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Consolidated Income Statement

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income

Statement of Financial Position

Statement of Financial Position

Review of performance

Consolidated Income Statement

4QFY19 – for the 3 months ended 31 March 2019
3QFY19 – for the 3 months ended 31 December 2018
4QFY18 – for the 3 months ended 31 March 2018
FY19 – for the 12 months ended 31 March 2019
FY18 – for the 12 months ended 31 March 2018

Comparatives were restated as a result of adoption of new accounting standard which is effective from FY19

Review of Results for the 12 Months Ended 31 March 2019

Review of Results

Revenue

The Group registered revenue of $323.1 million for FY19, compared to $338.8 million in FY18. The full-year revenue was affected by reduced work activity in certain months during the year as a result of delays in commencement of new projects.

Revenue for 4QFY19 amounted to $74.7 million, which was comparable to that for 4QFY18.

Sequentially, revenue for 4QFY19 was 3.0% higher than 3QFY19 revenue of $72.5 million.

Gross Profit and Gross Profit Margins (GPM)

Operating Expenses

In 4QFY19, the Group made a provision for foreseeable loss of $1.0 million for a particular project that had incurred cost overruns as a result of stricter regulatory requirements on the development and unforeseen difficult ground conditions. The provision made had consequently lowered overall gross profit to $15.0 million for FY19.

Despite the provision, gross profit for FY19 improved 34.1% over FY18’s $11.2 million. This was mainly enabled through tight fiscal discipline in the execution of projects and a slight improvement in tender prices towards the end of FY19. GPM for FY19 (excluding the provision for foreseeable loss of $1 million) was 5.0% as compared to 3.3% recorded in FY18.

4QFY19 gross profit and GPM has improved as compared to 4QFY18. This was mainly due to the completion of old projects with low margins that were secured at the beginning of FY19 and the commencement of new projects secured at better margins. The improvement in tender prices has translated into 4QFY19 GPM of 7.1% (excluding provision for foreseeable loss of $1 million), as compared to 0.6% in 4QFY18 and 2.0% in 3QFY19.

Other Income

The Group recorded other income of $1.9 million for FY19 (FY18: $2.9 million) and $0.5 million for 4QFY19 (4QFY18: $0.6 million), on account of a lower gain from the disposal of older equipment during the periods under review.

Other income for 4QFY19 was higher compared to $0.2 million in 3QFY19 due to higher gain from the disposal of older equipment and an increase in miscellaneous construction-related income during the period under review.

Operating Expenses

Operating Expenses

Other operating expenses for FY19 and 4QFY19 amounted to $28.3 million (FY18: $26.7 million) and $7.5 million (4QFY18: $6.7 million; 3QFY19: $6.9 million) respectively. The increase in other operating expenses was from administrative expenses, arising from higher legal fees accrued to recover outstanding debts and higher staff costs incurred during the periods under review in view of an increase in headcount.

Following the adoption of new accounting standard which is effective from FY19 (refer to “Accounting Policies” note in pages 25 to 27), the Group had recognised expected credit losses on trade and other receivables and contract assets amounted to $1.1 million in FY19 (FY18: $Nil) and $1.3 million in 4QFY19 (4QFY18: $Nil; 3QFY19: reversal of $0.1 million).

Other operating expenses to revenue ratios for FY19 and 4QFY19 were higher at 8.8% (FY18: 7.9%) and 10.0% (4QFY18: 8.9%; 3QFY19: 9.5%), in line with the increase in other operating expenses and the lower revenue recorded during these periods.

Net Finance Expenses

Net Finance Expenses

Net interest expenses were $3.7 million for FY19 (FY18: $2.9 million) and $1.1 million for 4QFY19 (4QFY18: $0.8 million; 3QFY19: $0.9 million). The increase was due to higher short-term borrowings drawn down for working capital purposes.

With reference to the Group’s announcement on 16 September 2016, the Group invested GBP 0.5 million (equivalent to $0.9 million) to acquire a 21% stake in Coriolis Hertford Limited in relation to a property development project in Hertford, United Kingdom. As at 31 March 2019, the net income generated from the said investment was $0.6 million.

Loss for the period/year

Net Finance Expenses

Taking into account the above factors and excluding the provision for foreseeable loss of $1.0 million and expected credit losses of $1.1 million made in FY19, the Group recorded a net loss before tax of $14.6 million for FY19 (FY18: $12.8 million) and $4.1 million for 4QFY19 (4QFY18: $5.3 million; 3QFY19: $6.1 million).

