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Review of Performance

The Group’s revenue for FY2017 decreased by 40.7% or US$6.2 million to US$9.0 million, from US$15.1 million for FY2016. This was mainly due to the significant decrease in revenue contribution by the Ports and Offshore segment of US$8.0 million. Oil price volatility continued to impact this segment in FY2017. However, the significant decrease was partially offset by the increase in revenue contribution by the Renewables segment of US$1.8 million which represents an increase of approximately 353% as compared to FY2016.

The Group’s gross profit for FY2017 decreased by 46.5% or US$3.4 million to US$3.9 million, from US$7.2 million for FY2016. The significant decrease was mainly due to decrease in gross profit from the Ports and Offshore segment of US$4.1 million. The decrease was partially offset by increase in gross profit generated from the Renewables segment of US$0.7 million. The movements in gross profit was consistent with the movements in revenue as explained earlier.

The Group’s gross profit margin for FY2017 decreased by 4.7 percentage points, from 48.0% for FY2016 to 43.3% for FY2017.

The Group’s distribution expenses increased by US$0.2 million or 44.1%, from US$0.3 million in FY2016 to US$0.5 million in FY2017. The increase was mainly due to a one-off reversal of sales commission of US$0.2 million in relation to a Ports and Offshore project in FY2016.

The Group’s administrative expenses increased by US$2.6 million or 51.5%, from US$5.0 million in FY2016 to US$7.6 million in FY2017 primarily due to the provision for doubtful debts of US$2.9 million in FY2017 as compared to US$0.4 million in FY2016. The provision for doubtful debts were made for those long outstanding arrears due from the customers. The increase was partially offset by the decrease in office related costs, such as office rental.

Other income decreased by US$0.3 million or 80.4%, from US$0.4 million in FY2016 to US$0.1 million in FY2017. In FY2016, the other income comprised primarily the one-off insurance claim of US$0.1 million and one-off income arising from the forfeiture of Goodwill Commitment in relation to lapse of the Proposed Placement of US$0.1 million.

The Group’s finance costs increased by US$0.1 million or 41.0%, from US$0.3 million in FY2016 to US$0.4 million in FY2017. The increase is mainly due to higher interest expenses arising from other trade banking facilities.

The Group suffered income tax expense of US$0.1 million and US$0.3 million in FY2017 and FY2016 respectively, mainly due to the write-off of withholding tax.

As a result of the above, the Group suffered a loss for the year from continuing operations of US$4.6 million in FY2017 as compared to a profit for the year of US$1.6 million in FY2016.

Review of Performance

The Group’s non-current assets decreased by US$1.4 million, from US$10.3 million as at 31 December 2016 to US$8.9 million as at 31 December 2017. The decrease was mainly due to the following:

  1. the goodwill and deferred tax asset impairment of US$0.3 million and US$0.6 million respectively as a result of the liquidation of a subsidiary; and
  2. the decrease in property, plant and equipment of US$0.8 million mainly due to the depreciation charge.

The decrease in non-current assets was partially offset by the increase in intangibles of US$0.3 million in relation to the Company’s Materials Development Project.

The Group’s current assets decreased by US$9.2 million, from US$15.7 million as at 31 December 2016 to US$6.5 million as at 31 December 2017. The significant decrease was mainly due to the following:

  1. a decrease in trade and other receivables of US$11.5 million mainly due to the provision for doubtful debts and the disposal of subsidiaries following the administration and liquidation during the year; and
  2. a decrease in cash and bank balances of US$0.3 million.

The decrease in current assets was partially offset by the increase in asset held for sale of US$2.5 million.

The Group’s non-current liabilities increased by US$1.5 million, from US$3.6 million as at 31 December 2016 to US$5.1 million as at 31 December 2017. The increase was mainly due to the issuance of US$1.0 million of convertible notes during FY2017 and the loan from directors of US$0.5 million.

The Group’s current liabilities decreased by US$5.7 million, from US$15.3 million as at 31 December 2016 to US$9.5 million as at 31 December 2017. The decrease was mainly due to the following:

  1. a decrease in trade and other payables, and tax payable of US$2.9 million and US$0.4 million respectively as a result of the disposal of subsidiaries following the administration and liquidation during the year; and
  2. a decrease in liabilities for trade bills discounted with recourse, and bank loan and advances of US$1.9 million and US$0.3 million respectively due to repayments during FY2017.

Review of Performance

Net cash from operating activities in FY2017 amounted to US$1.0 million as compared to US$1.7 million in FY2016. The Group had a net cash outflow of US$2.0 million from its operating activities before changes in working capital. Working capital movement included a decrease in trade and other receivables of US$3.8 million, an increase in trade and other payables of US$1.7 million, partially offset by a decrease in trade bills discounted with recourse of US$1.9 million and increase in inventories of US$0.1 million.

Net cash used in investing activities in FY2017 amounted to US$1.5 million as compared to US$4.7 million in FY2016, mainly due to the investment in joint venture of US$1.2 million.

Net cash from financing activities for FY2017 amounted to US$0.6 million mainly due to proceeds from bank borrowing, issuance of convertible notes and director loans of US$1.4 million, US$0.7 million and US$0.2 million respectively which were partially offset by the repayment of bank borrowings and finance lease payables of US$1.7 million and US$0.1 million respectively.

As a result of the above, the Group’s cash and cash equivalents increased by US$0.1 million, from a deficit of US$0.3 million as of 31 December 2016 to a deficit of US$0.2 million as of 31 December 2017, net of fixed deposit pledged and bank overdrafts.