Financial Statement for the Second Quarter and First Half Year Ended 30 June 2018
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Profit & Loss
|Second quarter ended 30 June||Half Year ended 30 June|
|Cost of sales||(26,653)||(45,487)||(41.4)||(63,615)||(70,138)||(9.3)|
|Other operating income||737||601||22.6||1,319||1,350||(2.3)|
|Other operating costs||(4,772)||(5,036)||(5.2)||(9,125)||(9,724)||(6.2)|
|Share of results of joint ventures||293||935||(68.7)||1,026||1,557||(34.1)|
|Share of results of associates||85||379||(77.6)||171||6,160||(97.2)|
|(Loss)/Profit before taxation||(4,024)||(1,942)||107.2||(5,843)||3,069||N.M|
|Income tax credit/(expense)||12||(237)||N.M||(34)||(251)||(86.5)|
|(Loss)/Profit for the period||(4,012)||(2,179)||84.1||(5,877)||2,818||N.M|
|Other comprehensive income:|
|Items that may be reclassified subsequently to profit or loss|
|Foreign currency translation (loss)/gain||(35)||380||N.M||478||(22)||N.M|
|Other comprehensive income for the period||(35)||380||N.M||478||(22)||N.M|
|Total comprehensive income for the period||(4,047)||(1,799)||125.0||(5,399)||2,796||N.M|
|(Loss)/profit attributable to:|
|Equity holders of the Company||(3,501)||(2,224)||57.4||(5,099)||2,626||N.M|
|Total comprehensive income attributable to:|
|Equity holders of the Company||(3,539)||(1,920)||84.3||(4,623)||2,606||N.M|
N.M. - Not meaningful
|Property, plant and equipment||36,370||38,816||42,979|
|Investments in subsidiaries||-||-||-|
|Investments in associates||16,516||16,145||10,162|
|Investment in a joint ventures||2,972||2,003||-|
|Deferred tax assets||-||-||424|
|Loans to associates||-||-||20,136|
|Loans to a joint venture||26,459||24,537||20,525|
|Loans to an associate||-||13,490||-|
|Amounts due from subsidiaries||-||-||-|
|Properties held for sale||1,151||1,057||9,463|
|Cash and bank balances||37,561||30,435||58,730|
|Income tax recoverable||-||510||-|
|Amounts due to subsidiaries||-||-||-|
|Trade and other payables||25,548||42,179||44,372|
|Loans and borrowings||1,665||1,607||3,201|
|Income tax payable||232||1,026||4,679|
|Net current assets||145,284||156,471||54,868|
|Trade and other payables||4,109||3,447||5,699|
|Deferred tax liabilities||243||308||239|
|Loans and borrowings||98,819||99,428||14,710|
|Equity attributable to equity holders of the Company|
|Foreign currency translation reserve||838||362||-|
Review of Performance
Income Statement Review – Second Quarter 2018 ("2Q2018") vs Second Quarter 2017 ("2Q2017")
The Group achieved revenue of S$29.6 million in 2Q2018 which was a decrease of 39.6% from S$49.0 million achieved in 2Q2017. The lower revenue for the quarter was attributable to lower construction activities for both the General Construction and Specialised Engineering Segment. The Property Development Segment also did not register any sales this quarter as all development units were sold. There was an improvement in gross profit margin from 7.2% to 9.9% while gross profit as a result of lower revenue decreased by 16.5% from S$3.5 million to S$2.9 million.
Other operating income increased by S$0.1 million due to higher rental income over the two quarters in comparison.
Other (expense)/income which comprised foreign exchange differences and fair value gain or loss on derivatives amounted to a loss of S$0.5 million in 2Q2018. This arose mainly from fair value loss adjustment on interest rate swap entered into by the Group to hedge against interest rate on a long term loan.
Administrative costs was reduced by 9.7% or S$0.2 million mainly due to lower depreciation cost recorded in the quarter. Other operating costs were reduced marginally by 5.2%.
Finance cost increased by S$0.5 million as interest was incurred on the term loan obtained from the bank to finance for the purchase of Goh & Goh Building.
Share of results of joint ventures of S$0.3 million which was mainly from the progressive recognition of income from the sale of condominium units of The Wisteria, and had decreased as the project is at the end stage of construction.
Share of results of associates for the period was considerably reduced as the profits from the sale of Lake Life Executive Condominium were almost fully recognised in the last financial year.
The Group had a loss attributable to equity holders of the Company of S$3.5 million for 2Q2018.
