Tai Sin Electric Limited

24 Gul Crecent, Jurong Town, Singapore 629531

T: (+65) 6672 9292 E: ir@taisin.com.sg


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Full Year Results Financial Statement And Related Announcement

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FULL YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE PERIOD ENDED 30 JUNE 2018

Profit And Loss

Financials

Balance Sheets

Financials

Review

Statement of profit or loss

For the year ended 30 June 2018, the Group delivered higher revenue of $44.889 million, up 16.05% to $324.542 million when compared to $279.653 million from the last financial year.

The Cable & Wire ("C&W") Segment's revenue posted an increase of $35.730 million, attributable to a surge in copper price and buoyed by higher delivery during the year.

Electrical Material Distribution ("EMD") Segment's revenue grew by $10.416 million. This was due to improved sales to the Building & Infrastructure, Electronic and Chemical, Oil & Gas Clusters as the segment began to get more orders from various projects.

Test & Inspection ("T&I") Segment's revenue was down by $1.228 million, primarily caused by decrease in Non-Destructive Testing and Heat Treatment revenue from Singapore and Indonesia as a result of completion of projects and downturn in the oil and gas cluster. Laboratory test revenue which was affected by the pricing pressures due to stiff competition for fewer projects from the private sector in Singapore, also decreased.

Gross profit ("GP") for the current year declined 6.70% or $3.856 million to $53.693 million from $57.549 million in last financial year, despite the Group recording higher revenue. The gross profit margin of 16.54%, was lower by 4.04% as compared to 20.58% achieved in the last year. Lower margins were attributable to pricing pressure from stiff competition in the Infrastructure and Commercial & Residential Sectors which eroded the margins of the C&W and T&I Segment. In addition, the surge in copper prices over the last twelve months greatly affected the margins of Commercial & Residential and Infrastructure projects delivered by the C&W Segment.

Other operating income fell to $2.088 million from $2.772 million, down $0.684 million. During the year ended June 2018, higher fair value gain on derivative financial instruments was recorded as a result of US Dollar and copper price strengthening as at year end. During the year ended June 2017, the Group benefited from the gain on disposal of property of $0.650 million and gain on foreign exchange of $0.322 million.

Selling and distribution expenses increased by $0.517 million from $18.700 million. This was mainly because of higher transportation cost and sales commission from the C&W segment as well as higher staff cost from the EMD segment. The increase was however negated by lower advertisement and marketing expenses used to penetrate the retail market in Vietnam in the previous financial year.

Administrative expenses increased by $1.124 million to $19.565 million in current year, mainly due to higher donation made to an approved Institution of Public Character (IPC) and higher staff welfare particularly for the celebration of the 60th anniversary of the EMD Group.

Other operating expenses increased by $0.464 million to $1.892 million. The Group suffered foreign exchange losses as a result of fluctuations in the USD/SGD exchange rates during the year. The increase was offset against lower allowance for doubtful receivables for the year.

Share of profit from associates increased by $3.326 million to $3.668 million, due to higher profit contribution from Nylect International Pte Ltd, mainly attributable to the gain on disposal of its investment in Kingsland Development Pte Ltd.

The Group reported profit before income tax ("PBT") of $18.223 million for the year ended 30 June 2018, a dip of $3.272 million from $21.495 million in the last year. PBT of the C&W Segment was lower by $5.335 million as a result of lower gross profit margin, foreign exchange loss and higher staff cost. The T&I Segment's PBT decreased by $1.067 million because of intense competition and absence of gain on disposal of property. The Switchboard Segment's PBT declined by $0.093 million to $0.257 million. Notwithstanding, PBT from the EMD Segment increased by $3.211 million moving in tandem with higher revenue achieved during the year and higher share of profit from associates.

Statement of financial position

Cash and bank balances declined by $3.327 million, due to settlement of bank borrowings and payables towards year end.

Trade receivables increased by $15.974 million, mainly the result of higher sales for the quarter ended 30 June 2018 as compared to quarter ended 30 June 2017.

Other receivables increased by $0.782 million, primarily attributable to down payments for purchases of raw materials and tax recoverable.

Inventories increased by $6.719 million, mainly due to higher purchases in the C&W Segment. The increase was negated by lower inventories in the EMD Segment because of higher sales for the quarter ended 30 June 2018.

Property, plant and equipment decreased by $1.131 million, mainly due to depreciation charges of $5.020 million, partially offset against acquisition of plant and equipment amounting to $3.875 million.

Short-term bank borrowings increased by $9.759 million primarily because of higher borrowings by the C&W Segment which moved in tandem with higher purchases and higher borrowings by T&I Segment for its working capital.

Trade payables increased by $5.223 million, substantially due to higher purchases in the C&W Segment towards year end.

Other payables increased by $0.564 million mostly because of higher advances from customers and commissions payable against lower accrual of a director's remuneration.

Statement of cash flows

The cash and cash equivalent at the end of the year dropped to $18.754 million compared with $22.081 million at the end of the previous year.

The Group's net cash from operating activities of $0.116 million was attributable to operating profit before working capital changes of $21.017 million, net of increase in trade and other receivables, inventories, trade payables, payment of bonus and income tax during the year.

The net cash used in investing activities of $1.847 million was mainly for acquisition of an associate, purchase of property, plant and equipment, net of proceeds from disposal of plant and equipment, dividend and interest received.

The net cash used in financing activities of $1.637 million was largely due to higher proceeds from shortterm bank borrowings, net of repayment of short-term bank borrowings, finance leases, dividend and interest paid.

Commentary

The Group's business is underpinned by the Singapore economy as well as the construction and infrastructure activities in Southeast Asia. The business environment for the industries that the Group serves are likely to remain challenging due to intense competition couple with volatility of copper prices and fluctuation of foreign exchange rates.

Although the government introduced new property cooling measures in the 2nd half of 2018, there have already been many successful en-bloc acquisitions by developers in the last 24 months. As such, we foresee a slight increase in demand in the Commercial & Residential Sector for our products in the coming financial year but we continue to face stiff competition in this sector.

The mounting trade tensions between the United States ("US") and China and the US and Europe will throw uncertainty into the recovering market and we foresee negative spillover effects on Singapore which will affect our businesses in the Industrial and Commercial & Residential Sectors.

Developments in the Infrastructure Sector will continue to be strong in Singapore and will remain as a core focus to our Group's businesses.

Regionally, the Group will leverage its presence in Indonesia, Malaysia and Vietnam to grow the Group's businesses. The Group will also continue to further develop our businesses in other Southeast Asia markets such as Myanmar, Cambodia and The Philippines.

The Group will focus in executing business development plans to drive sales growth and improve operational efficiencies and increase productivity. We remain mindful of the volatile market environment and will keep abreast of market trends to identify more opportunities in the region.