Financials

Selected Consolidated Statement of Comprehensive Income & Balance Sheets Items

Financial Review for FY2016
Consolidated Statement of Comprehensive Income

Revenue

Our revenue increased by approximately S$19.7 million or 15.3% from approximately S$128.4 million in FY2015 — the financial year ended 30 June 2015 — to approximately S$148.1 million in FY2016. The increase in revenue was due mainly to a higher revenue contribution by work completed for on- going projects. These projects include, among others, revenue from construction works relating to alteration and addition works, new building works, home improvement program works and term contract works.

Cost of Works

Our cost of works increased by approximately S$20.3 million or 17.3% from approximately S$117.6 million in FY2015 to approximately S$137.9 million in FY2016. The increase is mainly attributable to higher costs incurred by materials, subcontracting and overall project overhead in line with the increase in work done for on-going projects.

Gross Profit and Gross Profit Margin
Our gross profit margin declined by approximately 1.6 percentage points from 8.4% in FY2015 to 6.8% in FY2016 due to an increase in cost of works as a result of higher-than-anticipated costs incurred by certain projects in FY2016.

Other Income

Our other income decreased by approximately S$1.1 million or 46.4%, from approximately S$2.3 million in FY2015 to approximately S$1.2 million in FY2016. This is mainly due to a lower dormitory income contribution worth approximately S$1.0 million as the lease ended during the first half of FY2016 and a lower equipment handling income worth approximately S$0.1 million as one of the land leases for equipment handling ended in FY2016.

Other Losses – Exchange Translation Differences, Net

Our other losses increased by approximately S$0.2 million or 70.1%, from approximately S$0.3 million in FY2015 to approximately S$0.5 million in FY2016. This is mainly due to allowance on impairment of property, plant and equipment worth approximately S$0.2 million, incurred as the projects that utilised precast moulds were completed at a time the Malaysian ringgit affected our Malaysian subsidiaries with a currency translation loss worth approximately S$0.1 million.

Distribution and Marketing Expenses

Distribution and marketing expenses decreased by approximately S$18,000 or 4.3%, from approximately S$418,000 in FY2015 to approximately S$400,000 in FY2016, mainly due to lower entertainment expenses.

Administrative Expenses

Our administrative expenses decreased by approximately S$0.2 million or approximately 3.1% from approximately S$8.0 million in FY2015 to S$7.8 million in FY2016. The decrease was mainly due to lower: (i) depreciation of approximately S$0.2 million from our workers’ dormitories, (ii) repair and maintenance of approximately S$0.5 million for our workers dormitories and (iii) donation to institutions of public character and expenses incurred for the upkeep of factory worth approximately S$0.1 million, offset by higher: (i) payroll expenses of approximately S$0.2 million mainly as a result of CPF contributions, bonus and salary adjustments, (ii) licence fee for our precast business worth approximately S$0.2 million and (iii) tender fee and bank charges worth approximately S$0.1 million.

Finance Expenses

The finance costs increased by approximately S$44,000 or 30.1%, from approximately S$146,000 in FY2015 to
approximately S$190,000 in FY2016 mainly due to higher interest payment on short-term loans for working capital purposes. These short-term loans were drawn down towards the second half of FY2015.

Income Tax Expense

The overall effective tax rate was 20.9% and 11.5% for FY2016 and FY2015 respectively. The Singapore statutory corporate tax rate for both years of assessment remained at 17.0%. The increase in our effective tax rate for FY2016 is a result of one subsidiary fully utilising certain government tax incentives in FY2015.

Net Profit

As a result, our net profit decreased by approximately S$1.7 million or approximately 47.5% from approximately S$3.7 million in FY2015 to S$2.0 million in FY2016.

