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Unaudited Financial Statements For The Third Quarter Ended 30 September 2016

Financials Archive

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Income Statement

Profit & Loss 3Q2016

Statement of Comprehensive Income

Profit & Loss 3Q2016

Balance Sheet

Balance Sheet 3Q2016

Review of Performance

a) Income Statement

Sales dropped slightly from US$18m in 3Q FY2015 to US$17.8m in 3Q FY2016 which was mainly due to decrease in sales from the printed circuit board & kitting business by US$5.3m, offset by an increase in sales of US$5.1m from the new minimart business. 3Q FY2016 gross profit and gross profit margin decreased from US$1.9m in 3Q FY2015 to US$1.6m in 3Q FY2016.

Administrative expenses increased by 31.9% in 3Q FY2016 as compared to 2Q FY2015 due to additional headcounts and other expenses incurred to support the expansion of new minimart business. Finance costs were 23.4% higher than that of $0.1m in 3Q FY2015 due to new loan taken to finance the minimart business.

Other expenses decreased by 44.4% to US$0.1m in 3Q FY2016 mainly due to higher unrealised exchange loss included in 3Q FY2015 as a result of weakening of Malaysia Ringgit during that period.

b) Balance Sheet

Property, plant and equipment increased by US$2.6m to US$9.4m as at 3Q FY2016 mainly due to acquisition of factory for UK subsidiary. Intangible assets increased by 146.3% from 4Q FY2015 to 3Q FY2016 due to the goodwill arising from the acquisition of minimart business.

Level of inventory increased slightly by US$ 0.2m to US$23m in 3Q FY2016 which was in line with the expansion of new minimart business. Trade and other receivables decreased by US$6.4m from US$16.3m as at 4Q FY2015 to US$9.9m as at 3Q FY2016 due to lower sales during the period and sales from minimart business are mainly on cash basis.

Trade and other payables increased by US$1.4m from US$7.0m to US$8.4m as at 3Q FY2016 mainly because of higher trade in new minimart busines which was in line with the higher volume. Included in amount due to related parties was advances from a director.

c) Cash Flow Statement

During 3Q FY2016, the net cash generated from operating activities was US$0.7m as compared to net cash generated of US$1.8m for 3Q FY2015 due to an increase in inventory for the new minimart business.

Net cash outflows of US$2.9m in investing activities was mainly due to acquisition of new factory in UK subsidiary.

Net cash inflows of US$1m in financing activities was mainly due to net proceeds from bank loans.

Cash on hand was slighly lower at US$4m as at 3Q FY2016 compared to US$4.6m as at 3Q FY2015.

Commentary

The Board expects the business environment in the avionics industry to be challenging in the next 12 months. The Group's new minimart business has commenced since the beginning of the year and is expected to contribute to the Group's performance for the next 12 months.

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