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Financial Statements Announcement for the First Quarter Ended 30 June 2019
(For the Financial Year Ending 31 March 2020)

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

1QFY20 – for the 3 months ended 30 June 2019
4QFY19 – for the 3 months ended 31 March 2019
1QFY19 – for the 3 months ended 30 June 2018

Review of Results for the First Quarter Ended 30 June 2019

Review of Results

Revenue

Revenue for the Group of $80.5 million for 1QFY20 was stable compared to $81.3 million recorded for 1QFY19.

Quarter-on-quarter, the Group recorded a 7.7% increase in revenue as compared to $74.7 million in 4QFY19 on the back of higher work volume from projects secured as demand for construction activities in Singapore improved.

Gross Profit and Gross Profit Margins (GPM)

Gross profit and GPM for 1QFY20 were higher at $9.7 million and 12.0% (1QFY19: $4.3 million and 5.3%). The improvement in GPM reflected an overall improvement in tender prices and business activities.

Quarter-on-quarter, gross profit and GPM increased in tandem with the higher revenue recorded.

Other Income

The Group recorded other income of $0.6 million for 1QFY20 (1QFY19: $0.8 million; 4QFY19: $0.5 million), taking into account the gain from the disposal of old equipment of $0.4 million in 1QFY20 (1QFY19: $0.7 million; 4QFY19: $0.1 million).

Operating Expenses

Operating Expenses

Other operating expenses for 1QFY20 amounted to $6.9 million, comparable to the $6.8 million incurred in 1QFY19.

Other operating expenses for 1QFY20 were lower compared to 4QFY19. The decrease was mainly from lower administrative expenses recorded and the absence of one-off expenses incurred in 1QFY20. Other operating expenses for 4QFY19 included expected credit losses on debtors arising from the adoption of new accounting standard and higher legal fees incurred to recover outstanding debt amounting to $1.6 million collectively.

Other operating expenses to revenue ratio of 8.5% for 1QFY20 was comparable to 8.4% in 1QFY19. Sequentially, the ratio improved by 27% from 4QFY19, in line with the higher revenue and lower other operating expenses recorded in 1QFY20.

Net Finance Expenses

Net Finance Expenses

Net interest expenses of $1.0 million incurred for 1QFY20 was higher than that of $0.8 million in 1QFY19. The increase was due to higher amount of short-term borrowings drawn down for working capital purposes.

Net interest expenses for 1QFY20 were comparable to 4QFY19.

Profit/(Loss) for the period

The Group recorded net profit before tax of $1.7 million in 1QFY20, a turnaround from losses before tax of $2.3 million in 1QFY19 and $6.4 million in 4QFY19. The results for 4QFY19 included a provision of $1.0 million in relation to a project that experienced delays and cost overruns. There was no such provision made in 1QFY20.

Earnings before interest, tax, depreciation and amortisation (EBITDA) also improved significantly to $9.3 million in 1QFY20, compared to EBITDA of $4.7 million in 1QFY19 and $0.2 million in 4QFY19.

Earnings per share for 1QFY20 was 0.03 cent, a turnaround from a loss per share of 0.13 cent in 1QFY19 and a loss per share of 0.30 cent in 4QFY19.


Statement Of Financial Position

Property, Plant and Equipment

Net book value of property, plant and equipment as at 30 June 2019 was $137.0 million (31 March 2019: $137.1 million).

In 1QFY20, the Group acquired $2.3 million worth of new plant and equipment to replace older equipment. The Group disposed of plant and equipment with carrying values of $0.5 million and recorded a $0.1 million gain on the disposal. Depreciation charge for 1QFY20 was $6.0 million (1QFY19: $6.0 million).

Net Current Assets

As at 30 June 2019, net current assets was $4.5 million (31 March 2019: $4.1 million). Current ratio (current assets / current liabilities) was 1.02 (31 March 2019: 1.02).

The Group had higher inventories of $30.7 million at 30 June 2019 (31 March 2019: $29.7 million) as it had anticipated an increase in equipment sale and leasing activities.

Trade and other receivables and contract assets were $137.9 million (31 March 2019: $134.6 million) while trade and other payables and contract liabilities were $107.2 million (31 March 2019: $99.7 million).

The Group disposed of assets held for sale with carrying values of $0.6 million and recorded a $0.3 million gain on the disposal in 1QFY20. As at 30 June 2019, assets held for sale was $15.0 million (31 March 2019: $15.5 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 current right-of-use assets and current lease liabilities of $2.6 million and $2.4 million respectively.

Borrowings

As at 30 June 2019, total borrowings, excluding lease liabilities arising from the adoption of SFRS(I) 16 Leases, of the Group was $96.7 million (31 March 2019: $102.7 million). The reduction was a result of net repayment of debt in 1QFY20.

Consequently, the debt to equity ratio as at 30 June 2019 improved to 0.67 (31 March 2019: 0.72).

Equity and Net Asset Value

As at 30 June 2019, the Group’s equity was $143.7 million (31 March 2019: $142.4 million), while net asset value per ordinary share was 6.2 cents (31 March 2019: 6.1 cents).


Cash Flow

Cash Flow

Cash Flow from Operating Activities

Net cash inflow from operating activities was $10.3 million for 1QFY20 (1QFY19: $0.6 million; 4QFY19: $0.5 million), taking into account the net profit recorded during the period under review.

Cash Flow from Investing Activities

The Group recorded a lower net cash outflow from investing activities of $0.4 million for 1QFY20 (1QFY19: $4.3 million; 4QFY19: $1.3 million) as the Group incurred lower capital expenditure in 1QFY20.

Cash Flow from Financing Activities

The Group’s net cash outflow from financing activities was $12.2 million for 1QFY20 (1QFY19: $1.3 million; 4QFY19: $1.4 million), following the higher 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 $4.9 million as at 30 June 2019 (30 June 2018: $10.7 million; 31 March 2019: $7.2 million).


Outlook

The Group’s performance turnaround came on the back of a recovery in Singapore’s construction industry. This recovery in the construction sector has been pinpointed as a bright spot against a cloudy economic outlook for Singapore, with public and private sector projects expected to continue to support construction demand in the year ahead.

Against this backdrop, the Group is cautiously optimistic about the prospects of its continuing recovery for the current financial year. Nevertheless, it is also mindful that the wider economic and geopolitical headwinds could yet weigh on the sector’s recovery.

As at 2 August 2019, the Group’s order book stands at about $150 million (17 May 2019: $160 million), which should provide the Group with a steady flow of activities for the next six months.