SIA Engineering Company

[csl123]

If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?

33.9 M Q2 2013/14
52.0 M Q2 2014/15

Anyone has insights ?

From annual report and quarterly reports, I understand that these are cost that are incurred by the Company for services that cannot be performed and needs to be subcontract to OEMs or vendors. There are two possibilities:

1) SIAEC is just acting as middle-man between customers and their vendors, which resulted in a spike in contracts being outsourced. Are there insufficient capacity within SIAEC to fulfill contract obligations?

2) SIAEC relies on more subcontract workers to produce the same level of output as before (likely due to labour intensive nature of such business). This can be due to a decline in productivity of its workers, which incidentally, SIAEC is trying to boost up the productivity of its workforce in the latest quarterly report.