Earnings before interest, tax, depreciation and amortization (EBITDA) excluding the provision and expected credit losses was $11.5 million for FY19 (FY18: $14.8 million) and $2.5 million for 4QFY19 (4QFY18: $1.5 million; 3QFY19: $0.4 million).


Statement Of Financial Position

Property, Plant and Equipment

Net book value of property, plant and equipment as at 31 March 2019 was $137.1 million (31 March 2018: $156.2 million).

In FY19, the Group selectively acquired $16.9 million worth of new plant and equipment to replace older equipment. The Group disposed of plant and equipment with carrying values of $1.7 million and recorded a $0.9 million gain on the disposal. In addition, certain property and equipment with carrying values of $16.3 million were transferred from property, plant and equipment to assets held for sale. Depreciation charge for FY19 was $24.2 million (FY18: $25.8 million).

Net Current Assets

As at 31 March 2019, net current assets was $4.1 million (31 March 2018: $9.2 million). Current ratio (current assets / current liabilities) was 1.02 (31 March 2018: 1.06).

The Group had higher inventories of $29.7 million at 31 March 2019 (31 March 2018: $23.7 million) as it had anticipated an increase in equipment sale and leasing activities.

Trade and other receivables and contract assets were $135.1 million (31 March 2018: $119.1 million) while trade and other payables and contract liabilities were $99.7 million (31 March 2018: $86.5 million).

The Group disposed of $0.8 million of the equipment transferred from property, plant and equipment to assets held for sale in FY19. As at 31 March 2019, assets held for sale was $15.5 million (31 March 2018: $Nil).

Borrowings

As at 31 March 2019, total borrowings of the Group was $102.7 million (31 March 2018: $80.4 million). The Group drew down more short-term borrowings to finance the business operations in FY19.

Consequently, the debt to equity ratio as at 31 March 2019 was 0.72 (31 March 2018: 0.50).

Equity and Net Asset Value

As at 31 March 2019, the Group’s equity was $142.4 million (31 March 2018: $159.4 million), while net asset value per ordinary share was 6.1 cents (31 March 2018: 7.2 cents).


Cash Flow

Cash Flow

Cash Flow from Operating Activities

Net cash inflow from operating activities was $1.9 million for FY19, compared to $20.4 million in FY18, taking into account the net loss recorded for the year. For 4QFY19, net cash inflow was $0.4 million (4QFY18: $6.8 million; 3QFY19: $6.3 million).

Cash Flow from Investing Activities

The Group’s net cash outflow from investing activities for FY19 and 4QFY19 were $14.0 million and $1.6 million respectively (FY18: $3.1 million; 4QFY18: $1.6 million).

The higher cash outflow in FY19 was mainly due to net investment in new plant and equipment. In addition, the Group invested $1.4 million in a residential property development project in Cambridge, United Kingdom, in FY19.

Quarter-on-quarter, net cash outflow for 4QFY19 was lower than 3QFY19, taking into account the lower capital expenditure incurred in 4QFY19.

Cash Flow from Financing Activities

The Group recorded net cash inflow from financing activities of $3.5 million for FY19, compared to a net cash outflow of $14.8 million for FY18, as it had drawn down short term borrowings to finance the business operations in FY19.

Net cash outflow for 4QFY19 was $1.1 million (4QFY18: $7.6 million; 3QFY19: $3.6 million), following the lower net repayment of bank borrowings in 4QFY19.

Cash and Cash Equivalents

Taking into consideration the abovementioned factors, the Group’s cash and cash equivalents stood at $7.2 million as at 31 March 2019 (31 March 2018: $15.8 million; 31 December 2018: $9.4 million).


Outlook

The Group is cautiously optimistic of the outlook of the Singapore construction industry in the year ahead. The construction sector logged its first quarter of year-on-year expansion after 10 consecutive quarters of decline. It expanded by 2.9 per cent on a year-on-year basis in the first three months of 2019, a turnaround from the 1.2 per cent decline in the previous quarter, as construction output rose on the back of increasing public sector and private sector construction works1. While demand for construction services looks to be recovering, the Group is mindful of the competition prevailing following the construction lull in prior years.

In this regard, the Group will maintain a prudent approach towards tenders for public and private construction projects. In the months ahead, the Group will continue to focus on managing asset utilisation and the optimisation of cost and operational efficiencies to reinforce its competitive position.

As at 17 May 2019, the Group’s order book stood at about $160 million (11 February 2019: $190 million).