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 YEAR ENDED 30 JUNE 2017

Profit And Loss

Financials

Balance Sheets

Financials

Review

Statement of profit or loss

The Group achieved revenue of $279.65 million for the year ended 30 June 2017, down 12.86% when compared to $320.91 million from the last financial year. The decrease in revenue was mainly from the Cable & Wire ("C&W") Segment which reported a decrease of $41.94 million. In Singapore, revenue decrease was attributable to lower delivery to the Commercial & Residential, Industrial and Infrastructure Sectors as a result of completion of deliveries for the existing contracts. In Malaysia and Vietnam, sales to the Industrial Sector dropped, while the Commercial & Residential and Infrastructure Sector grew as the segment began to pick up more orders from various projects.

Switchboard ("SB") Segment revenue declined by $1.71 million mainly due to a lack of new projects launched by the government and completion of existing projects.

Test & Inspection ("T&I") Segment revenue decreased by $0.11 million. This was mainly due to completion of Heat Treatment contracts in Indonesia and lower revenue from lab testing in Singapore as a result of intense competition. The decrease was however offset against higher revenue from Non-Destructive Testing as new contracts were executed during the year.

The decrease in revenue in the Group was negated by increase in revenue from the Electrical Material Distribution ("EMD") Segment which increased by $2.51 million. This was mainly due to higher sales to the Electronic Cluster as a result of strong demand from the semiconductor market.

Gross profit ("GP") decreased $7.18 million to $57.55 million from $64.73 million in the last financial year. The decrease was in tandem with lower revenue reported during the year.

Other operating income increased by $0.48 million, mainly attributable to gain on disposal of property, plant and equipment, gain on foreign exchange and rental income from investment property. The increase was offset by lower government grants received and credit insurance refunded in last financial year.

Selling and distribution expenses increased by $0.04 million, mainly because of higher staff cost offset against lower advertisement, delivery and packing material expenses which moved in tandem with lower business activity during the year.

Administrative expenses decreased by $0.06 million, mainly due to lower staff related costs especially lower company trip expenses offset against higher depreciation charges as a result of addition of assets and renovation works carried out during the year.

Other operating expenses dropped by $0.06 million, principally attributable to the net impact of lower foreign exchange loss and higher allowance for doubtful receivables during the year.

The Group reported profit before income tax of $21.50 million for the year ended 30 June 2017, a decrease of $6.09 million as compared to the last financial year. The decrease was largely attributable to the C&W Segment, which decreased by $4.97 million, the SB Segment which decreased by $0.09 million and the T&I Segment which decreased by $1.46 million. The lower profit before income tax was however partially offset by higher profit from the EMD Segment which increased by $0.45 million.

Statement of financial position

Cash and bank balances decreased by $12.09 million, mainly due to cash purchase of property, plant and equipment, purchase of investment property, repayment of short-term bank borrowings and acquisition of remaining shares in a subsidiary during the period.

Trade receivables decreased by $20.66 million, mainly the result of lower sales in the C&W Segment for the quarter ended 30 June 2017 as compared to quarter ended 30 June 2016 and improvement in collections.

Other receivables decreased by $1.15 million, primarily attributable to capitalization of downpayment for purchase of plant and equipment and lower advances to sub-contractors.

Inventories increased by $2.29 million mainly due to higher inventories kept by the EMD Segment to cater for higher delivery expected in the following months.

Property, plant and equipment increased by $0.78 million, primarily due to acquisition of motor vehicles, plant and machinery and office equipment, offset against depreciation charges during the year.

Investment property of $3.05 million was due to acquisition of property in Malaysia during the year.

Short-term bank borrowings decreased by $26.92 million as a result of settlement made and lower copper purchases during the year.

Trade payables decreased by $1.38 million to $23.50 million, principally due to lower purchases in the C&W Segment.

Other payables decreased by $2.10 million mainly because of lower accruals of bonuses for the financial year ended 30 June 2017 and gratuity payout for the financial year ended 30 June 2016 in current year.

Statement of cash flows

The cash and cash equivalent at the end of the year declined to $22.08 million compared with $34.17 million at the end of the last year.

The net cash from operating activities of $37.42 million was mostly due to lower sales, lower purchases, lower bonus accrued, payment of gratuity and income tax during the year.

The net cash used in investing activities of $11.56 million was mainly for acquisition of additional shares in a subsidiary and purchase of property, plant and equipment, purchase of investment property, net of proceeds from disposal of plant and equipment and interest received.

The net cash used in financing activities of $37.72 million was largely for repayment of short-term bank borrowings, finance lease, dividend and interest paid, net of proceeds from bank borrowings.

Commentary

Market conditions for the Group's business segments have become more challenging in the face of the intractably difficult environment. Singapore, which accounts for the bulk of the Group's business, is expected to see private sector construction demand remaining subdued as a result of the slowdown in the property market and continued economic uncertainties.

With local public sector construction demand expected to account for a major portion of total construction demand over the next few years, the Group will focus its resources more on the infrastructure market.

With overall lower local construction demand there will be pricing pressures which, coupled with the volatile foreign exchange and copper prices, as well as rising operating costs, will have a more severe impact on the Group's revenue and profitability.

On the regional front, the Group plans to further develop markets with better growth potential such as Cambodia, Indonesia, Malaysia and Myanmar. These markets too have their own challenges and we will further invest in building our resources and making a more visible presence there.

In the next 12 months, we will take a more cautious and prudent approach to doing business in the face of the prevailing uncertainties in the market.