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Unaudited Half-Year Financial Statement For The Six-Month Period Ended 30 September 2016

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Consolidated Income Statement

Income Statement

Statement of comprehensive income for thesix months ended 30 September 2015

Comprehensive Income

Statements of Financial Position

Financial Position

REVIEW OF PERFORMANCE

REVIEW OF FINANCIAL PERFORMANCE OF THE GROUP

Six months ended 30 September 2016 ("HY2017") compared to six months ended 30 September 2015 ("HY2016")

The Group's revenue is derived from three business segments: (i) sale of goods; (ii) rendering of services; and (iii) airtime revenue. Sale of goods is mostly project-based and relates to the design, supply, integration and installation of a comprehensive range of radio and satellite communication, navigation and marine automation systems. Rendering of services relates to the provision of maintenance and support services including repair works, troubleshooting, commissioning, radio survey and annual performance tests. Airtime revenue relates to provision of airtime for satellite communication systems.

The Group's total revenue increased by approximately S$0.7 million or 3.8% from approximately S$17.2 million in HY2016 to approximately S$17.9 million in HY2017. The main reason for this increase came from the sale of goods segment, which recorded a year-on-year increase of approximately S$1.7 million. This was partially offset by a decrease in revenue from the services rendering segment of approximately S$0.8 million and a decrease in revenue from the airtime revenue segment of approximately S$0.2 million. The Group's revenue from the sale of goods segment increased marginally by S$1.7 million in HY2017 compared to HY2016, mainly due to delivery of higher value projects in China during HY2017. The Group's revenue from both the services rendering segment and airtime revenue segment decreased mainly due to lesser service work rendered and a decrease in the number of airtime packages taken up by customers during HY2017, in line with the downturn in the marine and offshore industry.

The Group's cost of sales increased by approximately S$0.4 million or 2.6% from S$13.6 million in HY2016 to S$14.0 million in HY2017, mainly due to higher cost of equipment incurred, in line with the projects undertaken in HY2017.

The Group's gross profit increased by approximately S$0.3 million or 8.4% from approximately S$3.6 million in HY2016 to approximately S$3.9 million in HY2017. The overall gross profit margin increased from 21.0% in HY2016 to 21.9% in HY2017.

Other items of income (including interest income) decreased by approximately S$0.3 million or 52.9% from approximately S$0.6 million in HY2016 to approximately S$0.3 million in HY2017 mainly due to a decrease in net exchange gain of approximately S$0.2 million, a decrease in sundry income of approximately S$50,000 and a decrease in write back of allowances of doubtful receivables of approximately S$41,000.

The Group's distribution costs decreased by approximately S$0.3 million or 9.6% from approximately S$3.3 million in HY2016 to approximately S$3.0 million in HY2017. This was due mainly to the decrease in salaries and bonuses for sales, marketing and support staff of approximately S$0.2 million and a decrease in advertisement costs of approximately S$0.1 million.

The Group's general and administrative expenses decreased by approximately S$0.3 million or 11.6% from approximately S$2.8 million in HY2016 to approximately S$2.5 million in HY2017. This was due to a decrease in salaries and bonuses for general and administrative staff and executive directors of approximately S$0.1 million, as well as decreases in rental of premises and repair and maintenance expenses of approximately S$0.1 million in total and legal and professional charges of approximately S$0.1 million.

The Group's other expenses increased by approximately S$0.2 million or 44.4% from approximately S$0.5 million in HY2016 to approximately S$0.7 million in HY2017. This was due mainly to the increase in allowance for doubtful trade receivables of approximately S$0.2 million mainly attributable to customers in the oil and gas industry.

The Group's share of loss from associates widened to S$0.2 million in HY2017, compared to its share of loss of S$23,000 in HY2016 mainly because Sense Infosys Pte. Ltd. incurred net losses during HY2017.

Recognition of income tax benefit was due mainly to corporate income tax rebate received during HY2017.

The Group continued to be faced with difficult market conditions and the downturn in the marine and offshore industry amidst sharp fall in oil prices continued to weigh on the overall financial performance of the Group in HY2017. As a result of the foregoing, the Group recorded a loss of approximately S$2.2 million in HY2017.

REVIEW OF FINANCIAL POSITION OF THE GROUP

Total non-current assets increased by approximately S$0.7 million, from approximately S$2.2 million as at 31 March 2016 to approximately S$2.9 million as at 30 September 2016. This was mainly due to an increase in investments in associates of approximately S$0.7 million. In May 2016, the Group completed the subscription for additional convertible preference shares in the capital of its associate, Sense Infosys Pte. Ltd., for approximately S$0.9 million in cash.

Total current assets decreased by approximately S$1.8 million, from approximately S$36.3 million as at 31 March 2016 to approximately S$34.5 million as at 30 September 2016. This was due mainly to a decrease in inventories of approximately S$2.0 million due to utilisation of inventories to fulfill orders during HY2017, and a decrease in trade and other receivables of approximately S$5.1 million as the Group stepped up its debt collection efforts, which were partially offset by the increase in cash and cash equivalents of approximately S$5.3 million.

Total current liabilities increased by approximately S$1.0 million, from approximately S$16.5 million as at 31 March 2016 to approximately S$17.5 million as at 30 September 2016. This was due mainly to an increase in advances from customers of approximately S$1.0 million.

As at 30 September 2016, our capital and reserves amounted to approximately S$19.7 million comprising mainly share capital of approximately S$18.0 million and retained earnings of approximately S$2.1 million, offset by treasury shares held of approximately S$0.3 million and foreign currency translation account of approximately S$0.1 million.

REVIEW OF STATEMENT OF CASH FLOWS OF THE GROUP

In HY2017, net cash outflow from operating activities before working capital changes was approximately S$1.1 million. Net cash generated from working capital amounted to approximately S$7.2 million which was due mainly to a decrease in inventories of approximately S$2.1 million, a decrease in trade and other receivables of approximately S$4.1 million, and an increase in advances from customers of approximately S$1.0 million. After receipt of interest income of S$0.1 million, the net cash generated from operating activities amounted to approximately S$6.2 million in HY2017 as compared to net cash used in operating activities of approximately S$2.1 million in HY2016. This was due to the Group's conscious efforts to manage its capital in view of the challenging operational environment.

Net cash used in investing activities in HY2017 was approximately S$0.8 million. The net cash used in investing activities in HY2017 was due mainly to the subscription of additional convertible preference shares in the capital of Sense Infosys Pte. Ltd. by Jason Venture Pte Ltd, a wholly owned subsidiary, on 6 May 2016.

No cash was generated or used in financing activities in HY2017 as compared to the net cash used in financing activities of approximately S$1.3 million in HY2016.


COMMENTARY

In view of slower economic growth, the Group expects market conditions to remain very challenging. Weak demand for goods and services coupled by intense market competition will continue to exert pressure on margins.

As such, the outlook for the Group remains weak. The Group will continue to actively look for business opportunities prudently. At the same time, the Group is taking steps to improve its operational efficiency and cost management.