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FULL YEAR FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2018

Financials Archive

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Consolidated Statement of Profit or Loss

Profit or Loss

Statements of Financial Position

Balance Sheet

Review of the Group's Income Statement

Revenue

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. The Group has a subsidiary, Grimm Industries Pte. Ltd. (“Grimm”), which is principally engaged in in the trading and designing of production components.

Revenue for the financial year ended 30 September 2018 (“FY2018”) was S$17.74 million, a decrease of S$6.14 million or 25.7% as compared to S$23.88 million for the previous financial year ended 30 September 2017 (“FY2017”). The decrease in revenue was a result of a decrease in the Group’s sales of door and shutter system and a decrease in revenue from the Group’s provision of service and maintenance work, partially offset by an increase in revenue from Grimm, as follows:

  1. The Group’s overall sales of doors and shutter system decreased by S$6.38 million or 40.4% from S$15.79 million in FY2017 to S$9.41 million in FY2018. The decrease was mainly due to the decrease of the Group’s sales of manufactured products of S$7.67 million. However, revenue from sales of distributed products has increased by S$1.29 million;
  2. Grimm recorded an increase in revenue of S$0.40 million or 6.9% from S$5.80 million in FY2017 to S$6.20 million in FY2018; and
  3. The Group’s provision of service and maintenance work decreased by S$0.16 million or 7.0% from S$2.29 million in FY2017 to S$2.13 million in FY2018.

Cost of sales

Cost of sales decreased by S$2.56 million or 17.2% from S$14.87 million in FY2017 to S$12.31 million in FY2018 mainly due to lower material costs of S$2.07 million and labour cost of S$0.44 million, in line with the decrease in revenue.

Gross profit

Gross profit decreased by S$3.58 million or 39.7% from S$9.01 million in FY2017 to S$5.43 million in FY2018. Gross profit margin decreased from 37.7% in FY2017 to 30.6% in FY2018. The lower gross profit margin was mainly due to lower sales in manufactured products which typically have better margins as compared to distributed products.

Other operating income

Other operating income decreased by S$0.01 million or 4.4% from S$0.18 million in FY2017 to S$0.17 million in FY2018. The decrease was mainly due to lower government incentives received in FY2018.

Marketing and distribution expenses

Marketing and distribution expenses decreased by S$0.01 million or 2.3% from S$0.62 million in FY2017 to S$0.61 million in FY2018. This was mainly due to a decrease in transportation expenses.

Administrative expenses

Administrative expenses decreased by S$1.13 million or 17.0% from S$6.66 million in FY2017 to S$5.53 million in FY2018. The decrease was mainly due to a decrease in personnel cost of S$0.77 million resulting from lower headcount, decrease in professional fees and rental expenses of S$0.18 million and S$0.15 million respectively.

Other operating expenses

Other operating expenses decreased by S$0.47 million or 47.6% from S$0.98 million in FY2017 to S$0.51 million in FY2018. The decrease was due to lower allowance for doubtful receivables of S$0.52 million as the Group has taken a cautious and prudent approach in tendering for project work to better manage the credit risk of customers. The decrease was partially offset by an increase in research and development expenses of S$0.07 million which was attributable to more research and development activities carried out during the year.

Investment revenue

Investment revenue which mainly comprise interest from bank deposits, increased from S$11,000 in FY2017 to S$19,000 in FY2018.

Other gains and losses

Other gains and losses increased from a net loss of S$6,000 in FY2017 to a net loss of S$26,000 in FY2018. The increase was mainly due to a higher net foreign exchange loss of S$0.02 million arising from the translation of trade receivables, payables and bank balances denominated in US$ in FY2018.

Finance costs

Finance costs decreased S$9,000 or 81.8% from S$11,000 in FY2017 to S$2,000 in FY2018 mainly due to the absence of finance costs from a subsidiary (i.e. Gliderol Doors Asia Limited) which has been disposed off in FY2017.

Income tax credit

The Group is in an income tax credit position in FY2018 where the income tax expense decreased by S$0.40 million from S$0.02 million income tax expense position in FY2017 to S$0.42 million income tax credit position in FY2018. The income tax credit position was mainly due to a net tax refund of S$0.08 million and reversal of over provision of tax in prior years of S$0.32 million.

Loss for the year

As a result of the above, the Group recorded a loss of S$0.63 million in FY2018 as compared to profit of S$0.90 million in FY2017.

Review of the Group's Financial Position

Current assets

Current assets decreased by S$1.64 million from S$19.22 million as at 30 September 2017 to S$17.58 million as at 30 September 2018, as a result of the following:

  1. a decrease in trade and other receivables of S$1.56 million as a result of lower sales volume;
  2. a decrease in inventories of S$0.43 million; and partially offset by
  3. an increase in cash and cash equivalents of S$0.35 million.

Non-current assets

Non-current assets decreased by S$0.70 million from S$6.69 million as at 30 September 2017 to S$5.99 million as at 30 September 2018. The decrease in non-current assets was mainly attributable to lower net book value in property, plant & equipment and intangible assets arising from depreciation and amortization charges.

Current liabilities

Current liabilities decreased by S$0.95 million from S$3.09 million as at 30 September 2017 to S$2.14 million as at 30 September 2018. The decrease in current liabilities was mainly due to a decrease in trade and other payables of S$0.84 million, a decrease in finance lease payables of S$0.06 million and a decrease in income tax payable of S$0.05 million.

Non-current liabilities

Non-current liabilities increased by S$0.10 million from S$0.70 million as at 30 September 2017 to S$0.80 million as at 30 September 2018. The increase in non-current liabilities was due to an increase in other payables of S$0.39 million which are deferred income on government grant received, partially offset by the decrease in deferred tax liabilities of S$0.29 million.

Capital, reserves and non-controlling interests

Total equity as at 30 September 2018 was S$20.63 million as compared S$22.12 million as at 30 September 2017.

Review of the Group's Cash Flows

Net cash from operating activities

In FY2018, the Group utilised net cash from operating activities before changes in working capital of S$13,000. The Group’s net working capital inflow amounted to S$1.33 million and was mainly due to a decrease in trade and other receivables of S$1.35 million and a decrease in inventories of S$0.40 million, which were partially offset by a decrease in trade and other payables of S$0.42 million. After income tax refund of S$0.08 million, the net cash generated from operating activities in FY2018 amounted to S$1.40 million.

Net cash used in investing activities

Net cash used in investing activities amounted to S$0.13 million, mainly due to the Group’s purchase of property, plant and equipment of S$0.16 million.

Net cash used in financing activities

Net cash used in financing activities amounted to S$0.92 million, mainly due to payment of dividends of S$0.85 million and the net repayment of finance lease obligation of S$0.06 million.

Commentary

The factors that may impact the Group are as follows:

  1. General health of the Singapore economy;
  2. Level of activities in the commercial and industrial developments in Singapore; and
  3. Changes in the Singapore government’s policies and regulations on the immigration and employment of foreign workers.

The industry remains competitive and the Group stays cautious with the credit risk of potential customers. The Group is constantly exploring innovations and improvements in operational efficiency to stay competitive and expand its order book.

The Group continues to face issues of labour supply constraints and high manpower costs in Singapore. In this regard, the Group will continue to take appropriate steps and measures to address these issues to maintain its competitiveness.