Financial Statements And Related Announcement - Full Yearly Results 2023

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• CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS
  

  Notes:
  (1) 2HY2023 : 6 months ended 30 June 2023
  (2) 2HY2022 : 6 months ended 30 June 2022
  (3) FY2023 : 12 months ended 30 June 2023
  (4) FY2022 : 12 months ended 30 June 2022
  (5) n.m.: not meaningful.

• CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  
• CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
  
• FINANCIAL PERFORMANCE REVIEW

  Comparing 2HY2023 to 2HY2022

  Revenue

  Revenue increased by S$4.0 million or 13.0% to S$34.6 million for the financial period from 1 January 2023 to 30 June 2023 ("2HY2023") from S$30.6 million for the financial period from 1 January 2022 to 30 June 2022 ("2HY2022").

  • Marine & Offshore Segment revenue increased by 12.6% or S$3.8 million in 2HY2023 as compared to 2HY2022. This was mainly due to the increase in revenue contribution from the mooring and rigging business of S$3.7 million and water treatment business of S$0.2 million, partially offset by the decrease in revenue contribution from the engineering business.
  • Revenue contribution from Property Segment increased by S$0.2 million in 2HY2023 as compared to 2HY2022. The increase was mainly due to the increase in renovation projects, and this had also contributed to the increase in cost of sales for this segment.

  Gross profit

  The Group's gross profit of S$12.3 million in 2HY2023 was a marginal increase of S$0.5 million or 4.5% compared to 2HY2022. The Group's gross profit margin decreased to 35.6% in 2HY2023 as compared to 38.6% in 2HY2022.

  • Marine & Offshore Segment contributed gross profit of S$11.9 million to the Group in 2HY2023 as compared to S$11.2 million in 2HY2022. The gross profit margin decreased to 35.2% in 2HY2023 from 37.4% in 2HY2022. The decrease in gross profit margin was mainly due to the lower gross profit margin from the mooring and rigging business driven by competitive pricing.
  • Property Segment contributed gross profit of S$0.4 million to the Group in 2HY2023, of which S$0.3 million was contributed by the Group's property consultancy business.

  Other operating income

  Other operating income decreased by S$1.3 million or 85.7% to S$0.2 million in 2HY2023 from S$1.5 million in 2HY2022. The decrease was mainly due to the absence of a global settlement of a legal suit reached in March 2022.

  Distribution expenses

  Distribution expenses decreased by S$0.1 million or 15.3% to S$0.7 million in 2HY2023 from S$0.8 million in 2HY2022. These were mainly attributable to lower freight costs as a result of easing in supply chain disruptions that were built up during the COVID-19 pandemic.

  Administrative expenses

  Administrative expenses decreased marginally by S$0.2 million or 3.2% in 2HY2023. The decrease was mainly due to absences of legal fees of S$0.3 million in relation to the global settlement of a legal suit reached in March 2022. The decrease in legal fees was partially offset by the increase in manpower costs.

  Other operating expenses

  Other operating expenses decreased by S$0.1 million or 6.7% to S$2.2 million in 2HY2023 from S$2.3 million in 2HY2022. The decrease was mainly due to lower foreign exchange losses in 2HY2023 arising from the fluctuation in USD against SGD.

  Finance income

  Finance income, comprising mainly interest income from bank deposits, remained insignificant for 2HY2023.

  Finance costs

  Finance costs increased by S$0.1 million or 34.4% in 2HY2023 from S$0.5 million in 2HY2022. The increase was mainly due to the significant increase in interest rates.

  Income tax expense

  In 2HY2023, the Group incurred an income tax expense of S$0.5 million as compared to S$0.6 million in 2HY2022.

  Profit for the year

  Combining the profit before tax of S$3.0 million for the Marine & Offshore Segment and the unallocated head office expenses of S$0.3 million, the Group's profit before tax was S$2.7 million in 2HY2023 as compared to a profit before tax of S$3.0 million in 2HY2022. Overall, the Group reported profit after taxation of S$2.1 million for 2HY2023 (2HY2022: S$2.4 million).