Income Statement Review – First Half 2018 ("1H2018") vs First Half 2017 ("1H2017")
Group revenue recorded for 1H2018 was S$70.3 million as compared to S$78.5 million in 1H2017. Although revenue from the Specialised Engineering Segment was up, the increase was offset by lower revenue from the General Construction and Property Development Segment.
Gross profit margin for 1H2018 averaged to 9.5% which was slightly below 10.7% achieved in 1H2017.
Administrative costs declined marginally by 3.9% and other operating costs were lower by 6.2% as an allowance for inventory obsolescence of S$0.3 million was made in 1H2017.
Finance cost increased by S$1.0 million due to the financing cost for Goh & Goh Building.
Share of results of joint ventures and associates for 1H2018 amounted to S$1.0 million and S$0.2 million respectively. In comparison for 1H2017, the Group’s share was S$1.6 million and S$6.2 million respectively.
The Group had a loss attributable to equity holders of the Company of S$5.1 million for 1H2018.
Statement of Financial Position and Cash Flow Review
The Group’s financial position remains strong.
Total assets decreased from S$308.4 million to S$290.1 million and total liabilities decreased from S$170.4 million to S$159.4 million.
Contract assets decreased by S$8.8 million as contract work done was being certified, billed and settled by customers subsequent to the last financial year end. Consequently the non-current trade receivables which includes retention receivables, also increased.
Contract liabilities increased by S$6.0 million as there were excess of progress billings over revenue recognised on other projects.
With subsequent settlement of balances after the last financial year end and the lower construction activities during the period, current trade receivables and current trade and other payables decreased by S$6.9 million and S$16.6 million respectively.
For the half year ended 30 June 2018, the Group used S$0.9 million in operations. With interest and income tax payments, net cash used in operating activities amounted to S$2.8 million.
The Group extended additional loans of S$1.6 million to a joint venture for its property development project. On the other hand, the Group received full payment of loans of S$13.5 million from an associate. As a result, net cash of S$11.6 million was generated from investing activities.
The final and special dividends of S$1.9 million declared for the financial year ended 31 December 2017 were paid during the quarter. Together with repayment of bank borrowings and finance leases of S$0.9 million and after offsetting the cash inflow from a decrease in pledged deposits of S$1.0 million, the Group had net cash of S$1.8 million used in financing activities.
The Group’s cash position remained healthy at S$37.6 million as at 30 June 2018.
On 13 July 2018, the Ministry of Trade and Industry announced that based on advance estimates, the Singapore economy grew by 3.8 per cent on a year-on-year basis in the second quarter of 2018, moderating from the 4.3 per cent growth in the previous quarter. The construction sector contracted by 4.4 per cent on a year-on-year basis in the second quarter, extending the 5.2 per cent decline in the previous quarter. The sector was weighed down primarily by the continued weakness in private sector construction activities.
While the en bloc transactions and government projects announced last year will go some way to prop up the languishing construction secor, the latest round of property cooling measures announced on 5 July 2018 may dampen and further postpone the anticipated recovery of the construction sector.
The industry outlook remains challenging in the next 12 months with increasing competition, labour shortages and rising business costs. The Group expects the construction demand to remain weak and coupled with intense competition, tenders will continue to be challenging in the near term and bid prices will remain competitive at compressed margins.
The Group will continue to focus on its core businesses by leveraging its strong track record in building construction and civil engineering to secure more projects, as well as enhancing cost effectiveness and efficiency optimisation in the management of on-going projects.
On the re-development of Goh & Goh Building, the Group is still in discussions with the relevant authorities to optimise the potential of the development site. As for the current mixed development project at Yishun Avenue 4 The Wisteria and Wisteria Mall, which the Group holds 25.05% equity interest, Temporary Occupancy Permit ("TOP") has been obtained in July 2018. To date, all the 216 residential units of The Wisteria had been sold. The commercial mall, named Wisteria Mall, which currently achieved an occupancy rate of more than 80%, will be managed by the Group’s associate, Trendsteq Pte Ltd. It has a good tenant mix including a supermarket, a food court, a fitness club and various other retail and service outlets offering a varied mix of shopping and dining options and services to meet the needs of consumers living and working around the neighbourhood.
The Group will continue to explore business opportunities both locally and in the region, particularly in Thailand, to maintain and sustain its long term growth.
As at the date of this announcement, the Group has an order book of approximately S$165 million in respect of construction projects, predominantly in Singapore and Malaysia.