Megachem Limited
Annual Report
2014
34
Operating and Financial Review
1.3
OTHER OPERATING INCOME
FY 2014
FY 2013
Variance Fav/(Unfav)
S$’000
S$’000
S$’000
%
Bad debt recovered
63
8
55
696.4
Change in fair value of financial
assets held for trading
- listed equity security
60
9
51
566.7
Change in fair value of financial
assets held for trading
- forward foreign exchange contracts
47
93
(46)
(49.2)
Grant income
41
15
26
176.7
Net foreign exchange gain
190
0
190
100
Other operating income increased by S$258,000 to S$470,000 mainly due to net foreign exchange gain recorded for
the current year of S$0.2 million, as opposed to net foreign exchange loss suffered last year of S$0.7 million, higher
bad debt recovered, grant income received and fair value gain from listed equity security. This was partially offset by
lower fair value gain from forward foreign exchange contracts.
1.4 OPERATING EXPENSES
H2 2014 vs H1 2014
H2 2014 vs H2 2013
Higher remuneration and related expenses and rental expenses caused total operating expenses for H2 2014 to
increase by S$0.7 million or 6.7% vis-à-vis H1 2014 to S$10.4 million. The increase in employee remuneration by S$0.5
million was in line with better profitability of H2 2014 while higher inventory holding drove rental expenses up by
S$0.2 million. On the other hand, impairment charge for trade receivables was lower in H2 2014.
As compared to H2 2013, total operating expenses were also higher by S$0.5 million or 4.8%. Similarly, remuneration
and related expenses and rental expense accounted for majority of the increase, contributing S$0.8 million and
S$0.3 million respectively. This was partially offset by net foreign exchange loss of S$617,000 incurred for H2 2013 as
compared to net foreign exchange gain for H2 2014.
FY 2014 vs FY 2013
Total operating expenses for FY 2014 amounted to S$20.2 million and this represented an increase of S$0.9 million or
4.7% as compared to last year.
The main variances in our operating expenses were as follows:
FY 2014
FY 2013
Variance Fav/(Unfav)
S$’000
S$’000
S$’000
%
Employee remuneration and related expenses
11,711
10,698
(1,013)
(9.5)
Net foreign exchange loss
0
659
659
100.0
Professional fees
689
531
(158)
(29.8)
Rental
2,098
1,751
(347)
(19.8)
Employee remuneration remained the largest component of total operating expenses followed by rental expenses.
In addition to the usual annual increment and additional headcount hired for expansion, the bigger increase in
employee remuneration was in line with better sales and gross profit performance in the current year.
Increased in warehousing rental rates and higher inventory holding during the year led to an increase in rental
expenses for the year.
Higher professional fees incurred in the current year were primarily for tax-related consultancy fees, registration of
trademarks and lawyers’ fees for financing of the purchase of land in Malaysia.
