Page 18 - ar2012

Distribution costs rose by 30.6% y-o-y to S$0.8 million,
attributable to S$0.1 million increase in outward freight
and handling charges in line with higher sales volume,
as well as S$0.1 million arising from advertisement and
transport allowances.
Administrative expenses grew by 35.0% y-o-y or S$1.2
million to S$4.8 million in FY2012 mainly due to the
increased headcount and related costs. The Group
incurred additional expenses of S$1.0 million in relation
to higher headcounts, salaries and insurance coverage
expenses. The Group also incurred S$0.2 million in
insurances, and professional fees in the acquisition of
TEHO Engineering.
Other operating expenses increased by 19.8% y-o-y or
S$0.4 million to S$2.4 million in FY2012 as the Group
expended S$0.1 million towards enhancing staff welfare,
benefts and training. The balance of S$0.3 million was
attributable to higher facilities cost such as depreciation,
upkeep of properties and equipment, offce and land
rental and property tax.
Finance costs declined 30.5% y-o-y to S$0.4 million in
FY2012, as the Group successfully refnanced its long
term loans and renegotiated its trade facilities at lower
interest rates.
Meanwhile, other charges increased by 113.0% y-o-y
to S$0.3 million in FY2012, due largely to amortization
charges related to the acquisition of TEHO Engineering
such as the impairment of intangible assets as well as fair
value adjustments.
The effective tax rate for the Group was higher in
FY2012 at 23.0% compared to 15.7% in FY2011, due
mainly to higher non-allowable expenses and lower
capital allowances claimed for assets acquired under
hire purchase. The higher effective tax rate, along with
the Group’s focus on investing in its people to drive
future growth and performance, resulted in a net proft
attributable to owners of S$2.2 million, an increase of
1.6% over that of FY2011.
Balance Sheet and Capital Management
The Group’s non-current assets were up by 81.0% to
S$10.9 million in FY2012, largely due to the accounting of
intangible assets upon acquisition of TEHO Engineering.
The intangible assets of which included a goodwill of
S$2.5 million refects the Group’s confdence in the
business prospects of its newly acquired subsidiary, and
the synergistic value it brings in terms of complementary
customer base, extended marketing network and a
broader product offering.
Current assets rose by S$1.8 million to S$35.9 million
from increases in inventory of S$1.4 million as a result of
higher sales orders, as well as an increase in trade and
other receivables of S$1.4 million. This was partially offset
by the decrease in cash and cash equivalents of S$1.1
million.
The Group’s non-current liabilities grew by S$1.5 million in
FY2012. Term loans increased by S$0.6 million mainly due
to fnancing utilized in the acquisition of TEHO Engineering.
The Group also took on S$0.4 million in fnance leases for
the purchase of new plant and equipment. As a result, net
gearing ratio of the Group rose from 16.0% in FY2011 to
25.2% in FY2012. Meanwhile, the increase in deferred
tax liabilities of S$0.4 million arose from intangible assets
recognized in FY2012.
Current liabilities expanded by S$3.3 million mainly due to
the increase of S$2.3 million in trade and other payables.
Other fnancial liabilities and income tax payable grew by
S$0.7 million and S$0.3 million respectively.
Cash Flow
The Group generated a net cash fow of S$2.6 million
from operating activities, which were channeled towards
funding the S$3.5 million and S$0.1 million used in
investing and fnancing activities respectively, culminating
in a net decrease in cash and cash equivalents of S$1.1
million. The cash and cash equivalents as at 30 June
2012 stood at S$7.0 million.
Business Review
TEHO INTERNATIONAL INC LTD Annual Report 2012 16