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UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS AND FULL YEAR ENDED 30 SEPTEMBER 2021

Financials Archive

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Consolidated Statement of Profit or Loss

Profit or Loss

Statements of Financial Position

Balance Sheet

Review of performance of the Group

Review of the Group's Financial Performance

Revenue

For the sales of doors and shutter systems, the Group typically experiences a fluctuation in revenue contribution from its customers from period to period due to the project-based nature of its business. The Group’s projects differ in their scope and size and are typically non-recurring.

Revenue for the financial year ended 30 September 2021 (“FY2021”) was S$12.99 million, a decrease of S$1.29 million or 9.0% as compared to S$14.28 million for the previous financial year ended 30 September 2020 (“FY2020”). The decrease in revenue was due to a decrease in the Group’s sales of doors and shutter systems and a decrease in revenue from trading of production components and this was partially offset by an increase in revenue from the provision of service and maintenance work, as follows:

  1. The Group’s overall sales of doors and shutter system decreased by S$1.34 million or 20.9% from S$6.42 million in FY2020 to S$5.08 million in FY2021. The decrease was mainly due to the decrease in the Group’s sales of manufactured products of S$1.29 million and the decrease in sales of distributed products of S$0.05 million;
  2. The Group’s trading of production component revenue recorded a decrease in revenue of S$0.13 million or 2.3% from S$5.64 million in FY2020 to S$5.51 million in FY2021; and
  3. The Group’s provision of service and maintenance work increased by S$0.18 million or 8.1% from S$2.22 million in FY2020 to S$2.40 million in FY2021; and

The lower revenue recorded in FY2021 was mainly due to

  1. The door and shutter systems installation that were not carried out according to schedule due to delays and a slow progress in the construction projects; and
  2. The existing ports congestions globally has affected the goods delivery and hence the business volume.

Cost of sales

Cost of sales decreased by S$0.77 million or 7.8% from S$9.84 million in FY2020 to S$9.07 million in FY2021. The lower cost of sales corresponds with lower revenue recorded for FY2021.

Gross profit

Gross profit decreased by S$0.52 million or 11.7% from S$4.44 million in FY2020 to S$3.92 million in FY2021. Gross profit margin decreased slightly from 31.1% in FY2020 to 30.2% in FY2021. The lower gross profit margin was mainly due to lower sales in manufactured products which typically have better margins.

Other operating income

Other operating income decreased by S$0.56 million or 50.0% from S$1.12 million in FY2020 to S$0.56 million in FY2021. The decrease was mainly due to lower government grants and relief relating to the Covid-19 pandemic as the country slowly moves towards recovering from the pandemic.

Marketing and distribution expenses

Marketing and distribution expenses increased by S$0.04 million or 14.4% from S$0.33 million in FY2020 to S$0.37 million in FY2021. This was mainly due to an increase in freight charges and offset by a decrease in travelling expenses.

Administrative expenses

Administrative expenses decreased by S$0.24 million or 4.7% from S$5.24 million in FY2020 to S$5.00 million in FY2021. The decrease was mainly due to a decrease in personnel cost of S$0.14 million from staff attrition and a decrease in depreciation and amortisation expenses of S$0.14 million which were partially offset by an increase in product certification and assessment fees of S$0.03 million.

Other operating expenses

Other operating expenses decreased by S$0.31 million or 49.6% from S$0.63 million in FY2020 to S$0.32 million in FY2021. The decrease was mainly due to the absence of an impairment loss on goodwill acquired in a business combination of S$0.20 million, lower bank charges of S$0.04 million and GST claim of S$0.03 million arising from bad debts written-off .

Interest revenue

Interest revenue which mainly comprise interest from bank deposits, decreased by S$16,000 or 80.0% from S$20,000 in FY2020 to S$4,000 in FY2021. The decrease was mainly due to lower fixed deposit balance placed with the bank.

Other gains and losses

Other gains and losses decreased by S$0.11 million or 70.2% from S$0.16 million loss in FY2020 to S$0.05 million loss in FY2021. The decrease in other losses were mainly due to a decrease in loss on disposal of fixed assets relating to machinery and equipment.

Finance costs

Finance costs consists of interest expense arising from the application of Leases Accounting for lease liabilities.

Finance costs decreased by S$27,000 from S$254,000 in FY2020 to S$227,000 in FY2021.

