R&D costs in FY2016 were 45% lower than the amount incurred in FY2015, mainly due to a costs restructuring exercise undertaken in second half of year 2015 by the Equipment business.
In FY2016, the G&A costs decreased 21% when compared to the G&A costs in FY2015. The decrease was mainly due to costs saving exercises in the Group and the recognition of a S$0.4 million gain from the disposal of machinery as an offset against the G&A costs.
The variances for the exchange gain or loss in FY2016 were much lower than FY2015 due to a less volatile Malaysia Ringgit.
Finance costs incurred in FY2016 were higher by 26% when compared to FY2015, mainly due to increased borrowings from the holding company, ASTI Holdings Limited.
Depreciation of property, plant and equipment (“PPE”) decreased in FY2016 when compared to FY2015. This was due to the impairment of certain PPE of the Group at the end of the previous fi nancial year ended 31 December 2015.
Amortisation of intangible assets decreased in FY2016 when compared to FY2015 as the intangible assets had been fully amortised during the year.
Allowance for stock obsolescence decreased in
FY2016 when compared to FY2015. This was due to improved stock turnover arising from higher sales during the year.
Other expenses in FY2016 related to an impairment loss on certain PPE of the Group. Other expenses in FY2015 amounted to S$9.8 million due to impairment losses on PPE and goodwill as a result of the weaker business environment.
As a result of the above, the Group reported a lower net loss attributable to owners of the Company of S$2.8 million in FY2016 when compared to the net loss of S$17.0 million in FY2015.
BALANCE SHEET
The PPE decreased by S$0.1 million from S$2.0 million as at 31 December 2015 to S$1.9 million as at 31 December 2016 due mainly to the depreciation charges for the year. The decrease was offset by the purchases of machinery during the year.
Trade receivables increased by S$2.0 million, from S$6.7 million as at 31 December 2015 to S$8.7 million as at 31 December 2016 due to higher sales in the fourth quarter of 2016 (“4Q2016”).
Prepayments and advances increased by S$0.2 million, from S$0.4 million as at 31 December 2015 to S$0.6 million as at 31 December 2016 due to more advances to vendors.
Other receivables increased by S$0.2 million, from S$0.3 million as at 31 December 2015 to S$0.5 million as at 31 December 2016 due to higher deposits placed with vendors.
Amounts due from related companies comprised mainly of receivables from sales to a related company. Amounts due from related companies decreased by S$0.7 million, from S$1.3 million as at 31 December 2015 to S$0.6 million as at 31 December 2016, mainly due to lower sales to that related company.
The Group completed the disposal of its subsidiary’s leasehold land and building at the end of June 2016. This asset was classifi ed as a non-current asset held for sale on 31 December 2015.
Payables and accruals increased by S$3.4 million, from S$6.8 million as at 31 December 2015 to S$10.2 million as at 31 December 2016, in line with the higher sales in 4Q2016, and also due to extended repayment period.
Amount due to lease creditors decreased by S$0.2 million, from S$0.2 million as at 31 December 2015 to approximately S$9,000 as at 31 December 2016, which was attributable to repayment to the lease creditors during the year.
Bank loans and borrowings (current and noncurrent) were repaid in the second quarter of 2016 with the proceeds from the disposal of the subsidiary’s building.
Amounts due to related companies decreased by S$0.1 million, from S$0.3 million as at 31 December 2015 to S$0.2 million as at 31
December 2016. This was mainly due to the
repayment to related companies during the year.
Amounts due to holding company (current and non-current) increased by S$0.5 million, from S$7.4 million as at 31 December 2015 to S$7.9 million as at 31 December 2016 mainly due to an additional loan extended by the holding company to the Group.
As at 31 December 2016, the Group had net current assets of approximately S$56,000 and net liabilities of S$0.8 million.
CASHFLOW
Cash fl ows used in operating activities of S$2.2 million comprised of cash fl ows used in the Group’s operations in FY2016 of S$1.5 million and amounts paid for interests and taxes of S$0.7 million. Cash fl ows generated from investing activities amounted to S$2.0 million whereby a net amount of S$2.3 million was received from the disposals of non-current assets held for sale and PPE. An amount of S$0.3 million was utilised to purchase new PPE. Cash fl ows used in the fi nancing activities amounted to S$0.1 million,
mainly due to the repayment of S$1.1 million to lease creditors and fi nancial institutions which was offset by the S$1.0 million from other borrowings and loan from the holding company.
OUTLOOK
China has not returned to its past growth rates. China’s growth fundamentals have structurally changed and are now set on slower growth rates in the 6-7% range. The US $ and the US interest rates are on a rising trend after years of decline. Brexit and the new US administration continue to provide uncertainty to the global trade order. However, we continue to believe in our ability to navigate and grow through these
uncertain times. We have lowered many costs and improved operational effi ciencies within the Group, and will continue our vigilance in these regards. Our growth will require working capital, and we will resolve this as we progress this year. We will continue to explore opportunities and pursue commercial decisions that serve our stakeholders’ best interests as we move forward.
It is important to note that our business is prone to economic uncertainties and the cyclical nature of the electronics and semiconductor industries. Unforeseeable factors include, but are not limited to, foreign exchange volatility, intellectual property litigations, product and technology obsolescence, and inventory adjustments. In view of these factors, we willremain prudent and cautious in the management of our businesses.
IN APPRECIATION
I would like to thank all of our shareholders, customers, employees, and business associates for their trust and confi dence in ASA. I look forward to your support in the new financial year as we continue our growth plan for our ECMS and Equipment businesses, and continue to seek opportunities where we can expand our skill sets and presence in our target markets.
Yours sincerely,
Dato' Michael Loh
Executive Chairman and Chief Executive Officer