  Comparing FY2023 to FY2022

  Revenue

  Revenue increased by S$13.5 million or 23.7% to S$70.7 million for FY2023 from S$57.2 million for FY2022.

  • Marine & Offshore Segment revenue in FY2023 increased by S$7.9 million in FY2023 as compared to FY2022. The increase was mainly attributable to increased revenue contribution from the mooring and rigging business of S$7.2 million and water treatment business of S$0.5 million.
  • Revenue contribution from Property Segment increased by S$5.6 million in FY2023 as compared to FY2022. The increase was mainly due to the sale of a semi-detached landed property, and this had also contributed to the increase in cost of sales for this segment.

  Gross profit

  The Group's gross profit of S$23.6 million in FY2023 increased by S$1.0 million or 4.3% from S$22.6 million in FY2022. The Group's gross profit margin decreased to 33.4% in FY2023 as compared to 39.5% in FY2022.

  • Marine & Offshore Segment contributed gross profit of S$22.6 million to the Group in FY2023 as compared to S$21.4 million in FY2022. The gross profit margin decreased to 35.4% in FY2023 from 38.4% in FY2022. The decrease in gross profit margin was mainly due to the lower gross profit margin from the mooring and rigging business.
  • Property Segment contributed gross profit of S$1.0 million to the Group in FY2023, of which S$0.8 million was contributed by the Group's property consultancy business.

  Other operating income

  Other operating income decreased by S$1.1 million or 73.2% to S$0.4 million in FY2023 from S$1.5 million in FY2022. The decrease was mainly due to the absence of a global settlement of a legal suit reached in March 2022.

  Distribution expenses

  Distribution expenses remained stable at S$1.6 million in FY2023 and FY2022 despite the increase in revenue. These were mainly attributable to lower freight costs as a result of easing in supply chain disruptions that were built up during the COVID-19 pandemic.

  Administrative expenses

  Administrative expenses decreased by S$0.3 million or 2.4% in FY2023. The decrease was mainly due to absences of legal fees of S$0.6 million in relation to the global settlement of a legal suit reached in March 2022. The decrease in legal fees was partially offset by the increase in manpower costs.

  Other operating expenses

  Other operating expenses increased by S$0.2 million or 3.4% to S$4.5 million in FY2023 from S$4.3 million in FY2022. The increase was mainly due to higher depreciation of property, plant and equipment for FY2023.

  Finance income

  Finance income, comprising mainly interest income from bank deposits, remained insignificant for FY2023.

  Finance costs

  Finance costs increased by S$0.3 million or 32.2% to S$1.2 million in FY2023 from S$0.9 million in FY2022. The increase was mainly due to the significant increase in interest rates in FY2023.

  Income tax expense

  In FY2023, the Group incurred an income tax expense of S$0.6 million as compared to S$0.8 million in FY2022.

  Profit for the year

  Combining the profit before tax of S$4.2 million for the Marine & Offshore Segment, loss before tax of S$0.3 million for the Property Segment and the unallocated head office expenses of S$0.5 million, the Group's profit before tax was S$3.4 million in FY2023 as compared to a profit before tax of S$3.7 million in FY2022. After accounting for income tax expense of S$0.6 million in FY2023, the Group's profit for FY2023 was S$2.8 million (FY2022: S$2.8 million).

• FINANCIAL POSITION REVIEW

  Non-current assets

  Non-current assets decreased to S$14.7 million as at 30 June 2023 from S$15.4 million as at 30 June 2022. The decrease was mainly due to the following:

  • Property, plant and equipment decreased by S$0.5 million due to (i) amortisation of right-of-use assets and depreciation of property, plant and equipment of S$1.8 million, (ii) derecognition of right-of-use assets amounting to S$0.3 million, and (iii) reclassification to assets held for sale of S$0.6 million. The decrease stated above was partially offset by the acquisition of plant and equipment of S$2.2 million.
  • Trade and other receivables decreased by S$0.2 million due to monthly repayments from the global settlement of a legal suit.

