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Revenue decreased by $0.5 million or 2.1% to $26.6 million for the financial period ended 31 December 2016 ("HY2017") from $27.1 million for the financial period ended 31 December 2015 ("HY2016"). The decrease was mainly due to the following:
Gross profit remained stable at $8.6 million in HY2017 as compared to HY2016.
Overall, the Group's Gross Profit Margin increased to 32.5% in HY2017 as compared to 31.8% in HY2016.
Other income increased by $1.1 million or 128.6% to $1.9 million in HY2017 from $0.8 million in HY2016. The increase of $1.6 million was mainly due to the following:
The increase in other income was offset by the following:
Distribution expenses decreased by $0.8 million or 46.7% to $0.9 million in HY2017 from $1.7 million in HY2016. This was mainly due to the Group and its joint venture partner's decision to put on hold the residential development phase of "The Bay" project, thus, the Group did not incur advertising, travelling and marketing costs in relation to this project during HY2017.
Administrative expenses decreased by $0.2 million or 2.9% to $6.6 million in HY2017 from $6.8 million in HY2016. The decrease was mainly due to the following:
The decrease in administrative expenses was offset by the following:
Other operating expenses
Other operating expenses decreased by $0.8 million or 20.9% to $2.8 million in HY2017 from $3.6 million in HY2016. The decrease was mainly due to the following:
The Group's finance income, comprising mainly interest income, remained insignificant in HY2017.
Finance costs remained at $0.5 million in HY2017, similar to that incurred in HY2016.
Income tax expense
There was an income tax expense of approximately $23,000 in HY2017 compared to an income tax credit of approximately $45,000 in HY2016. The income tax credit in HY2016 was attributable mainly to deferred tax income.
Loss before tax
Combining the profit before tax of $1.3 million for the Marine & Offshore Segment, loss before tax of $1.1 million for the Property Development Segment and the unallocated head office expenses of $0.4 million, the Group's loss before tax is $0.2 million in HY2017 as compared to a loss before tax of $3.1 million in HY2016.
Total comprehensive income / (loss) for the period
After accounting for foreign currency translation, the total comprehensive income for HY2017 is $1.0 million, compared to a total comprehensive loss of $1.8 million in HY2016.
Non-current assets increased by $1.3 million or 5.2% to $27.9 million as at 31 December 2016 from $26.6 million as at 30 June 2016. The increase was mainly due to the following:
Current assets decreased by $1.2 million or 1.3% to $90.1 million as at 31 December 2016 from $91.3 million as at 30 June 2016.
The decrease was due to the following:
The decreases above were offset by:
Non-current liabilities increased by $1.3 million or 5.5% to $25.1 million as at 31 December 2016 from $23.8 million as at 30 June 2016. The increase was due to the following:
The increase was offset by:
Current liabilities decreased by $2.2 million or 6.7% to $29.8 million as at 31 December 2016 from $32.0 million as at 30 June 2016.
The decrease was due to the following:
Shareholders' equity increased by $1.0 million or 1.6% to $63.1 million as at 31 December 2016 from $62.1 million as at 30 June 2016. The increase was mainly due to the following:
Cash flows from operating activities
Operating cash inflows before changes in working capital was $1.3 million in HY2017. Net cash outflow from working capital was $1.8 million due to the following:
After deducting income taxes paid of $0.5 million, net cash used in operating activities in HY2017 was $1.0 million.
Cash flows from investing activities
Net cash used in investing activities in HY2017 was $0.9 million, attributable to the following:
Cash flows from financing activities
Net cash used in financing activities in HY2017 was $0.6 million, attributable to the following:
Partially offset by:
As a result of the above, cash and cash equivalents as at 31 December 2016 decreased by $2.6 million to $5.2 million from $7.8 million as at 30 June 2016.
The Group's Marine & Offshore Segment expects the industries in which it operates remain challenging and uncertain. The International Monetary Fund ("IMF") is anticipating the lowest level of global gross domestic product ("GDP") growth since 2009, and this in turn is expected to generate a lower level of shipping demand1. Credit rating agency Moody's outlook for the global shipping industry in 2017 is negative, reflecting continued oversupply and a forecasted decline in earnings before interest, tax, depreciation and amortisation ("EBITDA") of between 7% and 10% 2. With fuel prices slowly rising and idle ships crowding the waters, low rates and tight margins will likely remain the norm in the global shipping industry.
Towards the end of 2016, oil-producing nations, both in and outside the Organization of the Petroleum Exporting Countries ("OPEC"), have reached a decision to reduce output, the first cut in over a decade. Amid renewed optimism, oil prices have since risen above US$50 per barrel, almost double the low seen in February 2016. This is a positive sign for the Group's Marine & Offshore Segment.
The Group is proactively taking measures to ensure that its Marine, Offshore Oil & Gas Segment remains competitive and resilient. In addition to keeping costs under control, the Group will continue to closely monitor its exposure to credit risks and to maintain an optimal amount of inventory. The Group is also exploring new markets for its products and is reaching out to customers in new geographical areas and industries to identify new sources of income.
Property Development segment
In relation to the Property Development Segment, the Group expects the property landscape in Singapore to remain subdued as it continues to be affected by the various cooling measures previously implemented by the Singapore government.
The Group has obtained a Certificate of Statutory Completion for its Urban Heritage development project in January 2017. Barring unforeseen circumstances, the Group expects to complete the construction of its Elite Residence project by the end of 2017. As part of the Group's turnaround efforts, the Group has appointed two new personnel to lead the Property Development Segment and to head the real estate agency business.
In relation to "The Bay" project, the Group and its joint venture partner have put on hold the residential development phase of the project as previously announced on 26 October 2016 and is still working with its joint venture partner to reposition the development. The Board will update shareholders on any material developments in due course and the Group will make further announcements as and when there are any subsequent developments.