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Profit & Loss Statement
The Group's revenue of $6.2 million for HY2016 decreased by 40.0% from HY2015. This was mainly due to continued weak worldwide demand from the HDD markets as well as more intensified price competition from overseas suppliers.
Despite the fixed costs, the Group managed to record a gross profit of $0.3 million in HY2016, as compared to a gross loss of $0.7 million in HY2015. The loss in HY2015 was due to impairment of inventory as a result of lower alumimium price during that period as worldwide aluminium price and its premium remained soft.
Other operating income decreased by 42.7% to $1.1 million as compared to $1.9 million in HY2015. This aspect of income comprised mainly proceeds from sale of production scrap. The decrease was due to lower production volume hence lower scrap available for sale. Price of scrap was also lower due to lower aluminium price.
Finance income decreased by 54.7% to $0.029 million from $0.064 million. Finance income comprised interest income earned on bank fixed deposits. The decrease was mainly due to lower bank fixed deposits.
Selling and distribution expenses decreased by 10.8% to $0.30 million from $0.33 million in HY2015. The decrease was mainly due to lower sales volume.
Administrative expenses increased by 60.2% to $3.6 million from $2.3 million in HY2015. An exchange loss of $1.1 million had increased administrative expenses in HY2016, while in HY2015, the exchange gain of $0.4 million was recorded under "Other operating income".
Other operating expenses related to loss incurred on the sale and scrapping of inventories and moulds of the China subsidiary that had been disposed. ("Disposed subsidiary").
Finance cost decreased by 75.0% to $0.002 million, compared with $0.008 million in HY2015. Finance cost comprised interest expense on loans obtained to finance the working capital of the Disposed Subsidiary. The bank loan has been fully repaid.
Share of results of associated company's loss for HY2016 was $0.14 million, compared with share of loss of $0.06 million in the same period last year.
At the pre-tax level, the Group's continuing operations reported a loss of $3.5 million, compared with a loss of $1.5 million over the same period in 2015.
The Group's non-current assets increased by $2.9 million from $20.3 million as at 31 December 2015 to $23.1 million as at 30 June 2016. The increase was mainly due to construction of Tuas South property, partially offset by the depreciation of property, plant and equipment and decrease in investment in an associated company arising from share of results.
The Group reported total current assets of $32.1 million as at 30 June 2016, a decrease of $5.8 million from last year end of $37.9 million. The decrease was mainly due to lower inventory level held by the Group and absence of assets of the Disposed Subsidiary.
The Group's total current liabilities decreased by $0.4 million from $3.7 million as at 31 December 2015 to $3.4 million as at 30 June 2016. The decrease was mainly due to the absence of liabilities associated with the Disposed Subsidiary.
The Group's total non-current liabilities increased by $0.9 million from $4.8 million as at 31 December 2015 to $5.7 million as at 30 June 2016. The increase was mainly due to bank loans taken to finance the construction of Tuas South factory.
Net cash generated from operating activities for HY2016 was $1.1 million compared with net cash used in operating activities of $2.3 million for the corresponding period last year. The positive operating cashflow for HY2016 was due to lower inventory level holding and receivables.
The Group's net cash used in investing activities for HY2016 was $3.6 million, which was $3.2 million higher than that in the previous corresponding period, due to the additions in property, plant and equipment resulting from the construction of factory at Tuas South.
The Group's cash received from financing activities for HY2016 was $1.0 million, compared with $2.2 million in HY2015. The decrease was due to the Group having issued and allotted 20,000,000 placement shares at an issue price of $0.13 and received $2.6 million after deducting related share issuance expenses in HY2015, which was not repeated in HY2016. The decrease was offset by proceeds from term loan taken to finance the construction of factory at Tuas South.
The half year ended 30 June 2016 saw weak demand from the HDD sector, as well as lower customer orders from the Group's main Electronics & Precision Engineering customer segment. Worldwide HDD and personal computers shipment numbers continued to drop in the face of weak industry demand. Industry projections for this customer segment remain sluggish going forward. In addition, some global political and economic setbacks like the "Brexit" and unpredictable others also added to uncertainties and may continue to weigh on consumer and business sentiments.
Singapore's manufacturing environment will continue to face major challenges in the forms of high operating costs and tight labour market. The Group continues to remain prudent in developing new customer base and work on improving operating efficiencies and managing operating costs. Ongoing fluctuations in energy prices and raw material costs will continue to have significant impact on the Group's profitability, and will be monitored closely.
The Group expects to complete its relocation to the new manufacturing site in Tuas South by end of this year. We are taking all necessary steps to minimize any potential costly disruption to operations, and work towards a smooth transition.