5
ANNUAL REPORT 2014
Letter to
Shareholders
Financial Review
The Group achieved revenue of S$142.38 million in the full year ended 31 December 2014 (“FY2014”), a decrease of
S$12.35 million, or 7.98% as compared to S$154.73 million in the full year ended 31 December 2013 (“FY2013”). This
was due mainly to lower revenue registered by the Group’s Aircon division as a result of delay in a few projects.
Gross profit increased by S$0.75 million or 3.16% to S$24.57 million in FY2014 due mainly to projects with higher
margins.
Other income increased by S$4.59 million or 483.62% to S$5.54 million due mainly to gain on disposal of investment
property at Benoi Crescent.
Distribution expenses decreased by S$0.13 million or 2.30% to S$5.68 million due mainly to lower salaries as headcount
in the sales and marketing division have reduced. Administrative expenses increased by S$2.23 million or 13.43% to
S$18.83 million due mainly to profit incentive to the top management in accordance to their respective service agreements
and higher salaries for administrative staff. Other expenses increased by S$0.42 million or 62.50% to S$1.10 million due
mainly to write-off of previously capitalised renovation work for Aircon division’s retail outlets at West Coast and Junction
10 as the leases of these two outlets were terminated.
In FY2013, the Group had a net tax credit due mainly to higher tax savings derived from certain new tax incentives
introduced by the government and reversal of overprovision of tax liabilities recognised in prior years.
Arising from the above, the Group reported a profit attributable to shareholders of S$3.10 million in FY2014.
Property, plant and equipment increased by S$7.45 million to S$25.59 million as at 31 December 2014 due mainly to
acquisition of property at Defu Lane. Investment property decreased by S$10.35 million due to the disposal of the Group’s
investment property at Benoi Crescent. Other investments increased by S$2.15 million to S$5.90 million due mainly to
subscription of zero coupon unsecured convertible bonds issued by HMK Energy Pte. Ltd. (as announced previously on 18
August 2014). Trade and other payables decreased by S$3.74 million to S$54.62 million as at 31 December 2014 due
mainly to faster payment to suppliers. Current loans and borrowings increased by S$3.96 million to S$6.37 million as at
31 December 2014 due mainly to the reclassification of the convertible loan notes from non-current liabilities to current
liabilities.
Cash flows from operating activities were an outflow of S$0.14 million for FY2014 as compared to an inflow of S$10.48
million for FY2013. This was due mainly to the decrease in trade and other payables as a result of faster payments to
suppliers. Cash flows from investing activities were an inflow of S$1.29 million for FY2014 as compared to an outflow of
S$7.27 million for FY2013. This was due mainly to net proceeds from disposal of investment property at Benoi Crescent.
Cash flows from financing activities were an inflow of S$1.97 million for FY2014 as compared to an inflow of S$0.96
million for FY2013. This was due mainly to proceeds from bank borrowings and offset by repayment of mortgage loan for
the investment property at Benoi Crescent.
