Financial Year ended 31 December 2017 (“FY2017”) was indeed a difficult year for the Group. At the outset of this report, I would like to express my gratitude and thanks to the shareholders, stakeholders, suppliers, sub-contractors, customers and members of staff who have continued to give us their support during this trying period. Despite the difficult situation the Group is facing, we have taken steps to turn things around and strengthen the financial position of the Group (for instance, via the recent placement exercise).
Our performance in FY2017 was disappointing. The Group registered a decrease in revenue from S$46.7 million in Financial Year ended 31 December 2016 (“FY2016”) to S$12.0 million in FY2017 and suffered a loss after tax of S$2.4 million.
The dispute and uncertainty (in relation to our subsidiary Acesian Star (S) Pte Ltd (“ASPL”) and the projects at Changi Airport Terminal 4 and Terminal 1 Extension) with main contractor, Takenaka Corporation (“Takenaka”), have resulted in ASPL being placed under judicial management and adversely affected the financials of the Group.
Despite only receiving S$25.2 million from Takenaka (comprising S$17.8 million voluntarily paid and S$7.4 million (without GST) awarded by the Singapore Mediation Centre), ASPL have avidly settled amounting to more that S$35.0 million to its sub-contractors and suppliers. Takenaka’s continual claim to be a creditor and appeal against the rejection (by the judicial manager, Deloitte & Touche LLP) (“JM”) of their proof of debt have forced ASPL to remain under judicial management. As a result, ASPL have not been able to tender for any projects, and this has in turn resulted in significant opportunity losses for the Group.
Notwithstanding though, it has been encouraging to note that the Group’s other business units have coped with the market conditions and challenges, and that the Group is sparing no effort in its drive for growth and profitability. We are in the process of relocating one of our manufacturing facilities in Malaysia to substantially larger premises, in order to achieve greater production capacity, quality and be able to participate in larger projects moving forward. In addition, we are looking to expand our overseas markets, as well as improve the efficiency and productivity in our facilities.
The Group registered a decrease in revenue S$12.0 million in FY2017. Engineering revenue reduced by S$22.0 million from S$26.8 million in FY2016 to S$4.8 million in FY2017, as the segment was adversely affected by the disputes between ASPL and Takenaka. Manufacturing revenue decreased by S$11.6 million from S$18.7 million in FY2016 to S$7.1 million in FY2017, largely due to challenging market conditions in the semiconductor industries.
Although the Group’s revenue decreased, our efforts have meant that gross profit increased to 30.8% in FY2017 as compared to 16.1% in FY2016
Other operating income increased by S$6.9 million from S$1.3 million in FY2016 to S$8.2 million in FY2017; a large part of this was due to the settlement of the scheme of arrangement with creditors which was adjudicated by the JM of ASPL. Administrative expenses fell from S$5.1 million in FY2016 to S$4.6 million in FY2017 due to a decrease in administrative costs in line with lower sales and production activity. Other operating expenses increased from S$5.3 million in FY2016 to S$9.7 million in FY2017; a substantial part of this increase was due to a provision made for the outstanding claim in relation to the project at Changi Airport Terminal 4, pending the outcome of arbitration. Finance costs decreased from S$121,000 in FY2016 to S$16,000 in FY2017.
The Group maintained a healthy liquidity position as shown by its current ratio of 1.94 as at 31 December 2017. The Group’s cash position (including pledged bank deposits) stood at a total of S$3.1 million as at 31 December 2017. On a per share basis, loss per share was 0.65 cents for the year. Net asset value per share as at 31 December 2017 was 2.72 cents, a decrease from 3.32 cents as at 31 December 2016.
The economic environment will continue to remain challenging, given the present macroeconomic dynamics and intense competition within the industry.
However, the Group will continue to remain vigilant on cost management and the ongoing process of restructuring and continuous improvement, and will stay open to and look to exploit any opportunities presented by the market.
Given the foregoing, as well as our significantly larger manufacturing facility and the new projects in the pipeline, we are cautiously optimistic for the coming year.
In closing, on behalf of the Board of Directors, we would like to extend our heartfelt appreciation to our management and staff for their continued hard work and commitment towards the Acesian Group. We would also like to express our sincere and deep gratitude to our valued shareholders, stakeholders, suppliers, sub-contractors and customers for your unwavering belief in us during this difficult and challenging time. We hope all of you will continue to give us your support as we navigate through the challenging economic landscape ahead and do our utmost to bring about a brighter future.