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With effect from 2015, the Group's main reporting segments are Property Rental & Services, Property Development, Engineering & Distribution, Technology & Manufacturing and Corporate Services & Others.
Q1 2015 compared with Q1 2014
(Note: Q1 2014 results include the contribution from Automotive and MFS Technology (S) Pte Ltd (MFSS) businesses for three (3) months from January to March 2014. Q1 2015 does not include the results of Automotive and MFSS businesses as these businesses were divested towards the end of 2014.)
Revenue decreased 24% to $515.3 million in Q1 2015 from $678.9 million in Q1 2014, mainly due to the absence of contribution from the divested Automotive and MFSS businesses. The decrease was partially offset by a higher progressive revenue recognition from the property sales at Eight Riversuites and higher contribution from Multi-Fineline Electronix, Inc. (MFLEX).
However, gross profit increased 21% to $85.7 million in Q1 2015 mainly attributable to the positive contribution from MFLEX, which has turned around from a gross loss position in Q1 2014. Gross profit margin increased to 16.6% in Q1 2015 as compared with 10.5% in Q1 2014.
Other income decreased 54% to $11.2 million in Q1 2015 from $24.3 million in Q1 2014. In Q1 2015, other income included mainly a gain of $5.7 million from the disposal of the manufacturing facility in China and a net disposal gain of $3.0 million from the sale of subsidiaries. In Q1 2014, other income comprised primarily a divestment and re-measurement gain of approximately $21.8 million from the disposal of a subsidiary in China.
Distribution costs decreased 59% to $11.4 million in Q1 2015 from $27.6 million in Q1 2014 and administrative expenses also decreased 11% to $38.2 million in Q1 2015 from $43.0 million in Q1 2014 mainly due to the absence of Automotive and MFSS businesses which were divested towards the end of 2014.
Other expenses decreased 56% to $2.3 million in Q1 2015 from $5.3 million in Q1 2014 mainly due to foreign exchange losses recorded in Q1 2014.
Income tax expense decreased 91% to $1.7 million in Q1 2015 from $19.5 million in Q1 2014. The lower income tax expense in Q1 2015 was mainly due to the write-back of over provision for prior years' income tax. The higher income tax expense in Q1 2014 was mainly due to the non-availability for group relief of losses incurred by certain overseas subsidiaries and a tax charge from the revaluation of deferred tax assets recorded by certain overseas subsidiaries.
The Group's attributable profit on continuing operations increased 215% to $25.0 million in Q1 2015 from $7.9 million in Q1 2014.
Financial position review
Cash flow review
As at 31 March 2015, the Group had cash and cash equivalents of $607 million. In Q1 2015, the Group incurred total development expenditure of $71 million mainly for Eight Riversuites and the Group's China property development projects. Apart from the above, the Group's components of cash flow and changes in these components from 31 December 2014 to 31 March 2015 were mainly the result of the Group's other ongoing operations.
Property Rental & Services
Revenue decreased marginally to $33.8 million in Q1 2015 from $33.9 million in Q1 2014. Operating profit before interest decreased 22% to $14.6 million in Q1 2015 from $18.8 million in Q1 2014 mainly due to higher operating costs and the absence of project management fee in Q1 2015.
Revenue increased 62% to $173.8 million in Q1 2015 from $107.1 million in Q1 2014 mainly due to higher progressive revenue recognition from the property sales at Eight Riversuites. Operating profit before interest increased to $7.0 million in Q1 2015 from $2.8 million in Q1 2014 mainly attributable to higher contribution from Eight Riversuites.
Engineering & Distribution
Revenue decreased 4% to $57.8 million in Q1 2015 from $60.2 million in Q1 2014 mainly due to lower contribution from the LPG distribution business. Operating profit before interest increased 63% to $3.9 million in Q1 2015 from $2.4 million in Q1 2014 mainly due to write-back of provisions following the finalisation of accounts of completed engineering projects.
Technology & Manufacturing
Revenue increased 36% to $227.2 million in Q1 2015 from $167.4 million in Q1 2014 mainly due to higher contribution from MFLEX. Operating profit before interest was $16.6 million in Q1 2015 compared with a loss of $27.0 million in Q1 2014 mainly due to the turnaround and positive profit contribution by MFLEX.
The property cooling measures implemented by the Singapore Government and the slower economic growth in China may continue to weigh on the sentiment of home buyers. The accounting treatment on revenue recognition for certain projects using the completion-of-construction method will result in volatility in the recognition of revenues and profits. Nevertheless, the progressive revenue recognition of Eight Riversuites using the percentage-of-completion method and the Group's portfolio of investment properties will help to reduce this volatility.
On 8 May 2015, MFLEX has announced that it remains focused on maintaining solid relationships with their current customers, while further diversifying their customer and product base.