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The Group recorded revenue of S$33.1 million for FY2017, 50.5% lower than the previous year of S$66.9 million. Project Sales revenue was 77.9% lower this year as compared to previous year and was the main factor in the Group's decrease in revenue. Project Sales revenue only achieved S$10.5 million in FY2017 as compared to S$47.6 million in FY2016. Project Management and Maintenance Services Segment recorded an increase of 16.9% in FY2017 compared to FY2016 (S$22.6 million vs S$19.3 million).
During the financial year, the Group faced a number of technical issues in Vietnam. These technical issues were from a single manufacturer and for a period of nearly 6 months the Group had to work with the customers and this manufacturer to determine who was at fault and whether the equipment was covered by the warranty or not. It was finally determined the equipment was covered by the warranty and all the affected equipment were replaced by the manufacturer. However, during this period, the Group's Vietnamese customers declined to sign any new contracts and therefore the Group's revenue was significantly affected. This has now been resolved and the Group has started to present sales proposals to our Vietnamese customers.
The Project Management and Maintenance Services which recorded an increase in revenue of S$3.3 million continued to provide the Group with a steady stream of recurring income.
Overall, in FY2017 the Group incurred a net loss before Minority Interest of S$2.0 million which is 171.4% decline, compared to net profit of S$2.9 million in FY2016.
The Group maintains its strategy of focusing on its core businesses of Project Sales, which is underpinned by Project Management and Maintenance Services for the Vietnam, Singapore and Myanmar markets.
The Group posted revenue of S$33.1 million in FY2017, representing a decrease of 50.5% or S$33.8 million over the previous corresponding year.
Revenue derived from Project Sales Segment decreased by 77.9% or S$37.1 million over the previous corresponding year. The decrease was due to not securing any new orders in Vietnam for the second half of the year whilst manufacturing warranties were being resolved (as mentioned above).
Revenue derived from Project Management and Maintenance Services Segment increased by 16.9% or S$3.3 million over the previous corresponding year. Project Management and Maintenance Services remains one of the Group's core businesses.
The Group posted a gross profit of S$7.0 million in FY2017 representing a decrease of 40.5% or S$4.8 million as compared to the previous corresponding year (FY2016: S$11.8 million).
Gross profit from Project Sales decreased by S$1.9 million from S$3.7 million in FY2016 to S$1.8 million in FY2017 (50.7% drop). The decrease in gross profit for this segment was a result in the decrease in revenue.
Although revenue for Project Management and Maintenance Services Segment increased, gross profit decline by 35.9% or S$2.9 million from S$8.1 million in FY2016 to S$5.2 million in FY2017.
The Group had participated in tendering for a nationwide project. As this project required fast mobilization and specialised skill, the Group decided to start recruiting prior to the start of the project in order to provide adequate training to the recruits and to ensure we meet the stringent terms of the project. This project had been delayed for almost a year resulting In inefficiencies and additional costs.
The Group maintain its strategies on focusing on core and recurring businesses.
Equipment and consumables used
Equipment and consumables costs are a function of Revenue and decreased accordingly by S$28.5 million or 52.1% from S$54.7 million in FY2016 to S$26.2 million in FY2017.
Freight charges decreased by S$182,000 or 73.7% from S$247,000 in FY2016 to S$65,000 in FY2017, which is in line with the decrease in overseas sales.
Commission and consultancy
Commission and consultancy charges decreased by S$9,000 or 8.8% from S$102,000 in FY2016 to S$93,000 in FY2017. The Group's order book remains healthy (see Note 10 below) and services of external consultants were not needed as much.
Changes in inventories and contract work-in-progress
Inventories and contract work-in-progress decreased by S$0.3 million or 243.6%.
Interest-bearing deposits with financial institutions was S$17,000, an increase of S$4,000 or 30.8%, compared to S$13,000 in FY2016.
Other (losses)/ gains - net
The Group recorded other losses of S$99,000 in FY2017 as compared to other gains of S$654,000 in FY2016. Other losses in FY2017 was attributed to foreign currency translation and while other gains in FY2016 were due to government grants.
Distribution and marketing expenses
Distribution and marketing expenses increased slightly by S$25,000 or 18.5% from S$135,000 in FY2016 to S$160,000 in FY2017.
Administrative expenses decreased by S$50,000 or 0.5%. A further breakdown of the expenses is tabled below:
Finance costs decreased by S$31,000 or 33.0% from S$94,000 in FY2016 to S$63,000 in FY2017. This is largely due to a decrease in borrowings from financial institutions in the beginning of the financial year.
Property, plant and equipment increased from S$1.5 million as at 31 December 2016 to S$1.9 million as at 31 December 2017. This increase was attributable to the purchase of plant and equipment amounting to S$1.1 million and partially offset by depreciation charges of S$0.65 million and a disposal of S$0.05 million.
Cash and cash equivalents
Cash and cash equivalents decreased from S$15.6 million as at 31 December 2016 to S$7.4 million as at 31 December 2017 mainly due to an increase in operating activities. Please refer to paragraph (e) under the Statement of Cash Flow.
Trade and other receivables
Trade and other receivables decreased by S$4.9 million from S$47.7 million as at 31 December 2016 to S$42.8 million as at 31 December 2017. Collections are in line with payment terms we provide to our customers.
Inventories decreased marginally from S$363,000 as at 31 December 2016 to S$348,000 as at 31 December 2017 due to utilisation of inventories for project sales.
Trade and other payables
Trade and other payables decreased by S$14.8 million from S$28.7 million as at 31 December 2016 to S$13.9 million as at 31 December 2017. The decrease was mainly due to lesser equipment and consumables purchased as new projects were not signed up.
Current and non-current borrowings
Current borrowings increased by S$5.0 million from S$15.2 million as at 31 December 2016 to S$20.2 million as at 31 December 2017. This was due mainly to the increase in bank financing to support sales for new projects secured in the financial year.
Non-current borrowings increased by S$0.1 million from S$0.3 million as at 31 December 2016 to S$0.4 million as at 31 December 2017. This is due to increase in finance leases obtained by the Group.
Cash and cash equivalent decreased by S$8.2 million from S$15.6 million as at 31 December 2016 compared to S$7.4 million as at 31 December 2017.
Net cash provided by operating activities for the financial year ended 31 December 2016 amounted to S$0.8 million compared to net cash of S$13.0 million used in operating activities for the financial year ended 31 December 2017. This was mainly as a result of:
Net cash used in investing activities amounted to S$0.9 million for the financial year ended 31 December 2016 compared to S$0.7 million for the financial year ended 31 December 2017. The net cash was used mainly for the purchase of property, plant and equipment.
Net cash provided by financing activities of S$6.7 million was made up of:
The outstanding order book as at 31 December 2017 is S$75.5 million compared to 31 December 2016 of S$36.2 million. The secured contracts are from the Group's repeated customers in the markets of Singapore, Vietnam and Myanmar.
Although there was a setback during the financial year involving technical issues in Vietnam hindering the Group from securing new orders, our customers are back on track. The Group plans to maintain its strategy of focusing on its core business in Project Sales and recurring revenue streams generated from Project Management and Maintenance Service Segment, in the targeted countries of Singapore, Vietnam and Myanmar.
Barring any unforeseen circumstances, the Group is confident on its strategy moving forward.