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FULL-YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017

Financials Archive
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Consolidated Income Statement

Income Statement

Statement of comprehensive income for the financial year ended 31 March 2017

Comprehensive Income

Statements of Financial Position

Financial Position

REVIEW OF PERFORMANCE

REVIEW OF INCOME STATEMENT OF THE GROUP

Year ended 31 March 2017 ("FY2017") versus year ended 31 March 2016 ("FY2016")

Revenue

The Group’s revenue decreased by approximately S$4.0 million or 10.8% from S$37.2 million in FY2016 to S$33.2 million in FY2017. The decrease in revenue was contributed by all the business segments.

Revenue from sale of goods decreased by approximately S$0.4 million or 2.1% from S$22.9 million in FY2016 to S$22.5 million in FY2017 due to lower project sales in the oil & gas segment.

Revenue from rendering of services decreased by approximately S$1.7 million or 21.6% from S$8.0 million in FY2016 to S$6.3 million in FY2017 due to lesser service work rendered during FY2017.

Airtime revenue decreased by approximately S$1.9 million or 29.0% from S$6.3 million in FY2016 to S$4.4 million in FY2017 as a result of a decrease in the airtime services taken up by customers.

Gross profit

The Group’s gross profit increased by approximately S$2.9 million or 41.0% from S$7.1 million in FY2016 to S$10.0 million in FY2017. The overall gross profit margin increased from 19.1% in FY2016 to 30.1% in FY2017. This increase was attributable mainly to the sale of goods and rendering of services segment. Gross profit margin improved due to overall costs and operational efficiency.

Gross profit from sale of goods increased by approximately S$2.8 million or 63.6% from S$4.4 million in FY2016 to S$7.2 million in FY2017. Gross profit margin of this segment increased from 19.2% in FY2016 to 32.2% in FY2017.

Gross profit from rendering of services increased by approximately S$0.6 million or 40.0% from S$1.5 million in FY2016 to S$2.1 million in FY2017. Gross profit margin of this segment increased from 18.8% in FY2016 to 33.9% in FY2017.

Gross profit from airtime revenue decreased by approximately S$0.5 million or 41.7% from S$1.2 million in FY2016 to S$0.7 million in FY2017. Gross profit margin of this segment decreased from 19.2% in FY2016 to 14.3% in FY2017.

Other items of income

Other items of income (including interest income) for FY2017 increased by approximately S$0.2 million or 21.0% from S$1.3 million in FY2016 to S$1.5 million in FY2017. This was due mainly to the increase in write back of allowance for doubtful trade receivables of $0.2 million and net exchange gain of $0.3 million which was offset by the absence of gain on disposal of available-for-sale financial assets of S$0.2 million relating to the disposal of the entire investment in Rockson Automation GmbH, and decrease in sundry income of $0.1 million and grant of S$0.1 million.

Distribution costs

The Group’s distribution costs decreased by approximately S$1.5 million or 23.9% from S$6.3 million in FY2016 to S$4.8 million in FY2017. This was due mainly to lower salaries for sales, marketing and support staff of S$1.3 million, decrease in advertising and promotion expenses of S$0.1 million and entertainment and gifts expenses of S$0.1 million.

General and administrative expenses

The Group’s general and administrative expenses for FY2017 decreased by approximately S$1.0 million or 17.9% from S$5.6 million in FY2016 to S$4.6 million in FY2017. This was due mainly to the decrease in salaries (including bonuses) for the executive directors and general and administrative staff of S$0.4 million, staff welfare and associated expenses of S$0.3 million, depreciation and amortisation expenses of S$0.1 million, legal and professional fee of S$0.1 million as well as decreases in rental of premises, repair and maintenance and utilities of S$0.2 million in aggregate which was partially offset by the increase in general expenses of S$0.1 million.

Other expenses

Other expenses decreased by approximately S$1.2 million or 49.5% from S$2.4 million in FY2016 to S$1.2 million in FY2017 due mainly to the absence in net forex loss of S$0.5 million, decrease in allowance for impairment loss on available-for-sale financial asset of S$0.6 million and decrease in allowance for doubtful trade and non-trade receivables of S$0.2 million which was partially offset by the increase in allowances for inventory obsolescence of S$0.1 million.

