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ISOTeam Ltd’s Latest Earnings: What Investors Need to Know

ISOTeam Ltd (SGX: 5WF), which was established in 1998, is involved in the building maintenance and estate upgrading industry in Singapore. This morning, the firm announced its financial results for the full year ended 30 June 2017 (FY2017).

Here’s a quick rundown on the financial figures:

1. Revenue for the year came in at S$82.9 million, down 11.9% year-on-year.

2. Net profit attributable to shareholders declined 30.1% year-on-year to S$6.4 million. This translated to a net profit margin of 7.8%. In FY2016, the figure was higher at 9.8%.

3. Consequently, basic and diluted earnings per share for the year was 2.27 Singapore cents, down from 3.23 cents in FY2016.

4. The firm’s balance sheet weakened drastically for the year. As at 30 June 2017, ISOTeam had S$3.3 million in net debt. A year ago, it had S$27.9 million in net cash.

5. For FY2017, the firm’s return on equity was 11.2%, a deterioration from FY2016’s figure of 17.3%.

6. For the year, S$5.5 million of cash was used in operating activities and S$14.4 million was spent on capital expenditure. Therefore, the company had a negative free cash flow of around S$20 million. This is a huge drop from FY2016’s positive free cash flow figure of approximately S$8 million.

ISOTeam had a challenging FY2017. Revenue, net profit, net profit margin, return on equity and free cash flow all went south.

The decline in revenue for the year was mainly due to a reduction in the number of projects available in the Repairs and Redecoration (R&R) industry, said the firm. Revenue for the R&R segment dropped 48.1% year-on-year to S$20.9 million.

In April 2017, the firm purchased its new premises in Changi and this was the reason why capital expenditure ballooned for the year. The corporate headquarters and the offices of its subsidiaries will be housed there when completed by the end of this year.

Shareholders will receive a final dividend of 0.65 Singapore cent per share, down from 0.75 cent declared a year ago.

As of 18 August 2017, ISOTeam’s order book was at S$95.8 million, which will be progressively delivered in the next two years.

Executive Director and Chief Executive Officer, Mr Anthony Koh, had the following outlook:

“I am excited about FY2018 because I expect the investments we had made in FY2017 and also in recent months to start bearing fruit. We also expect to see some operational and cost efficiencies with the consolidation and centralisation of our operations at the new Changi HQ come the end of this year. We will continue to work hard to leverage our multi-disciplinary capabilities to drive sustainable revenue and profit growth for the Group.”

Shares of ISOTeam opened at S$0.34 this morning. This translates to a price-to-earnings ratio of 15 and a dividend yield of 1.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in ISOTeam Ltd.