Financial Statements And Related Announcement - Full Yearly Results.
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Profit & Loss
|Financial year ended 31 December|
|Cost of sales||(263,365)||(400,301)||(34.2)|
|Other operating income||3,556||3,651||(2.6)|
|Other operating costs||(15,453)||(13,153)||17.5|
|Share of results of associates||9,408||64||N.M|
|Share of results of joint ventures||1,062||(669)||N.M|
|Profit before taxation||3,270||5,277||( 38.0)|
|Income tax expense||(1,351)||(2,666)||(49.3)|
|Profit for the year||1,919||2,611||( 26.5)|
|Equity holders of the Company||1,129||2,332||(51.6)|
|STATEMENT OF COMPREHENSIVE INCOME|
|Profit for the year||1,919||2 ,611||(26.5)|
|Other comprehensive income:|
|Items that may be reclassi fied subsequently to profit or loss|
|Foreign currency translation differences||(477)||(1,734)||(72.5)|
|Other comprehensive income for the period||(477)||(1,734)||( 72.5)|
|Total comprehensive income for the year||1,442||877||64.4|
|Total comprehensive income attributable to:|
|Equity holders of the Company||734||955||(23.1)|
N.M - Not meaningful
|Property, plant and equipment||42,979||44,258|
|Investments in subsidiaries||-||-|
|Investments in associates||10,162||1,115|
|Investment in a joint ventures||-||-|
|Deferred tax assets||424||735|
|Loans to associates||20,136||19,257|
|Loans to a joint venture||20,525||17,360|
|Amounts due from subsidiaries||-||-|
|Development properties held for sale||8,412||8,395|
|Gross amount due from customers for work-in-progress||6,118||30,532|
|Cash and cash equivalents||58,730||23,935|
|Amounts due to subsidiaries||-||-|
|Gross amount due to customers for work-in-progress||33,635||28,968|
|Trade and other payables||44,372||80,582|
|Loans and borrowings||3,201||12,591|
|Income tax payable||4,890||640|
|Net current assets/(liabilities)||56,221||69,861|
|Deferred tax liabilities||239||4,864|
|Loans and borrowings||14,710||12,137|
|Equity attributable to equity holders of the Company|
|Foreign currency translation reserve||(2,652)||(2,257)|
Review of Performance
Income Statement Review – Financial year ended 31 December 2016 ('FY16') vs financial year ended 31 December 2015 ('FY15')
Group revenue decreased to $276.8 million in FY16 from $425.5 million in FY15 and the Group recorded a net profit attributable to equity holders of the Company of $1.1 million in the current financial year compared to $2.3 million in FY15.
The Group achieved higher revenue from its new businesses, namely Pre-fabricated Pre-finished Volumetric Construction ("PPVC") under the Specialised Engineering Segment and solar leasing projects under the Green Technology Segment. However, overall revenue for FY16 was lower mainly due to lesser general construction activities and revenue from property development at Bliss @Kovan having been fully recognised in FY15 for sold units after obtaining Temporary Occupancy Permit ("TOP") in that year. The Group's new property development projects are undertaken through an associate and a joint-venture and hence do not contribute to the Group's revenue. Specialised engineering revenue in Malaysia was higher at $106.2 million in FY15 compared to $67.2 million in FY16 because certain major projects were in their active stage of construction in FY15.
Gross profit for FY16 was $13.4 million compared to $25.2 million for FY15, mainly due to decrease in revenue and cost overruns incurred for certain general construction projects. Cost overruns were mainly attributable to additional costs incurred to expedite completion of projects. As such, despite an improvement in profit margins for the Specialised Engineering Segment which included PPVC, overall gross margin for FY16 was lower at 4.8% compared to 5.9% in FY15.
Other operating income for FY16 decreased to $3.6 million from $3.7 million in FY15, mainly attributable to lower administrative fees earned from the training and testing centres as a result of weaker demand in the construction industry.
Other expense of $0.2 million in FY16 comprised mainly foreign exchange losses arising from USD denominated trade payables for PPVC materials.
Administrative costs in FY16 decreased to $8.0 million compared to $9.3 million in FY15. Higher administrative costs in FY15 were attributable to a loss on liquidation of an associate company, Tennessee Pte Ltd, and sales and marketing costs for Bliss @Kovan. However, the lower costs in FY16 were partially offset by higher depreciation expense for BBR Building and solar leasing plants in operation. Other operating costs increased to $15.5 million in FY16 from $13.2 million in FY15 and this was mainly due to impairment losses for inventories and equipment, and increase in maintenance costs for machinery and store.
Finance costs in FY16 decreased to $0.4 million from $0.6 million in FY15, mainly due to lower working capital bank borrowings and hire purchase liabilities, and partially offset by full-year interest expense in the current year from a term loan to finance the purchase of BBR building.
Share of results of associates rose to $9.4 million in FY16 compared to $64,000 in FY15, attributable to the Group's 35% equity interest in Lakehomes Pte Ltd ("Lakehomes"), the developer for LakeLife Executive Condominium in Jurong Lake district. TOP was obtained on 30 December 2016 and Lakehomes recognised revenue and profits for 296 sold units in FY16 based on financial accounting standards for Executive Condominium development. Revenue and profits for the remaining 249 sold units is expected to be recognised in financial year ending 31 December 2017.