  Current assets

  Current assets decreased by S$2.9 million from S$45.2 million as at 30 June 2022 to S$42.3 million as at 30 June 2023. The decrease was mainly due to the following:

  • Development properties decreased by S$5.5 million which was due to the sale of a landed residential property located at 16 Lorong Salleh in Singapore; and
  • Inventories decreased by S$2.2 million from S$25.1 million as at 30 June 2022 to S$22.9 million as at 30 June 2023. The decrease was mainly due to efforts to optimize inventory levels in the Marine & Offshore Segment's business operations as a result of stabilisation of supply chain.

  The decrease stated above was partially offset by the following:

  • Assets held for sale increased by S$0.5 million as at 30 June 2023 following the planned disposal of a leasehold property owned by TEHO Water & Envirotec Pte Ltd. The disposal of the leasehold property was completed on 17 July 2023;
  • Trade and other receivables increased by S$0.7 million, which was in line with the increase in the Marine & Offshore Segment revenue in FY2023; and
  • Cash and cash equivalents increased by S$3.6 million from S$4.5 million as at 30 June 2022 to S$8.1 million as at 30 June 2023. Please refer to the "Cash Flows Review" section below for details.

  Non-current liabilities

  Non-current liabilities decreased by S$0.3 million to S$8.9 million as at 30 June 2023 from S$9.2 million as at 30 June 2022. The decrease was mainly due to the non-current portion of loans and borrowings decreased by S$0.4 million as a result of repayment of term loans and lease liabilities. The decrease stated above was offset by the increase of deferred grant income of S$0.1 million due to the recognition of grant received in FY2023 over the useful life of the process improvement projects for mooring and rigging business.

  Current liabilities

  Current liabilities decreased by S$6.0 million to S$25.1 million as at 30 June 2023 from S$31.1 million as at 30 June 2022. The decrease was mainly due to the following:

  • Current portion of loans and borrowings decreased by S$5.6 million, due mainly to (i) repayment of land and construction loans of S$3.6 million as the Group sold its development at 16 Lorong Salleh in Singapore, (ii) reclassification of a bank loan of S$1.7 million to non-current portion and (iii) repayment of lease liabilities of S$0.3 million;
  • Trade and other payables decreased by S$0.1 million due to slowdown in purchase of goods in June 2023 in order to maintain inventories at the optimum level;
  • Contract liabilities decreased by S$0.3 million; and
  • Current tax liabilities decreased by S$0.2 million due mainly to adjustment for overprovision of taxation for prior periods.

  The decrease stated above was partially offset by the increase in deferred grant income of S$0.2 million. Shareholders' equity

  Shareholders' equity increased by S$2.8 million to S$23.1 million as at 30 June 2023 from S$20.3 million as at 30 June 2023. The increase was mainly due to:

  • Net profit recorded for FY2023 amounting to S$2.8 million; and
  • Increase in other reserves of S$0.2 million.

  The increase stated above was partially offset by the dividend declared of S$0.2 million.

• CASH FLOWS REVIEW

  The Group's net cash flows generated from operating activities was S$12.5 million in FY2023 compared to S$0.9 million in FY2022. The increase in net cash flows generated from operating activities was mainly due to lower working capital requirements in FY2023. The lower working capital requirements was mainly due to (i) sale of a landed residential property and (ii) lower optimized inventory levels in the Marine & Offshore Segment's business.

  The cash flows used in investing activities amounted to S$0.6 million in FY2023 was mainly due to lower capital expenditure on the acquisition of property, plant and equipment of S$1.0 million, partially offset by the receipt of deferred grant income of S$0.4 million.

  Net cash flows used in financing activities amounted to S$8.3 million in FY2023 was mainly due to dividend payment of S$0.2 million, interest payment of S$1.2 million, repayment of loans and borrowings of S$25.4 million, and payment of lease liabilities of S$0.8 million; partially offset by proceeds from the drawdown of loans and borrowings of S$19.3 million.

  As at 30 June 2023, the Group has cash and cash equivalents of S$8.1 million as compared to S$4.5 million as at 30 June 2022.

• COMMENTARY

  The Group continues to face macro-economic headwinds, including inflation, escalating costs, and high interest rates. These macro-economic concerns warrant a cautious outlook for the next twelve months. To address these challenges, the Group is committed to optimising its business strategies and operations to ensure resilience and sustainable growth.