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The Group's revenue increased by 5% to $4.9 million for HY2018 mainly due to inclusion of scrap sales of $0.7 million when trading of scrap became one of the principal activities of a subsidiary. Sale of production scrap was previously classified under Other Operating Income. The Group's revenue excluding scrap sales revenue had decreased by 10% due to continued challenging and lackluster worldwide demand from the HDD markets as well as intensified pricing competition from overseas suppliers.
The Group recorded a gross loss of $0.03 million mainly due to low sales and fixed overheads. The Group recorded a lower gross loss for HY2018 compared with gross loss of $0.4 million mainly to inclusion of scrap sales in revenue in HY2017.
Other operating income decreased by 70.5% to $0.2 million, compared to $0.8 million in HY2017. Other operating income in HY2017 comprised mainly proceeds from sale of production scrap. Other operating income in HY2018 mainly consisted of proceeds from scrapping of residual parts of disposed old extrusion machine line.
Finance income remained relatively constant at $0.06 million. Finance income comprised interest income earned on bank fixed deposits.
Selling and distribution expenses increased by 8.8% from $0.31 million in HY2017 to $0.33 million in HY2018. The increase was due to higher sales travelling and packaging expenses.
Administrative expenses decreased by 13.7% to $2.9 million from $3.4 million in HY2017. Administrative expenses decreased due to lower foreign exchange loss of $0.02 million compared with $1.06 million loss in HY2017 as United States Dollars strengthened. The decrease was partially offset by professional fees of $0.52 million incurred in HY2018 for the fund-raising exercise undertaken by the Group to fund future acquisitions.
Finance cost relates to interest expenses incurred on bank loans taken to finance the acquisition of Tuas South land and construction of Tuas South Factory. Finance costs decreased by 39.2% from $0.07 million in HY2017 to $0.05 million in HY2018. The decrease was due to full repayment of the construction loan.
Share of results of associated company's loss for HY2018 remained relatively constant at $0.09 million.
At the pre-tax level, the Group reported a loss of $3.2 million.
The Group's non-current assets decreased by $0.8 million from $17.4 million as at 31 December 2017 to $16.5 million as at 30 June 2018. The decrease was mainly due to the depreciation of property, plant and equipment, partially offset by purchase of plant and equipment.
The Group reported a total current asset of $44.5 million as at 30 June 2018, an increase of $20.2 million from last year end of $24.3 million. The increase was due to cash proceeds from the completion of Tranche 1 fund-raising exercise where 28,750,000 ordinary shares were allotted and issued at an issue price of $0.80 per share for a total amount of $23 million. The increase was partially offset by lower level of inventory.
The Group's total liabilities decreased by $0.4 million from $6.3 million as at 31 December 2017 to $5.9 million as at 30 June 2018. The decrease was partly due to repayment of term loan taken to finance the construction of Tuas South factory and partly due to lower level of trade payables.
Net cash used in operating activities for HY2018 was $1.7 million compared with net cash used of $2.3 million for the corresponding period last year. The negative operating cashflow for HY2018 was mainly due to operating loss and higher trade receivable balance. This was partially offset by lower inventory balance.
The Group's net cash used in investing activities for HY2018 was $0.09 million, which was $0.2 million lower as compared to HY2017. Net cash used in investing activities for HY2017 was higher due to additions in property, plant and equipment resulting from the construction of factory at Tuas South. The factory construction had been completed and TOP obtained in January 2017.
The Group's cash received from financing activities for HY2018 was $22.8 million, as opposed to net cash used of $3.0 million in financing activities in HY2017. The increase was mainly due to cash proceeds from the completion of Tranche 1 fund raising exercise.
The Group's revenue excluding scrap sale revenue had decreased by 10% for the HY2018 compared with HY2017 due to weak hard disk drive industries demand and downward price pressure and competition among key industry players. The Board expects the challenging business condition to continue.
The Group is actively streamlining its operating costs and improving efficiencies, aiming to qualify and participate in new products/programme in HDD industry as well as budgeting for more resources in developing new customers and increasing market share of its core businesses. Fluctuations in raw material costs and energy prices continue to pose challenges, and will have ongoing significant impact on profitability. They will be monitored closely by the Group.
As announced on 27 April 2018, the Group has completed the Tranche 1 Subscription by allotting and issuing to the Subscriber 28,750,000 ordinary shares. The Board will make further announcements in relation to the Subscription as and when applicable.
The Group is currently working on the target new infrastructure business as contemplated by the diversification approved by the shareholders at the EGM on 27 March 2018. The Company will make the relevant announcements as and when information on any developments relating to the diversification becomes available.
The Company is currently in discussion with potential buyers for its Penjuru Lane site and shall make the necessary announcement as and when appropriate.