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Review of Performance
The Group achieved revenue of S$128.95 million for the full year ended 31 December 2016 ("FY2016"), an increase of S$19.97 million, or 18.33% as compared to S$108.98 million in the full year ended 31 December 2015 ("FY2015"). This was due mainly to higher revenue earned by the Group's Aircon division.
Gross profit increased by S$1.67 million to S$14.76 million in FY2016. Gross profit margin decreased from 12.01% in FY2015 to 11.44% in FY2016 due mainly to higher subcontractors' costs.
Other income increased by S$1.29 million or 206.55% to S$1.92 million due mainly to reversal of payables upon deregistration of our subsidiary in Cambodia, interest income from fixed deposits and gain on disposal of motor vehicles.
Distribution expenses increased by S$0.12 million or 8.29% to S$1.53 million due mainly to higher salaries and entertainment expenses.
Administrative expenses increased by S$1.14 million or 7.96% to S$15.51 million due mainly to higher salaries, higher depreciation and ex-gratia payments to former Independent Directors in FY2016.
Other expenses increased by S$6.71 million or 1,230.83% to S$7.25 million due mainly to impairment of goodwill in the Paint division and impairment of other investments in FY2016 as set out in the review of statements of financial position below.
Finance costs decreased by S$0.29 million or 32.96% to S$0.59 million due mainly to lower trade facilities utilisation in FY2016.
Tax credit was due mainly to refunds of taxes paid by the Aircon division for prior year of assessments.
Arising from the above, the Group reported a loss from continuing operation of S$8.21 million in FY2016.
Intangible assets decreased by S$1.48 million to S$0.69 million as at 31 December 2016 due mainly to the write-off of goodwill in the Paint division.
Other investments decreased by S$5.09 million to S$0.93 million as at 31 December 2016 due mainly to the impairment of investment as well as change in fair value of the zero-coupon convertible bonds.
Inventories decreased by S$2.94 million to S$11.71 million as at 31 December 2016 due mainly to utilisation of existing built-up inventory in the Group's Aircon division during the year.
Trade and other receivables decreased by S$4.79 million to S$19.49 million as at 31 December 2016 due mainly to the refund of security deposit from the landlord of Natural Cool Lifestyle Hub.
Trade and other payables decreased by S$1.26 million to S$36.80 million as at 31 December 2016 due mainly to lower trade facilities utilisation, lower accrued expenses and the amortisation of deferred revenue from the sale and lease-back of Natural Cool Lifestyle Hub. The decrease is offset by the higher advances received from customers of the Aircon division.
Total loans and borrowings decreased by S$3.93 million to S$13.10 million due mainly to repayment of finance lease liabilities, bank loans and conversion of outstanding loan notes by Mr. Lim Teck Chuan as announced on 25 May 2016.
Cash flows from operating activities were an inflow of S$5.84 million. This was due mainly to higher advances received from customers of Aircon division and refund of security deposit by from the landlord of Natural Cool Lifestyle Hub.
Cash flows from investing activities were an outflow of S$0.62 million. This was due mainly to purchase of property, plant & equipment in Aircon and Paint divisions.
Cash flows from financing activities were an outflow of S$17.12 million. This was due mainly to the payment of dividend and repayments of finance lease liabilities and bank loans.
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.
The Company wishes to draw Shareholders' attention to its announcement dated 28 February 2017 regarding its Paint division.