Financials Results
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS AND FULL YEAR ENDED 30 SEPTEMBER 2023
Financials Archive
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Condensed interim consolidated statement of profit or loss and other comprehensive income
Condensed interim statements of financial position
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 local projects differ in their scope and size and are typically non-recurring.
Revenue for the financial year ended 30 September 2023 (“FY2023”) was S$12.20 million, a decrease of S$1.46 million or 10.7% as compared to S$13.66 million for the previous financial year ended 30 September 2022 (“FY2022”).
The decrease in revenue of S$1.46 million was mainly due to:
- a decrease in trading of production components of S$2.18 million mainly due to the prolonged war in Russia; partially offset by
- an increase in sales of door and shutter systems of S$0.08 million;
- an increase in provision of service and maintenance work of S$0.64 million.
Cost of sales
Cost of sales decreased by S$0.83 million or 8.6% from S$9.65 million in FY2022 to S$8.82 million in FY2023. The lower cost of sales corresponds with lower revenue recorded for FY2023.
Gross profit
Gross profit decreased by S$0.63 million or 15.7% from S$4.02 million in FY2022 to S$3.39 million in FY2023. Gross profit margin decreased from 29.4% in FY2022 to 27.8% in FY2023. The lower gross profit margin was mainly due to lower sales in manufactured products and trading of production components, which typically have better margins.
Other operating income
Other operating income decreased by S$0.19 million or 62.1% from S$0.31 million in FY2022 to S$0.12 million in FY2023. The decrease was mainly due to absence of government grants (from Enterprise Singapore for Blast resistant / Blast mitigating roller shutter door) and reliefs relating to the Covid-19 pandemic as the country gradually recovers from the pandemic.
Marketing and distribution expenses
Marketing and distribution expenses decreased by S$0.11 million or 25.6% from S$0.43 million in FY2022 to S$0.32 million in FY2023. This was mainly due to decrease in freight charges and offset by an increase in local logistics transport services (such as lorries and cranes).
Administrative expenses
Administrative expenses increased by S$0.03 million or 0.7% from S$4.75 million in FY2022 to S$4.78 million in FY2023. The increase was mainly due to higher professional fees, the rental of one additional dormitory room for workers, the onboarding of two contract staff, partially offset by decrease in personnel cost.
Other operating expenses
Other operating expenses decreased by S$0.19 million or 34.9% from S$0.53 million in FY2022 to S$0.35 million in FY2023. The decrease was mainly due to decrease in research and development expenses of S$0.14 million.
Interest revenue
Interest revenue which mainly comprise interest from bank deposits and interest income from fixed deposits with bank, increased by S$10,000 from S$3,000 in FY2022 to S$13,000 in FY2023. The increase was mainly due to interest received from fixed deposit placed with bank.
Other gains and losses
Other gains and losses decreased from a S$90,000 gain in FY2022 to a S$118,000 loss in FY2023. The decrease in other gains and losses were mainly due to unrealised foreign exchange loss arising from the translation of trade receivables and bank balances denominated in US dollar during FY2023.
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$201,000 in FY2022 to S$174,000 in FY2023.
Income tax expense
Income tax expense increased by S$0.29 million from tax expense of S$181,000 in FY2022 to credit in income tax of S$105,000 in FY2023, due to reversal of deferred tax liability.
Loss for the year
As a result of the above, the Group recorded a loss of S$2.12 million in FY2023 as compared to loss of S$1.68 million in FY2022.
Review of the Group's Financial Position
Current assets
Current assets decreased by S$2.56 million from S$12.49 million as at 30 September 2022 to S$9.93 million as at 30 September 2023, as a result of the following:
- a decrease in cash and cash equivalents of S$1.30 million;
- a decrease in contract assets of S$0.19 million arising from lower project works certified;
- a decrease in trade and other receivables of S$0.79 million due primarily to lower revenue generated; and
- a decrease in inventories of S$0.28 million.
Non-current assets
Non-current assets decreased by S$1.64 million from S$10.85 million as at 30 September 2022 to S$9.22 million as at 30 September 2023. 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 decreased by S$0.39 million from S$3.79 million as at 30 September 2022 to S$3.40 million as at 30 September 2023. The decrease in current liabilities was mainly a result of the following:
- a decrease in contract liabilities of S$0.17 million which is mainly comprise of the deposit received from customers;
- a decrease in trade and other payables of S$0.16 million;
- a decrease in income tax payable of S$0.11 million from lower revenue mainly from subsidiary; partially offset by
- an increase in lease liabilities of S$0.04 million mainly due to the increase in building lease payments within the next twelve months;
Non-current liabilities
Non-current liabilities decreased by S$1.46 million from S$7.39 million as at 30 September 2022 to S$5.93 million as at 30 September 2023. The decrease in non-current liabilities was mainly due to a decrease in lease liabilities of S$1.26 million as the remaining lease periods decrease over the contractual lease term.
Capital, reserves and non-controlling interests
Total equity was S$9.83 million as at 30 September 2023 as compared to S$12.16 million as at 30 September 2022, a decrease of S$2.34 million due to current year losses.
Review of the Group's Cash Flows
Net cash generated from operating activities
In FY2023, the Group generated cash from operating activities before changes in working capital of S$2,000. The Group’s net working capital outflow amounted to S$0.95 million and was mainly due to a decrease in trade and other receivables of S$0.79 million, a decrease in inventories of S$0.19 million, a decrease in contract assets of S$0.19 million, partially offset by a decrease in trade and other payables of S$0.05 million and a decrease in contract liabilities of S$0.17 million. After income tax paid of S$0.18 million and interest paid on lease liabilities of S$0.17 million, the Group’s net cash inflow from operating activities was S$0.59 million in FY2023.
Net cash used in investing activities
Net cash used in investing activities amounted to S$0.18 million, mainly due to the purchase of property, plant and equipment.
Net cash used in financing activities
Net cash used in financing activities was S$1.65 million due to repayment of lease liabilities of S$1.35 million and payment of dividends to non-controlling shareholders by a subsidiary of S$0.30 million.
Based on the above, cash and cash equivalents has decreased from S$7.18 million as at 30 September 2022 to S$5.88 million as at 30 September 2023.
Commentary
The construction industry is gradually recovering from the Covid-19 pandemic. However, the progress on the work sites remained slower than expected. In fact, the pace of recovery had not kept up with that of the overall cost increases in raw materials, freight and energy costs arising from the Russia-Ukraine war and other geopolitical and supply chain issues. Therefore, cost pressures will remain a challenging factor for the Group’s businesses. There are also additional concerns about the inflationary cost pressures remaining higher for longer globally.
In view of the above, the Board expects the Group’s prospects to remain challenging, but with the recovery in local construction from Covid-19 pandemic and Government investment in infrastructure and building construction, we are cautiously optimistic of pick up in our activities in the months ahead. Concurrently, with the resumption of the Group’s sales and marketing efforts in both local and overseas markets, the Group is quietly optimistic, while closely monitoring the business sentiments of the respective countries. The Group will continue to focus on innovations and improving its range of proprietary products, as well as production and installation efficiency to stay competitive. We will leverage on technology to enhance our distribution channels and will continually evaluate strategies to navigate through these market uncertainties.