Megachem Limited Annual Report 2015 34 Operating and Financial Review The impact of net foreign exchange gain of S$0.3 million in H2 2015, as compared to a net loss of S$0.4 million in H1 2015, was the main reason for the decrease in total operating expenses from S$11.0 million to S$10.6 million in H2 2015. The net foreign exchange gain in H2 2015 arose mainly from the appreciation of United State Dollars against British Pound and Singapore Dollars. Excluding the impact of foreign exchange, operating expenses in H2 2015 would have increased by S$0.3 million due to higher rental, professional fees and travelling and transport expenses. As compared to H2 2014, total operating expenses were higher marginally by S$0.1 million or 1.4%. Excluding net foreign exchange gain of S$0.3 million in H2 2015, the increase would be higher by S$0.4 million which was mainly attributable to higher employee remuneration and related expenses and rental expense. FY 2015 vs FY 2014 Total operating expenses for FY 2015 amounted to S$21.6 million which represented an increase of S$1.4 million or 6.9% as compared to last year. Excluding net foreign exchange loss, the increase would be smaller at S$1.3 million or 6.5%. The main variances in our operating expenses were as follows: FY 2015 S$’000 FY 2014 S$’000 S$’000 % Employee remuneration and related expenses 12,563 11,711 (852) (7.3) Net foreign exchange loss 83 - (83) (100.0) Professional fees 616 689 73 10.6 Rental 2,698 2,098 (600) (28.6) Variance Fav(Unfav) Employee remuneration remained the largest component of total operating expenses followed by rental expenses. The increase of S$0.9 million or 7.3% for employee remuneration was in line with annual pay increment and additional headcount hired for expansion. Increase in warehousing rental rates and higher average inventory level compared to last year led to an increase in rental expenses of S$0.6 million or 28.6%. Lower professional fees were incurred as certain services such as tax-related consultancy fees and lawyers’ fees for financing of the purchase of land in Malaysia did not recur in the current year.
RkJQdWJsaXNoZXIy NTkwNzg=