Group Performance
The Group's revenue of S$33.4 million for the financial year ended 30 June 2011 ("FY2011") was a decrease of S$4.0 million or 10.7%, from S$37.4 million in FY2010. The marine segment, which was severely impacted by the ongoing financial and economic instability and uncertainty in Europe and the USA, registered the largest fall in sales of S$3.7 million. The offshore oil & gas segment posted a decline of S$0.5 million as compared with the previous year. Only the others segment (which comprises the Group's customers in the construction, defense, logistics and other industries as well as trading companies) saw sales improve, increasing by S$0.2 million over FY2010. Geographically, sales to Singapore and rest-of-world segments dropped S$4.1 million and S$0.2 million respectively, and Asia excluding Singapore had a marginal gain of S$0.3 million.
The Group's gross profit decreased by S$1.6 million or 14.7%, from S$10.9 million in FY2010 to S$9.3 million in FY2011. The economic slowdown put selling prices under intense competitive pressure. Volatility in steel and crude oil prices, partially offset by the weakening USD/SGD exchange rates, also contributed to the smaller gross profit margin which slipped from 29.0% in FY2010 to 27.7% in FY2011. Among the different market sectors, gross profit margin from the marine segment remained stable, others saw a marginal drop, but erosion for the offshore oil & gas segment was up to 14.3%. The gross profit margin for the Singapore and Asia segments moved downwards by 1.9% to 3.3% but that of the rest-of-world segment improved by 12.6% despite lower sales.
Other items of income fell by S$0.1 million or 41.7% due mainly to a one off gain from CPF job credit in FY2010.
Distribution costs shrank by S$0.1 million from S$0.7 million in FY2010 to S$0.6 million in FY2011. The reduction was attributed to lower outward freight and handling charges.
Administrative expenses rose by S$0.3 million, from S$3.2 million in FY2010 to S$3.5 million in FY2011. The incremental expenses of S$0.4 million from higher headcount and increase in overall CPF contribution and related costs, was partially offset by the S$0.1 million savings in other general administrative expenses.
Other operating expenses increased by S$0.4 million from S$1.6 million in FY2010 to S$2.0 million in FY2011, pushed up by higher facilities costs of S$0.2 million from depreciation, land rental, property tax and China representative office, and new office rental of S$0.2 million.
Finance costs grew by S$0.1 million, from S$0.4 million in FY2010 to S$0.5 million in FY2011, as more working capital financing was utilized to support a higher level of import purchases.
Other charges decreased by S$0.1 million in FY2011, due mainly to the loss on fair value of interest swap in FY2010.
The Group's profit before tax from continuing operations dipped S$2.2 million or 45.8%, from S$4.8 million in FY2010 to S$2.6 million in FY2011. This came from the smaller gross profit of S$1.6 million as a result of lower sales, and unfavorable other items of income and expenses of S$0.6 million.
Balance Sheet and Capital Management
The Group's non-current assets decreased S$0.3 million due to higher depreciation for property, plant and equipment in FY2011. Current assets declined by S$1.0 million from reductions in inventories of S$0.2 million, trade and other receivables of S$1.4 million, other assets of S$0.1 million, and a boost in cash and cash equivalents of S$0.7 million.
The Group's non-current liabilities contracted by S$1.6 million, of which S$1.5 million was from the reclassification to current financial liabilities of short-term loans repayable in equal monthly or quarterly installments over the next 3 years, and long-term mortgage loans that are due within the next 12 months. There was also S$0.1 million decrease in deferred tax liabilities.
Current liabilities decreased by S$1.0 million. Income tax provision was lower by S$0.4 million, the combined effect of higher payment for FY2010 and a lesser provision based on a smaller profit this year. Amounts owed to trade and other creditors dropped by S$0.5 million. Repayment of term loans and banking facilities amounted to S$1.6 million but was offset by the S$1.5 million reclassification of term loans repayable within the next 12 months.
Cash Flow
The Group's net cash flow generated from operating activities was S$4.2 million, of which S$0.5 million was used in investing activities and S$3.0 million in financing activities, culminating in a net increase in cash and cash equivalents of S$0.7 million for the financial year. The cash and cash equivalents as at 30 June 2011 stood at S$8.1 million.