Financial Statements Announcement for the Second Quarter Ended 30 September 2019 (For the Financial Year Ending 31 March 2020)
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Statement of Financial Position
Review of performance
Consolidated Income Statement
2QFY20 – for the 3 months ended 30 September 2019
1QFY20 – for the 3 months ended 30 June 2019
2QFY19 – for the 3 months ended 30 September 2018
1HFY20 – for the 6 months ended 30 September 2019
1HFY19 – for the 6 months ended 30 September 2018
Review of Results for the Second Quarter Ended 30 September 2019
Revenue for the Group was $170.4 million for 1HFY20 (1HFY19: $175.9 million) and $89.9 million for 2QFY20 (2QFY19: $94.6 million) with work volume remaining stable for the periods under review.
Quarter-on-quarter, the Group recorded an 11.6% increase in revenue compared to 1QFY20 on the back of higher work volume from projects that commenced in 2QFY20.
Gross Profit and Gross Profit Margins (GPM)
Gross profit and GPM for 1HFY20 rose to $20.5 million and 12.0% (1HFY19: $9.3 million and 5.3%). Similarly, gross profit and GPM for 2QFY20 increased to $10.8 million and 12.0% (2QFY19: $4.9 million and 5.2%). The increases reflected an improvement in tender prices and business activity in these periods year-on-year.
Sequentially, gross profit increased in tandem with the revenue recorded. GPM was sustained at 12.0%.
The Group recorded other income of $1.2 million for 1HFY20 (1HFY19: $1.2 million) and $0.6 million for 2QFY20 (2QFY19: $0.4 million; 1QFY20: $0.6 million) respectively. These took into account the gain from the disposal of old equipment of $0.9 million in 1HFY20 (1HFY19: $0.8 million) and $0.5 million in 2QFY20 (2QFY19: $0.1 million; 1QFY20: $0.4 million).
The Group incurred higher other operating expenses of $14.7 million for 1HFY20 (1HFY19: $13.8 million) and $7.8 million for 2QFY20 (2QFY19: $7.2 million; 1QFY20: $6.9 million). The increase was mainly due to higher legal fees accrued to recover outstanding debt and higher staff costs incurred due to an increase in headcount in 2QFY20.
Consequently, other operating expenses to revenue ratio was higher at 8.6% for 1HFY20 (1HFY19: 7.8%) and 8.7% for 2QFY20 (2QFY19: 7.6%; 1QFY20: 8.6%).
Net Finance Expenses
Net interest expenses were $2.2 million for 1HFY20 (1HFY19: $1.7 million) and $1.1 million for 2QFY20 (2QFY19: $0.9 million; 1QFY20: $1.0 million). The increase was due to a higher amount of short-term borrowings drawn down for working capital purposes.
Profit/(Loss) for the period
The Group recorded net profit before tax of $3.9 million in 1HFY20, a turnaround from a loss before tax of $4.2 million in 1HFY19.
The Group recorded its second consecutive quarter of profit before tax of $2.2 million for 2QFY20 compared to a loss before tax of $1.9 million in 2QFY19. Sequentially, profit before tax for 2QFY20 improved 24.9% from the $1.7 million recorded in 1QFY20.
Earnings before interest, tax, depreciation and amortisation (EBITDA) also improved significantly to $20.6 million for 1HFY20 (1HFY19: $8.8 million) and $11.3 million in 2QFY20 (2QFY19: $4.1 million; 1QFY20: $9.3 million).
Earnings per share for 1HFY20 and 2QFY20 were 0.09 cent (1HFY19: loss per share of 0.26 cent) and 0.06 cent (2QFY19: loss per share of 0.13 cent; 1QFY20: 0.03 cent) respectively.
Statement Of Financial Position
Property, Plant and Equipment
Net book value of property, plant and equipment as at 30 September 2019 was $137.5 million (31 March 2019: $137.1 million).
In 1HFY20, the Group acquired $6.0 million worth of new plant and equipment to replace older equipment. The Group disposed of plant and equipment with carrying values of $2.0 million and recorded a $0.6 million gain on the disposal. Depreciation charge for 1HFY20 was $13.5 million (1HFY19: $12.1 million).