The Group recorded $1.1 million profits from share of results of joint ventures in FY16, mainly attributable to a joint construction project undertaken by Singapore Piling – Shincon JV, as well as progressive recognition of profits from a mixed residential and commercial development at Yishun ("Yishun Mixed Development"). The Group has 25% equity interest in Yishun Mixed Development which includes residential development properties known as The Wisteria. Construction for The Wisteria has reached the active stage and profits are progressively recognised for sold residential units. FY15 share of loss in joint ventures of $0.7 million was mainly attributable to start-up expenses in Yishun Mixed Development.
Income tax expense for FY16 decreased to $1.4 million from $2.7 million for FY15 mainly due to lower profits and reversal of deferred tax liabilities by a subsidiary. However, the effective tax rate for the Group is high because profits from its Malaysia subsidiary cannot be offset against losses incurred by some Singapore subsidiaries for group tax relief purpose.
Statement of Financial Position Review
The carrying amount of the Group's property, plant and equipment was $43.0 million as at 31 December 2016 compared to $44.3 million as at 31 December 2015. Depreciation charges for property, plant and equipment of $5.7 million for the current year was partly offset by additions for infrastructure and installation works pertaining to a 20-year solar leasing contract.
Investment in associates rose to $10.2 million as at 31 December 2016 from $1.1 million as at 31 December 2015, due mainly to recognition of the Group's share of profits in Lakehomes.
Deferred tax assets decreased to $0.4 million as at 31 December 2016 from $0.7 million as at 31 December 2015 due to reversal of deferred tax assets in a subsidiary.
Loans to an associate and a joint venture increased by $0.8 million and $3.1 million to $20.1 million and $20.5 million respectively, as at 31 December 2016 to finance construction costs and working capital for these property development companies.
As at the end of 2016, most of the Group's general construction projects were at the final stages of construction, leading to a decrease in amount due from customers for work-in-progress (which represents cost and profits in excess of billings) to $6.1 million from $30.5 million as at 31 December 2015. However, gross amount due to customers for work-in-progress (which represents billings in excess of costs and profits) rose to $33.6 million as at 31 December 16 from $29.0 million as at end of 2015, mainly due to increase in progressive claims for certain major projects in Malaysia.
Inventories decreased to $8.4 million as at 31 December 2016 from $10.2 million as at 31 December 2015, due to utilisation as well as provision for impairment loss.
Total current and non-current trade receivables decreased to $63.2 million as at 31 December 2016 from $121.1 million as at 31 December 2015, mainly due to collection of the balance 15% sales proceeds for Bliss @Kovan upon expiry of defects liability period and lower volume of general construction work carried out. Other receivables decreased to $2.4 million as at 31 December 2016 from $3.4 million as at 31 December 2015 with progressive settlement of sundry debtors and refunds for deposits as general construction projects are being completed.
Cash and cash equivalents and pledged deposits rose to $63.4 million as at 31 December 2016 compared with $29.2 million as at 31 December 2015, largely due to increase in cash generated from operating activities. Cash flow from operating activities improved mainly due to collection of trade receivables from sold units at Bliss @Kovan, increase in amount due to customers for work-in-progress (net), and partially offset by payments for trade payables. Cash generated from operating activities were partially offset by repayments for bank borrowings and capital expenditure for a solar leasing plant in the current year.
Current and non-current trade and other payables decreased to $50.1 million as at 31 December 2016 from $88.8 million as at 31 December 2015, due to decrease in project costs as a result of lower general construction work volume.
Current and non-current deferred income of $3.1 million arose from payment by the lessor of a 20-year solar leasing contract upon successful commissioning of solar panels. The deferred income is to be amortised over the lease period.
Income tax payable increased to $4.9 million as at 31 December 2016 from $0.6 million as at 31 December 2015 mainly due to reclassification of deferred tax liabilities relating to property development to income tax payable for taxes due in 2017; and vice versa for the decrease in deferred tax liabilities to $0.2 million as at 31 December 2016 from $4.9 million a year ago.
Total bank loans and borrowings decreased to $17.9 million as at 31 December 2016 from $24.7 million as at 31 December 2015, due to repayments for term loans and finance leases.
On 17 February 2017, the Ministry of Trade and Industry announced that the Singapore economy grew by 2.9 per cent on a year-on-year basis in the fourth quarter of 2016, faster than the 1.2 per cent growth in the previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 12.3 per cent, a reversal from the 0.4 per cent contraction in the preceding quarter. For the whole of 2016, the economy grew by 2.0 per cent. The construction sector contracted by 2.8 per cent on a year-on-year basis in the fourth quarter, extending the 2.2 per cent decline in the previous quarter. The contraction was largely due to the decline in private sector construction activities. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector expanded by 0.8 per cent, a reversal from the 12.6 per cent contraction in the preceding quarter. However, based on the 2017 Budget, the Singapore government has announced that $700 million worth of infrastructure projects will be brought forward.
The industry outlook remains challenging in the next 12 months with increasing competition amid a weaker construction market and increase in labour cost due to short supply of foreign workers. The Group will continue to focus on its core business 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 ongoing projects. BBR will also continue to conduct feasibility studies to undertake new property development projects.
As at the date of this announcement, the Group has an order book of approximately $250 million in respect of construction projects, predominantly in Singapore and Malaysia.