Share of results of associates

The Group's share of loss from associates widened to S$0.3 million in FY2017, compared to its share of loss of $32,000 in FY2016 mainly because Sense Infosys Pte. Ltd. incurred net losses during FY2017.

Income tax expenses

Income tax expense was approximately S$0.3 million in FY2017 as compared to approximately S$24,000 in FY2016 mainly due to prior year income tax payable.

Profit/(loss) after income tax attributable to owners of the parent

As a result of the foregoing, profit after income tax attributable to owners of the parent incurred for FY2017 was approximately S$0.4 million as compared to a loss after income tax attributable to owners of the parent of approximately S$6.0 million recorded in FY2016. The Group recorded net profit margin of 1.1% in FY2017 as compared to a net loss margin of 16.1% in FY2016.

REVIEW OF STATEMENT OF FINANCIAL POSITION OF THE GROUP

Total non-current assets increased by approximately S$1.1 million, from S$2.2 million as at 31 March 2016 to S$3.3 million as at 31 March 2017. This was due mainly to net investment (including share of losses) in associates relating to the Group's investment in Sense Infosys Pte Ltd of S$0.5 million, increase in plant and equipment of S$0.6 million and trade and other receivables of $0.1 million, which was offset by the decrease in available-for-sale financial assets of S$0.1 million.

Total current assets decreased by approximately S$1.9 million, from S$36.3 million as at 31 March 2016 to S$34.4 million as at 31 March 2017. This was due mainly to the decrease in trade and other receivables of S$10.6 million and inventories of S$1.6 million, which were partially offset by the increase in cash and cash equivalents of S$9.9 million and derivative financial instruments of S$0.4 million.

Total current liabilities decreased by approximately S$1.2 million, from S$16.5 million as at 31 March 2016 to S$15.3 million as at 31 March 2017. This was due mainly to the decrease in trade and other payables of S$1.4 million and deferred revenue of S$0.3 million which was partially offset by the increase in income tax payable of S$0.5 million.

As at 31 March 2017, the Group's equity attributable to the owners of the parent amounted to approximately S$22.3 million, comprising mainly share capital of S$18.0 million and retained earnings of S$4.7 million.

REVIEW OF STATEMENT OF CASH FLOWS OF THE GROUP

In FY2017, the Group generated net cash from operating activities before working capital changes of approximately S$1.9 million. Net cash generated from working capital amounted to S$9.3 million which was mainly due to the decrease in trade and other receivables of S$9.4 million and inventories of S$1.4 million, which was partially offset by the decrease in trade and other payables of S$1.4 million and deferred revenue of S$0.3 million. After receipt of income tax of S$0.2 million, the net cash generated from operating activities amounted to S$11.4 million for FY2017.

Net cash used in investing activities in FY2017 was approximately S$1.5 million. This was due mainly to the purchase of plant and equipment of S$1.0 million, increase in investment in available-for-sale financial asset as the Group converted trade receivables into securities in the capital of Vallianz Holdings Limited amounting to S$0.1 million and increase in subscription of additional convertible preference shares of S$0.5 million in the capital of Sense Infosys Pte. Ltd. by Jason Venture, a wholly owned subsidiary, on 6 May 2016 , which was partially offset by interest received of S$0.1 million.

No cash was generated or used in financing activities in FY2017 as compared to the net cash used in financing activities of S$1.8 million in FY2016.


COMMENTARY

The Group expects market conditions to remain challenging and its financial performance will continue to be affected by the uncertainties and developments in the marine and offshore oil and gas industry. Pressure on margins will continue to persist on the back of softer demand for goods and services and intense market competition. As such, the Group is cautious over its industry outlook.

The Group will focus on strengthening its existing business and look for opportunities to increase business activities by creating value for customers and leveraging on technology. At the same time, the Group will actively exercise prudence in managing operational costs.