Income tax expense

Income tax expense increased by S$5,000 from S$125,000 in FY2020 to S$130,000 in FY2021.

Loss for the year

As a result of the above, the Group recorded a loss of S$1.60 million in FY2021 as compared to loss of S$1.15 million in FY2020.

Review of the Group's Financial Position

Current assets

Current assets decreased by S$1.20 million from S$14.99 million as at 30 September 2020 to S$13.79 million as at 30 September 2021, as a result of the following:

  1. a decrease in trade and other receivables of S$0.66 million due primarily to overall lower revenue generated;
  2. a decrease in cash and cash equivalents of S$0.41 million;
  3. a decrease in inventories of S$0.32 million arising from fewer stocks held for raw material; and partially offset by
  4. an increase in contract assets of S$0.20 million arising from increased project work yet to be certified.

Non-current assets

Non-current assets decreased by S$1.69 million from S$14.38 million as at 30 September 2020 to S$12.69 million as at 30 September 2021. The decrease in non-current assets was mainly due to lower net book value in property, plant and equipment, right-of-use assets and intangible assets arising from depreciation and amortisation charges.

Current liabilities

Current liabilities increased by S$0.13 million from S$3.42 million as at 30 September 2020 to S$3.55 million as at 30 September 2021. The increase in current liabilities was a result of mainly the following:

  1. an increase in lease liabilities of S$0.26 million mainly due to the increase in building lease payment within the next twelve months; and partially offset by
  2. a decrease in contract liabilities of S$0.14 million which as mainly comprise of the deposit received from customers.

Non-current liabilities

Non-current liabilities decreased by S$1.22 million from S$10.00 million as at 30 September 2020 to S$8.78 million as at 30 September 2021. The decrease in non-current liabilities was mainly due to a decrease in lease liabilities of S$1.15 million as the remaining lease periods decrease over the contractual lease term.

Capital, reserves and non-controlling interests

Total equity was S$14.16 million as at 30 September 2021 as compared to S$15.95 million as at 30 September 2020.

Review of the Group's Cash Flows

Net cash generated from operating activities

In FY2021, the Group generated cash from operating activities before changes in working capital of S$0.51 million. The Group’s net working capital inflow amounted to S$0.91 million and was mainly due to an increase in contract liabilities of S$0.60 million, an increase in trade and other payables of S$0.29 million and a decrease in inventories of S$0.32 million which were partially offset by an increase in contract assets of S$0.20 million and an increase in trade and other receivables of S$0.10 million. After income tax paid of S$0.17 million and interest paid on lease liabilities of S$0.23 million, the Group generated net cash from operating activities of S$1.02 million in FY2021.

Net cash used in investing activities

Net cash used in investing activities amounted to S$0.20 million, mainly due the purchase of property, plant and equipment and intangible assets of S$0.14 million and S$0.09 million respectively, partially offset by proceeds from disposal of property, plant and equipment of S$0.03 million.

Net cash used in financing activities

Net cash used in financing activities was S$1.20 million due to repayment of lease liabilities of S$1.0 million and payment of dividends of S$0.20 million.

Based on the above, cash and cash equivalents has decreased from S$9.19 million as at 30 September 2020 to S$8.78 million as at 30 September 2021.

Commentary

The door and shutter industry has remained challenging and competitive.

The Covid-19 pandemic continues to weigh on the already challenging business and operation environment. Despite Singapore having entered the stabilization phase, the construction industry’s recovery had been slow and weak. Many worksites continue to struggle to re-start, hampered by the Safe Management Measures and the shortage of workers. This is aggravated by the current new wave of infections causing frequent disruptions arising from sudden and immediate recall of workers whenever instructed by the management of dormitories where workers reside.

The construction industry had to also contend with the rapid and significant rise in material costs led initially by the shortage of steel materials. This was further exacerbated by the energy crisis, supply chain and freight issues.

In view of the above, the Board expects the Group’s prospects to remain weak and challenging in the months ahead. The pandemic is also expected to disrupt the Group’s sales and marketing efforts in overseas markets. Nevertheless, the Group will continue to focus on innovations and improving its production efficiency to stay competitive. It will also leverage on technology in enhancing its distribution channels and will continually evaluate strategies to navigate through these market uncertainties.