Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
In accordance with the FRS, the results of the disposed group are presented separately as "Discontinued Operations".
(i) Continued Operations
Group revenue achieved for 1H2016 decreased by 0.6% to S$7.57 million, as compared to S$7.62 million for 1H2015, mainly due to a 10.2% decrease of orders from key customers of the Elastomeric business units in Malaysia in Malaysia Ringgit ("MYR"). The decrease was also reduced by the effects of the weakening of MYR by 18.5%.
Gross profit in 1H2016 grew by 5.9% or S$0.14 million, from S$2.39 million for 1H2015 to S$2.53 million in 1H2016, on the back of lower manaufacturing expenses and higher gross margin recorded in 1H2016. Gross profit margin accordingly increased from 31.4% for 1H2015 to 33.4% for 1H2016.
Distribution costs and administrative expenses decreased by 6.6% to S$3.14 million in 1H2016 from S$3.36 million in 1H2015 mainly due to decrease of staff related cost, depreciation and legal fees.
Finance costs for 1H2016 were S$0.02 million as compared to S$0.15 million for 1H2015 as the debenture loans were fully repaid in 1H2015.
The Group recorded provision for doubtful debt of S$5,000 as other charges in 1H2016. This compares to other charges of S$0.31 million in 1H2015.
Other credits in 1H2016 was S$0.38 million compared to S$0.75million in 1H2015 mainly due to foreign exchange gains of S$294,000 and reversal for imapirment on inventories of S$55,000 recorded in 1H2016. In 1H2015, the Group recorded a gain on its disposal of power generation system equipment of S$0.66 million in Myanmar and operating lease income from Process Innovation Technology SE Asia Pte Ltd of S$80,000.
Overall, the Group registered a net loss before tax of S$0.07 million for 1H2016 compared to the loss before tax of S$0.56 million for 1H2015 and a loss after tax of S$0.39 million (1H2015: S$0.81 million).The Group posted a loss attributable to equity holders of the Company of S$0.43 million in 1H2016 compared to S$0.90 million in 1H2015.
(ii) Discontinued Operations
The Group classified the energy/power segment as discontinued operations and reported a loss attributable to owners of S$0.08 million (1H2015: S$0.17 million).
As at 30 June 2016, the total non-current assets of the Group increased by S$0.09 million to S$16.15 million from S$16.24 million as at 31 December 2015. The Group purchased new plant and equipment of S$0.77 million, offset by the depreciation of plant and equipment of S$0.35 million and the foreign currency translation loss for plant and equipment in overseas operations of S$35,000. The fair value of quoted securities in Abterra Ltd previously transferred by Mr. Tan Jian You decreased by S$0.47 million.
The Group's current assets amounted to S$18.42 million as at 30 June 2016, a decrease of S$2.60 million compared to 31 December 2015. Inventories and trade and other receivables increased by S$0.22 million and S$0.12 million, respectively, due to the increase of orders from key customers from the Elastomeric business units in Indonesia. The Group also subscribed for 20,000 "SGD Class A" redeemable participating shares at the price of S$100.00 per share in an investment fund (Fortune Asia Long Short Fund), for the total subscription amount of S$2,000,000.
Cash and cash equivalents declined by S$2.64 million mainly due to the investment into Fortune Asia Long Short Fund of S$2.00 million, purchase of new plant and equipment of S$0.77 million, repayment of borrowings & lease liabilities of S$0.22 million and the payment of income tax of S$0.51 million.
Total liabilities of the Group as at 30 June 2016 increased by S$0.31 million to S$16.18 million compared to S$15.87 million as at 31 December 2015. During the period, the Group has repaid bank borrowings of approximately S$0.22 million but taken out additional borrowings of S$0.60 million. The Group has also paid the income tax of S$0.51 million.
Trade and other payables of S$13.27 million was recorded as at 30 June 2016, an increase of S$0.16 million compared to S$13.11 million as at 31 December 2015, mainly due to the increase in orders from suppliers of elastomeric business unit in China.
As at 30 June 2016, income tax was recorded at S$0.20 million compared to S$0.38 million as at 31 December 2015. Extra income tax for one of the subsidiaries in Singapore was recorded as at 31 December 2015 after a review by IRAS and a payment of S$0.17 million was made in January 2016 .
Deferred tax as at 30 June 2016 increased by S$2,000 mainly due to the foreign currency translation loss in overseas operations.
Equity decreased by S$0.99 million to S$20.39 million as at 30 June 2016 from S$21.38 million as at 31 December 2015. While retained earnings decreased by S$0.47 million during the period, there was an increase in losses from foreign currency translation reserve of S$0.05 million mainly due to the weakening of China's Renminbi against SGD and the strengthening of MYR against SGD. The changes in the fair value of available-for-sale financial assets of S$0.47 million are recognised in other comprehensive income and accumulated in the fair value reserve. The loss attributable to non-controlling interest reduced the effect of higher retained earnings on total equity.
The Group faces rising cost pressures due to the increase in minimum wages in some of its countries of operations namely, the PRC, Indonesia and Malaysia.
The Group has implemented various measures to stay lean and cash flow positive in order to stay competitive in the challenging business environment.
The Group intends to diversify its core business to property business as and when suitable opportunities arise. The Group may also invest in or acquire or dispose of shares or interests in any entity that is in the property business. The Company does not plan to restrict the property business to any specific geographical market as each project and investment will be evaluated and assessed by the Board on its merits. The Group may also explore joint ventures and/or strategic alliances with third parties who have the relevant expertise and resources to carry out the property business as and when the opportunity arises.
On 5 July 2016, the Group announced that it had entered into a new Sale and Purchase Agreement ("Proposed Acquisition") with Mr. Tan Sze Seng to acquire 80% interest in G4 Station Pte. Ltd. for a consideration of S$664,000. The Company will be seeking specific approval from the shareholders of the Company for the Proposed Acquisition and the proposed diversification at an extraordinary general meeting of the Company to be convened.
While recent economic indicators point to possible bottoming out of the recession, the Group expects to operate in a very challenging business environment characterized by slow recovery and uncertain financial environment. This is due to the current financial turmoil, tightening global credit and declining demand in the world economy. The Group will take necessary pre-emptive and precautionary measures to address the challenges and business risks.
Nevertheless, the Company has, and will continue to explore new business opportunities which can enhance long term shareholder value. These include geographical expansion, mergers and acquisitions, divestment and partnering with long term strategic investor(s) who can add depth and breadth to the Group's existing business portfolio.