Following the adoption of Singapore Financial Reporting Standards (International) (“SFRS(I)”) 16 Leases as disclosed in “Accounting Policies” on pages 23 to 24, the Group has recognised noncurrent right-of-use assets of $11.3 million.
Net Current Assets
As at 30 September 2019, net current assets was $2.7 million (31 March 2019: $4.1 million). Current ratio (current assets / current liabilities) was 1.01 (31 March 2019: 1.02).
The Group’s inventories stood at $23.2 million as at 30 September 2019 (31 March 2019: $29.7 million). In 1HFY20, inventories amounting to $9.7 million in carrying value were capitalised as property, plant and equipment following the reassessment of the economic uses of these inventories.
Trade and other receivables and contract assets were $144.0 million (31 March 2019: $134.6 million) while trade and other payables and contract liabilities were $101.5 million (31 March 2019: $99.7 million). The increase in trade and other receivables and contract assets was mainly due to the timing differences between billing and receipt of payment from customers. Of these receivables, approximately $29.2 million have since been collected in October 2019, subsequent to the quarter end.
The Group disposed of assets held for sale with carrying values of $0.7 million and recorded a $0.3 million gain on the disposal in 1HFY20. As at 30 September 2019, assets held for sale was $15.0 million (31 March 2019: $15.5 million).
Following the adoption of SFRS(I) 16 Leases, the Group has recognised current lease liabilities of $2.6 million.
As at 30 September 2019, total borrowings, excluding lease liabilities arising from the adoption of SFRS(I) 16 Leases, was $99.9 million (31 March 2019: $102.7 million). The reduction was a result of net repayment of debt in 1HFY20.
Consequently, the debt to equity ratio as at 30 September 2019 improved by 5.6% to 0.68 (31 March 2019: 0.72).
Equity and Net Asset Value
As at 30 September 2019, the Group’s equity was $146.5 million (31 March 2019: $142.4 million), while net asset value per ordinary share was 6.1 cents (31 March 2019: 6.1 cents).
Cash Flow from Operating Activities
Net cash inflow from operating activities was $16.0 million for 1HFY20 and $5.7 million for 2QFY20, compared to a net cash outflow of $4.8 million in 1HFY19 and $5.3 million in 2QFY19, taking into account the net profit recorded during the periods under review.
Quarter-on-quarter, net cash inflow for 2QFY20 was $5.7 million (1QFY20: $10.3 million).
Cash Flow from Investing Activities
The Group’s net cash outflow from investing activities for 1HFY20 and 2QFY20 were $2.6 million and $2.2 million respectively (1HFY19: $9.5 million; 2QFY19: $5.3 million).
The lower cash outflows in 1HFY20 and 2QFY20 were mainly due to lower capital expenditure incurred during the periods under review. The Group had invested $1.4 million in a residential property development project in Cambridge, United Kingdom, in 2QFY19.
Cash Flow from Financing Activities
The Group recorded net cash outflow from financing activities of $12.5 million and $0.3 million for 1HFY20 and 2QFY20 (1HFY19 and 2QFY19: inflows of $8.0 million and $9.4 million), following the net repayment of bank borrowings during the periods.
Net cash outflow for 2QFY20 was lower than 1QFY20 due to lower net repayment of bank borrowings during the quarter.
Cash and Cash Equivalents
Taking into consideration the abovementioned factors, the Group’s cash and cash equivalents stood at $8.1 million as at 30 September 2019 (30 September 2018: $9.5 million; 30 June 2019: $4.9 million).
The Group’s performance has been underpinned by continued growth in the Singapore construction sector, which has emerged as the bright spot amid a subdued Singapore economic performance in recent quarters. Driven by higher demand from the public sector, the construction sector has turned in a 2.7% growth year-on-year in the third calendar quarter of 2019, marking its third consecutive quarter of growth.
The Group remains cautiously optimistic about the outlook of the construction sector and our prospects for the months ahead. Nevertheless, we are mindful that the wider economic and geopolitical headwinds could affect the sector’s recovery. To ride on the recovery of the construction sector, we will continue to leverage our strong capabilities and firm track record to actively tender for more strategic projects.
As at 5 November 2019, the Group’s order book stands at about $150 million (2 August 2019: $150 million).