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Review of Performance
The Group achieved higher revenue of S$71.02 million in the half year ended 30 June 2016 ("HY2016"), an increase of S$21.84 million, or 44.41% as compared to the half year ended 30 June 2015 (�HY2015�). This was due mainly to higher Aircon project revenue generated for a new commercial development in Jurong as well as increase in trading & retail sales by the Group's Aircon division.
Gross Profit has increased marginally by S$0.45 million or 6.71% in HY2016 due to higher cost of sales incurred as compared to HY2015. Cost of sales increased by S$21.39 million, or 50.40% as compared to HY2015 which was due mainly to higher sub-contractors costs incurred for the project in Jurong and higher material and equipment costs incurred.
Other income increased by S$0.83 million to S$1.15 million due mainly to reversal of payables in Cambodia, interest income from fixed deposits, recovery of doubtful debts and gain on disposal of motor vehicles.
Administrative expenses increased by S$1.23 million to S$6.96 million due mainly to salary increment and bonuses for staff as well as higher property depreciation and administrative expenses of the paint business acquired in the second half of 2015.
Other expenses decreased by S$0.68 million to S$0.03 million due mainly to absence of impairment of trade receivables and fixed assets written-off in the Aircon division in HY2016.
Finance costs decreased by S$0.18 million to S$0.37 million is due mainly to the absence of unwinding of the discount of the convertible loan notes and lesser bank borrowings in HY16.
Profit from discontinued operation arose from the Group's Switchgear division in HY2015. The Group disposed the Switchgear division in the second half of 2015.
Arising from the above, the Group reported a profit attributable to owners of Company of S$0.23million in HY2016.
Inventories decreased by S$1.89 million to S$12.76 million as at 30 June 2016 due mainly to utilisation of existing built-up inventory in HY2016.
Trade and other receivables increased by S$5.45 million to S$29.72 million as at 30 June 2016 due mainly to increased sales by the Aircon division in HY2016.
Trade and other payables increased by S$15.07 million to S$53.13 million as at 30 June 2016 due mainly to accrual of dividend payable on 18 July 2016.
Total loans and borrowings decreased by S$3.06 million to S$13.97 million due mainly to repayment of bank loans and conversion of outstanding loan notes by Mr. Lim Teck Chuan as announced on 25 May 2016.
The Group recorded a cash outflow from operating activities of S$3.72 million for HY2016 as compared to a cash inflow of S$4.58 million for HY2015. This was due mainly to the increase in trade and other receivables as a result of higher sales near the end of HY2016.
There was a higher cash outflow from investing activities of S$0.85 million for HY2016 as compared to S$0.36 million for HY2015 due mainly to payment for property, plant and equipment. The outflow was mitigated by cash inflow from acquisition of a subsidiary in the Aircon division.
There was a cash outflow from financing activities of S$0.79 million due mainly to repayment of borrowings.
The Board of the Directors of the Company expects the Group's operating environment and conditions to be challenging for the next 12 months. The Group will continue to enhance its efforts to promote sales and margins by improving operational efficiency and rationalising cost structure in order to enhance our competitiveness.