Unaudited Financial Statements and Dividend Announcement For the Six Months and Full Year ended 30 June 2023
Profit or Loss
Review of Performance
A. Consolidated Statement of Comprehensive Income (Full Year FY2023 vs Full Year FY2022)
Total revenue increased by $6 million or 29.3% from $20.45 million in FY2022 to $26.45 million in FY2023. The increase was mainly due to higher revenue from engineering services, and security and manpower services. This was offset by a decrease in revenue from transport services.
Increase in engineering services revenue was due to more contracts being completed in FY2023. Increase in security and manpower services revenue was due to a marked increase in the number of technicians outsourced to the aviation industry as compared to FY2022. Revenue from transport services continued to be affected by the shortage of qualified drivers, which is an issue plaguing the industry. This resulted in a lower utilization of buses despite demand for buses being robust.
- Cost of Sales:
Cost of sales increased by $5.73 million or 30.9% from $18.58 million in FY2022 to $24.31 million in FY2023. The increase was due to corresponding increases in revenue from engineering services as well as security and manpower services.
- Gross Profit:
Due to the increase in revenue, gross profit increased by $0.27 million or 14.2% from $1.87 million in FY2022 to $2.14 million in FY2023. Overall, gross profit margins decreased from 9.1% in FY2022 to 8.1% in FY2023, due to a larger gross loss from transport services for FY2023 compared with FY2022. The increase in gross loss from transport services is due to the disposal of buses as a result of asset rationalization, as well as the increase in fuel cost.
- Other Income:
Other Income decreased from $1.68 million in FY2022 to $0.49 million in FY2023. There were lower government grants received mainly due to the end of the Job Support Scheme in FY2022, as well as the ending of Job Growth Incentive in FY2023.
- Administrative Expenses:
Administrative expenses decreased by $0.43 million from $4.51 million in FY2022 to $4.09 million in FY2023 mainly due to the reduction in salaries of management and staff in FY2023 which was a result of lower head-count. This was offset slightly by increased in rent for FY2023.
- Other Expenses:
Other expenses increased by $0.58 million from $0.51 million in FY2022 to $1.09 million in FY2023, largely attributable to the losses on disposal of transportation assets.
- Finance Costs:
Increase in finance costs was mainly due to increase interest costs for lease liabilities, which was due to higher lease liability amounts.
There was a tax credit of $455,000 in FY2023 mainly due to reversal of temporary differences.
- Net Loss after tax:
Net Loss after tax increased from $1.44 million in FY2022 to $2.25 million in FY2023. This was due to lower gross profit margin, lower government grants received, and higher other expenses. This was offset by lower administrative expenses.
B. Consolidated Statement of Financial Position as at 30 June 2023
- Non-Current Assets:
Non-current assets decreased to $6.67 million as at 30 June 2023 from $9.41 million as at 30 June 2022, mainly due to depreciation of property, plant and equipment, as well as disposal of buses.
- Current Assets:
Current assets decreased slightly to $12.46 million as at 30 June 2023 from $12.86 million as at 30 June 2022. This was mainly due to decrease in cash and cash equivalent, and decrease in contract assets, offset by increase in trade receivables.
Decrease in cash and equivalent was mainly due to repayment of bank loans and operating expenses. Increase in trade receivables was due to higher outstanding receivables as a result of higher revenue.
Decrease in contract assets was mainly due to the higher conversion of unbilled amounts for work done into receivables.
- Non-Current Liabilities:
Non-current liabilities decreased to $1.08 million as at 30 June 2023 from $1.43 million as at 30 June 2022. This was mainly due to decrease in non-current loans and borrowings, as well as deferred tax liabilities, offset by increase in lease liabilities.
The decrease in non-current loans and borrowing was due to instalment repayments. The deferred tax liabilities which was offset against deferred tax assets arising from temporary difference, contributed to the decrease in tax liabilities. Increase in lease liabilities is due to the renewal of lease for right-of-use assets.
- Current Liabilities:
Current liabilities decreased to $6.15 million at 30 June 2023 from $6.70 million as at 30 June 2022, mainly due to decrease in lease liabilities, and loans and borrowings, offset by increase in trade and other payables.
Decrease in lease liabilities was due to instalment repayments. Decrease in loans and borrowings was due to the payment of loans. Increase in trade and other payables is due to higher outstanding trade payables, operating expenses payable due to higher cost of sales, and GST payable due to higher revenue.
C. Consolidated Statement of Cash Flows (Full Year FY2023)
Net cash used in operating activities in FY2023 amounted to $1.1 million. Operating cash flow before working capital changes was $0.21 million. However, this was offset by net working capital changes which amounted to deficit of $1.31 million. Net working capital changes was mainly due to an increase in trade and other receivables of $2.28 million.
Net cash from investing activities in FY2023 amounted to $0.69 million. This was mainly due to the proceeds from the disposal of property, plant and equipment.
Net cash used in financing activities in FY2023 amounted to $1.69 million. This was mainly due to payment of lease liabilities and repayment of loans and borrowings, offset by drawdown of a bank loan.
For our Engineering business, construction sector grew by 8.5 per cent year-on-year, which was supported by both the public and private sector demand, however in absolute terms, the value-add of the construction sector remained 19.3 per cent below its pre-pandemic (i.e. fourth quarter of 2019) level. The Group remains focused on executing existing projects in a timely and cost efficient manner, as well as actively tendering for higher value projects with the multi-national clients in Singapore.
Relevant to our transportation business, manpower shortage for qualified bus drivers continues to be the bottleneck for growth across the industry. 1 In this regard, the Group expects demand for its transport services to improve, but continued to be challenged with manpower shortages as well as high fuel costs. The Group has undertaken an asset rationalising exercise that resulted in the disposal of the Group’s older and less efficient buses.
For our security and manpower business, the Group foresees increase cost attributable to the progressive wage model implemented by Ministry by Manpower effective from 1 September 2022. Going forward, the Group will be strategic in the securing of new projects to ensure that the margins are improved.
Overall, operating within this current challenging and uncertain environment, the Group remains focused on its efforts to improve on its performance.
1 Straits Times, Bus companies in Singapore facing shortage of drivers, 8 Apr 2023.