) Pte Ltd, Singapore Piling & Civil Engineering Pte Ltd, San Keong Construction Pte Ltd and Soil-Build (Pte) Ltd. Revenue contribution from the Group’s others business segment rose from $6.2 million for FY2015 to $17.8 million for FY2016. This was derived largely from ID works from Public Service Division and Woh Hup Pte Ltd, waterproofing works from Ang Mo Kio Town Council, landscaping works from HDB and rental income for leasing services.
Gross profit and gross profit margin
The Group's gross profit increased by $4.0 million or 19.9% from $20.2 million in FY2015 to $24.2 million in FY2016 mainly due to higher margin contributed by R&R, A&A and C&P works.
The Group's other income increased by $0.9 million or 103.4% from $1.0 million in FY2015 to $1.9 million in FY2016. The increase was mainly due to increase in gain on disposal of property, plant and equipment of $0.3 million, increase in interest income of $0.3 million and increase in other income of $0.3 million. Other income comprised mainly rebates from the suppliers for the bulk quantity purchase and sales of scrap material.
Marketing and distribution expenses
The Group's marketing and distribution expenses increased by $0.7 million or 68.9% from $1.1 million in FY2015 to $1.8 million in FY2016. The increase was mainly due to increase in depreciation of motor vehicles and its running expenses such as diesel & petrol expenses and repair & upkeep expenses which is in line with the additional fixed assets purchased and staff costs arising from the acquisitions of new subsidiaries.
General and administrative expenses
The Group's general and administrative expenses increased by $2.6 million or 27.5% from $9.5 million in FY2015 to $12.1 million in FY2016. The increase was mainly attributable to (i) increase in staff costs of $1.7 million mainly due to expansion of the business and acquisition of a new subsidiary; (ii) increase in depreciation of $0.7 million; and (iii) increase in overhead cost of $0.2 million which is in line with the expansion of business and acquisition of new subsidiaries.
The Group's finance costs increased by $0.1 million or 52.0% from $0.3 million in FY2015 to $0.4 million in FY2016. The increase was mainly attributable to interest incurred for trust receipt and the property loan.
Other operating expenses
The Group's other operating expenses increased by $0.7 million or 94.2% from $0.8 million in FY2015 to $1.5 million in FY2016. The increase was mainly attributable to an increase in amortisation of intangible assets of $1.3 million and offset by decrease in goodwill written off of $0.6 million arising from the acquisitions of new subsidiaries.
Profit before tax
As a result of the above, our profit before tax increased by $0.8 million or 8.1% from $9.5 million in FY2015 to $10.3 million in FY2016.
Review of Financial Position
The Group's non-current assets increased by $8.1 million or 54.9% from $14.7 million as at 30 June 2015 to $22.8 million as at 30 June 2016, mainly due to (i) acquisition of new assets of $9.1 million, which was offset by the depreciation of fixed assets of $2.1 million and the disposal of assets of $0.5 million during FY2016; (ii) assets from newly acquired subsidiaries of $0.2 million; (iii) intangible assets and goodwill arising from the acquisition of a new subsidiary of $1.7 million in FY2016 and offset by amortisation of intangible assets of $1.4 million arising from the acquisition of new subsidiaries in FY2015 and FY2016; and (iv) investment in bonds of $1.1 million.
The increase in current assets of $10.6 million or 17.2% from $61.0 million as at 30 June 2015 to $71.6 million as at 30 June 2016 was attributed mainly due to the increase in cash and bank balances of $1.9 million, the increase in trade and other receivables of $2.6 million, increase in amounts due from customers for contract work-in-progress of $5.0 million, increase in intangible assets of $0.1 million and increase in investment in bonds of $1.0 million.
The increase in non-current liabilities of $2.2 million or 103.9% from $2.1 million as at 30 June 2015 to $4.3 million as at 30 June 2016 was attributed to the drawdown of bank borrowings of $1.6 million, finance lease facilities of $0.4 million and increase in deferred tax liabilities of $0.2 million.
The increase in current liabilities of $8.8 million or 32.6% from $27.3 million as at 30 June 2015 to $36.1 million as at 30 June 2016 was attributed mainly to the increase in amounts due to customers for contract work-in-progress of $3.2 million, increase in trade and other payables of $4.5 million, drawdown of bank borrowings of $1.8 million, drawdown of finance lease liabilities of $0.1 million and decrease in tax payable of $0.8 million.
Review of Statement of Cash Flows
Net cash generated from operating activities
The Group generated a net cash of $13.4 million from operating activities before changes in working capital. Net working capital inflows amounted to $3.9 million. This was mainly due to decrease in trade and other receivable of $4.8 million, increase in trade and other payable of $0.5 million and increase contract work-in-progress of $1.4 million. After payment of income tax of $1.7 million and interest of $0.3 million after offsetting with interest received of $0.3 million, the net cash generated from operating activities amounted to approximately $15.6 million.
Net cash used in investing activities
Net cash used in investing activities amounted to $7.9 million, which was mainly attributable to the purchase of plant and equipment of $4.7 million which is offset with the proceeds from disposal of property, plant and equipment of $1.0 million, investment in bonds of $2.1 million and net cash outflow on acquisition of a subsidiary of $2.1 million.
Net cash used in financing activities
Net cash used in financing activities of $6.0 million was mainly due to net repayment of bank borrowing of $1.5 million, repayment of finance lease of $0.7 million, fixed deposit pledged to the bank of $0.2 million, dividend payment of $1.6 million and purchase of treasury shares of $2.0 million.
The Group views that revenue will continue to be driven by awarded projects which will in turn be dependent on there being no delay or cancellation in the commencement or continuation of awarded projects and it expects to benefit from the general increase in public sector upgrading, retrofitting and maintenance of buildings and facilities activities in Singapore. The Group will continue to bid for these projects as well as projects in the private sector. Looking ahead, the Group continues to see better demand for its R&R and A&A services in view of on-going initiatives by the Singapore government to renew and rejuvenate middle-aged and mature estates.
Notwithstanding the above, the construction related service industry outlook is expected to be challenging in the next 12 months with the intense price competition and labour cost remains high due to higher foreign workers' levies.
Despite the challenging market conditions in the industry, the Group is cautiously optimistic in looking for opportunities overseas through acquisition, strategic alliances and/or joint venture by leveraging its established track record and expertise. The Group also intends to look beyond the local market and evaluate the prospects of bringing our expertise to tap on the infrastructure boom around us by offering total maintenance solution services.
The Group's order book as at 3 August 2016 stood at $94.1 million (including $50.1 million worth of new R&R, A&A, C&P and waterproofing projects secured by the Group during the second half of FY2016) which will be progressively delivered over the next two years. In addition to the order book, the Group is currently the lowest tenderer for 3 projects pending tender award confirmation, namely R&R to National Environment Agency Market / Food Centre, R&R to the Ministry of Health and Reroofing to Selegie Road, worth $5.7 million.