15
Mencast Holdings Ltd
| Annual Report 2014
Operating Expenses
The Group’s administrative expenses increased by $2.5 million or 14%
due to full year effect of the two newly acquired subsidiaries of $4.5
million.
Such increase was offset by the savings arising from lower staff cost at
managerial level as a result of the Group’s integration exercise; and
decrease in professional fees and office repairs and maintenance.
The Group’s finance expenses increased by $2.7 million or 110% as a
result of higher bank borrowings and issuance of Series 1 Notes in
September 2013.
Other income
Other income increased by $868,000 mainly due to gain on sales of
property, plant and equipment, increase in government grants, rental
income, sales of scrap, net foreign exchange gain and write back of
long-outstanding payables.
Income tax
The Group’s effective income tax rate of 9% is lower than the statutory
income tax rate of 17% mainly due to tax incentives under the Productivity
Innovation Credit (“PIC”) and utilisation of carry forward tax losses. The
effective income tax rate in FY2014 of 9% is higher than the effective income
tax rate in FY2013 of 4% due to higher PIC allowance claimed in FY2013.
Net Profit
The Group’s profit from operations (excluding non-recurring income)
increased from $10.9 million in FY2013 to $14.6 million in FY2014 as a
result of increase in revenue of 32% offset by the increase in cost of sales
of 35% and administrative expenses of 14% arising from capacity
expansions and consolidation of recent acquisitions.
The Group’s net profit increased by $2.0million or 13% from$16.2million for
the year ended 31 December 2013 to $18.2 million for the year ended 31
December 2014 as a result of the above. The net profit attributable to equity
holders of the Company also increased by $1.7 million or 11% in FY2014.
Cashflow
The Group had a net cash outflow
from operating activities of $337,000
mainly due to increase in trade and
other receivables of $26.6 million,
increase in inventories of $1.3
million and decrease in trade and
other payables of $5.5 million offset
by the cash operating profit of $33.2
million.
The Group had a net cash outflow
from investing activities of $11.5
million due mainly to purchases of
property, plant and equipment of
$10.9 million and payments of
deferred consideration relating to
prior financial years’ acquisitions of
$10.0 million offset by the proceeds
from the sales of property, plant
and equipment of $7.5 million.
The Group’s financing activities
provided net cash inflow of $11.5
million due mainly to the proceeds
from rights issue of $11.8 million
and borrowings of $57.8 million
offset by repayments of borrowings
and finance lease liabilities, and
payments of dividends and interest
of $58.0 million.
