Tai Sin Electric Limited

24 Gul Crecent, Jurong Town, Singapore 629531

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


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First Quarter Financial Statement And Related Announcement

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FIRST QUARTER FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2018

Profit And Loss

Financials

Balance Sheets

Financials

Review

Statement of profit or loss

For the period 30 September 2018, the Group delivered higher revenue of $7.327 million, up 9.35% to $85.662 million when compared to $78.335 million from the last corresponding period.

The Cable & Wire ("C&W") Segment's revenue posted an increase of $7.544 million, attributable to higher volume of project deliveries during the period.

Electrical Material Distribution ("EMD") Segment's revenue dropped by $1.202 million. This was due to lower sales to the Building & Infrastructure and Retail/Trading Sector. Sales to the Industrial sector had also declined particularly the Electronic and Chemical, Oil & Gas Clusters as a result of completion of projects and lower demand in the market.

Test & Inspection ("T&I") Segment's revenue increased by $1.266 million, primarily due to higher revenue from the Laboratory Testing Services in Malaysia as new projects awarded were executed towards the last financial quarter.

Gross profit ("GP") for the current period declined 22.16% or $3.043 million to $10.691 million from $13.734 million in last corresponding period. The gross profit margin of 12.48%, was lower by 5.05% as compared to 17.53% achieved in the last corresponding period. Lower margins were attributable to pricing pressure from stiff competition in the Infrastructure Sectors which eroded the margins of the C&W Segment projects which were secured 2-3 years ago. In addition, the surge in copper prices greatly affected the margins of Infrastructure projects delivered by the C&W Segment from Singapore and Malaysia market.

Other operating income increased by $436,000 to $755,000 from $319,000. During the period, higher fair value gain on derivative financial instruments and gain on foreign exchange was recorded as the result of a stronger US Dollar as at period end.

Selling and distribution expenses increased by $41,000 to $4.766 million. This was mainly because of higher transportation cost in tandem with revenue and exhibition cost.

Administrative expenses increased by $81,000 to $4.725 million in the current period, mainly due to higher staff cost.

Other operating expenses decreased from $680,000 to $50,000. This was the result of absence of Group's foreign exchange losses and fair value loss on derivative financial instruments during the last corresponding period.

The Group's reported profit before income tax ("PBT") of $1.806 million for the period ended 30 September 2018, a decrease of $2.169 million from $3.975 million in the last corresponding period. The C&W Segment's PBT declined by $2.455 million to a marginal loss before income tax as a result of lower gross profit margin. The EMD Segment decreased by $199,000 moving in tandem with lower revenue during the period against higher share of profit from associates. The Switchboard Segment's PBT declined by $28,000 to $91,000. Notwithstanding, PBT from the T&I Segment increased by $520,000 moving in tandem with higher revenue achieved during the period.

Statement of financial position

Cash and bank balances increased by $3.776 million, due to higher collection from customer towards period end.

Trade receivables decreased by $2.390 million, mainly the result of lower sales for the quarter ended 30 September 2018 as compared to quarter ended 30 June 2018.

Other receivables increased by $552,000, primarily attributable to down payments for purchases of property, plant and equipment.

Inventories increased by $8.558 million, mainly due to higher purchases in the C&W Segment for subsequent delivery.

Property, plant and equipment decreased by $494,000, mainly due to depreciation charges of $1.271 million and net of currency adjustment, partially offset against acquisition of plant and equipment amounting to $1.040 million.

Short-term bank borrowings increased by $11.471 million primarily because of higher borrowings by the C&W Segment which moved in tandem with higher purchases and higher borrowings by the T&I Segment for its working capital.

Trade payables decreased by $133,000, substantially due to prompt payment to suppliers in the C&W Segment towards period end.

Other payables decreased by $2.400 million mainly because of bonus payout for the financial year ended 30 June 2018 during the quarter.

Statement of cash flows

The cash and cash equivalent at the end of the period increased to $22.530 million compared with $18.754 million at the end of the last period.

The Group's net cash used in operating activities of $6.971 million was attributable to operating profit before working capital changes of $3.116 million, increase in inventories, down payment for purchase of property, plant and equipment, decrease in trade payables, payment of bonus and income tax during the quarter, net of decrease in trade receivables.

The net cash used in investing activities of $576,000 was mainly for purchase of property, plant and equipment, net of proceeds from disposal of plant and equipment and interest received.

The net cash from financing activities of $11.487 million was largely due to higher proceeds from short-term bank borrowings, net of repayment of short-term bank borrowings, finance leases and interest paid.

Commentary

The market remains uncertain and trade tensions dampen investor sentiments.

The business environment for the industries that the Group serves are likely to remain challenging due to intense competition coupled with volatility of copper prices and fluctuation of foreign exchange rates.

The Group will continue to exercise prudence in cost control and financial discipline, in the competitive environment. We remain mindful of the volatile market environment and will keep abreast of market trends to identify more opportunities in the region.