Balance Sheets

Current Assets

The Group’s current assets decreased by approximately S$5.1 million or 6.3% from approximately S$80.7 million as at 30 June 2015 to approximately S$75.6 million as at 30 June 2016, mainly due to decrease in trade and other receivables of approximately S$14.2 million and reduction of inventories of approximately S$0.9 million, offset by increase in cash and cash equivalents of approximately S$5.6 million, capitalisation of costs for the development properties in Singapore and Malaysia of approximately S$3.9 million and higher deposits placed for services in relation to our development properties and utilities of approximately S$0.5 million. The decrease in trade and other receivables was mainly due to the decrease in amount due from contract customers of approximately S$14.6 million as a result of lower unbilled amounts for project works performed until 30 June 2016 as most projects were nearing completion, and a decrease in trade receivables by approximately S$0.8 million offset by higher project retention sum of approximately S$1.3 million.

Non-Current Assets

Non-current assets decreased by approximately S$2.5 million from approximately S$8.0 million as at 30 June 2015 to approximately S$5.5 million as at 30 June 2016. The decrease is mainly attributable to the depreciation expenses of property, plant and equipment worth approximately S$2.3 million.

Current Liabilities

The Group’s current liabilities decreased by approximately S$6.8 million or 18.0% from approximately S$38.2 million as at 30 June 2015 to approximately S$31.4 million as at 30 June 2016, due to repayment of borrowings worth approximately S$1.9 million and a decrease in trade and other payables of approximately S$5.1 million, offset by an increase in income tax liabilities worth approximately S$0.1 million.

The decrease in trade and other payables is mainly due to the decrease in trade payables worth approximately S$4.0 million because of the following: prompt payment to sub-contractors and lower accrued operating expenses worth approximately S$2.0 million, as certain costs for works incurred had not been billed by subcontractors as at 30 June 2016; offset by higher trade payables to non-controlling interests worth approximately S$0.4 million; a higher amount due to contract customers worth approximately S$0.4 million for works performed but not recognised as revenue as at 30 June 2016; and higher non-trade payables to third parties worth approximately S$0.2 million.

Non-Current Liabilities

The decrease in non-current liabilities worth approximately S$1.1 million or 4.5% is mainly due to repayment of bank borrowings.

Shareholders’ Equity

As at 30 June 2016, shareholders’ equity stood at approximately S$26.3
million, compared to approximately S$26.0 million as at 30 June 2015. The increase of approximately S$0.3 million is mainly attributable to net profit worth approximately S$2.0 million in FY2016, offset by the payment of dividends worth approximately S$1.4 million and translation loss worth approximately S$0.2 million. The Group continued to register net current assets (excluding development properties) of approximately S$8.4 million as at 30 June 2016 compared to S$10.5 million as at 30 June 2015.

Consolidated Statement of Cash Flow

Cash Flow for Operating Activities

In FY2016, net cash provided by operating activities was approximately S$9.8 million. This is mainly due to operating cash inflows before working capital changes worth approximately S$5.4 million, adjusted for net working capital inflows of approximately S$4.8 million and income tax paid worth approximately S$0.4 million. The net working capital inflows were mainly due to a decrease in trade and other receivables worth approximately S$14.0 million and inventories of approximately S$0.8 million, offset by a decrease in trade and other payables of approximately S$4.8 million, additions to development properties of approximately S$4.8 million and other current assets of approximately S$0.5 million.

Cash Flow for Investing Activities

Net cash used in investing activities during FY2016 was approximately S$0.4 million, mainly due to additions of property, plant and equipment.

Cash Flow for Financing Activities

Net cash used in financing activities during FY2016 was approximately S$3.8 million, mainly due to repayment of bank borrowings and finance leases worth approximately S$3.7 million and S$0.4 million respectively; payment of interest on bank borrowings worth approximately S$0.2 million; and payment of dividends worth approximately S$1.4 million. These cash outflows were partially offset by the proceeds from bank borrowings worth S$1.8 million to finance our development property and for working capital needs.

Cash and Cash Equivalents

As a result of the above, cash and cash equivalents stood at approximately S$11.2 million as at 30 June 2016, which was double that of approximately S$5.6 million as at 30 June 2015.