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The Group's revenue of $8.2 million for FY2017 decreased by 32.8% from FY2016 mainly due to continued challenging and lackluster worldwide demand from the HDD markets, exacerbated by downward pricing competition from overseas suppliers.
The Group recorded a gross loss of $1.0 million mainly due to low sales and fixed overheads which included additional depreciation of the newly completed Tuas South factory.
Other operating income decreased by 60.0% to $1.4 million, compared to $3.5 million in FY2016 partly due to lower scrap sales as a result of lower production volume. FY2016's other operating income included $1.0 million gain on sale of old extrusion machines as well as foreign exchange gain of $0.5 million whereas there were none in FY2017.
Finance income increased to $0.12 million from $0.07 million. Finance income comprised interest income earned on bank fixed deposits. The increase was mainly due to a higher fixed deposits balance.
Selling and distribution expenses remained relatively unchanged at $0.6 million.
Administrative expenses increased by 47.7% to $5.8 million from $3.9 million in FY2016. Administrative expenses increased mainly due to an exchange loss of $1.6 million arising partly from products and purchases transacted in United States Dollar currency and partly from translation of United States Dollar currency balances to Singapore Dollar currency for financial reporting purposes.
Other operating expenses in FY2017 related to group restructuring expenses as well as fair value assessment loss of $5.6 million in relation to the Group's buildings at Penjuru and Tuas South, where $5.6 million fair value assessment loss was partially offset by Asset Revaluation Reserve. Other operating expenses in FY2016 related to a fair value assessment loss of the Tuas South building, of which an impairment of $1.6 million was recorded.
Finance cost of $0.1 million in FY2017 related to construction loan taken to finance the construction of Tuas South factory. The Tuas South factory construction has been completed and full Temporary Occupation Permit (“TOP”) obtained in January 2017 and interest costs from February 2017 onwards being charged to profit & loss account.
Share of results of associated company's loss for FY2017 was $0.16 million, compared with share of loss of $0.14 million in the same period last year.
At the pre-tax level, the Group's continuing operations reported a loss of $10.5 million.
The Group's non-current assets decreased by $6.9 million from $24.3 million as at 31 December 2016 to $17.4 million as at 31 December 2017. The decrease was mainly due to the fair value assessment loss of $5.6 million in relation to the Group's buildings. The decrease was also partly due to depreciation of property, plant and equipment of $1.4 million and amortization of $0.2 million on leasehold land, partially offset by purchase of plant and equipment as well as deferred tax asset from unabsorbed capital allowances.
The Group reported total current assets of $24.3 million as at 31 December 2017, a decrease of $9.1 million from last year end of $33.4 million. The decrease was mainly due to lower inventory and trade receivables balance as well as lower cash balances due mainly to repayment of bank loan.
The Group's total liabilities decreased by $5.2 million from $11.5 million as at 31 December 2016 to $6.3 million as at 31 December 2017. The decrease was mainly due to the repayment of term loans and the decrease in deferred tax liability. In addition, there was payment of liabilities incurred for Tuas South factory and write back of accrual of expenses which were no longer needed.
Net cash used in operating activities for FY2017 was $3.5 million as opposed to net cash generated from operating activities of $4.1 million for the corresponding period last year. The negative operating cashflows for FY2017 were mainly due to operating loss, partially offset by lower receivables and inventory balances.
The Group's net cash used in investing activities for FY2017 was $0.3 million, which was $3.8 million lower. During FY2016, there were additions in property, plant and equipment resulting from the construction of factory at Tuas South. The factory construction has been completed and TOP obtained in January 2017.
The Group's cash used in financing activities for FY2017 was $3.2 million, as opposed to net cash received of $2.2 million from financing activities in FY2016. The decrease was due to the repayment of term loan previously taken to finance the construction of factory at Tuas South.
The Group's main Electronics & Precision Engineering customer segment registered lower business turnover in FY2017, as the Group continued to face intense competition and downward price pressure, amid continued weak demand in the global personal computer and hard disk drive industries. The outlook in this sector remains subdued, with continuing downward price competition expected among key industry players.
The Group will continue its efforts in improving operating efficiencies and streamlining operating costs, while monitoring closely on potential volatility in raw material costs, energy prices and currency fluctuations. At the same time, it will look out for opportunities to enhance productivity, product quality and improve its competitiveness in the market place.
As announced on 2 January 2018, the Company had entered into a supplemental agreement with New Impetus Strategy Fund to, inter alia, extend the long-stop date for completion of the proposed $50 million subscription to 31 March 2018. Please see the Company's announcements on 8 August 2017, 10 November 2017 and 2 January 2018 for more information. In connection with the proposed subscription, the Company expects to hold the extraordinary general meeting for shareholders to approve the same on or around 27 March 2018. The Board will make further announcements in relation to the proposed subscription as and when applicable. However, there is no absolute certainty or assurance that the subscription will be effected. Shareholders of the Company are advised to exercise caution when dealing in the shares of the Company and to refrain from taking any action in respect of their shares which may be prejudicial to their interests.