We were heartened that CSC had emerged stronger through the construction downturn of prior years and eventually returned to profitability in the preceding financial year ended 31 March 2020 (“FY20”). The turnaround attested to the Group’s effective tendering strategies, prudence in cost management and ability to optimise the use of resources. However, the turnaround momentum was stifled by the sudden unprecedented onset of Covid-19 pandemic since the start of CSC’s new financial year in April 2020.
Like many other businesses in Singapore, a large part of CSC’s activities during the financial year ended 31 March 2021 (“FY21”) was centred on managing and adapting to issues arising from the Covid-19 outbreak. This proved to be relatively challenging, particularly in view of the Circuit Breaker (“CB”) and the Movement Control Order (“MCO”) imposed by the Singapore and Malaysia governments respectively in the earlier part of the financial year. No revenue was generated during the CB and MCO as construction activities were completely halted. By the time work resumption was allowed, the Group had to grapple with manpower shortage and the implementation of Covid-19 safemanagement practices which slowed down the pace of business activity significantly. These unprecedented developments weighed down on our performance for FY21.
With work gradually resuming in the second half of the financial year from October 2020 to March 2021 (“2HFY21”), the Group focused on maximising asset utilisation, as well as optimising cost and operational efficiencies. We are thankful that, with the support of the Covid-19-related grants and rebates extended to us by the Singapore government, the Group was able to regain a minor measure of profitability in 2HFY21.
In spite of the stronger performance in 2HFY21 compared to the six-month period from April 2020 to September 2020 (“1HFY21”), it was insufficient to mitigate the effects of the pandemic and our group revenue of $178.3 million for FY21 fell short compared to the revenue of $342.8 million recorded in the previous financial year ended 31 March 2020 (“FY20”). The Group’s net loss was $12.4 million in FY21, compared to a net profit of $7.3 million in FY20. Nonetheless, our cash position remained strong at $34.6 million for the year, taking into consideration a contribution of $9.7 million from the exercise of warrants in FY21.
FY21 Activity Update
As part of our right sizing and fleet optimisation strategy to handle current demand, we rejuvenated our equipment to replace the mid-sized equipment to increase our productivity and enable us to take on increased demand. Our 55%-owned trading arm, THL Foundation Equipment Pte Ltd has secured an exclusive distributorship with Xuzhou Construction Machinery Group Co., Ltd (“XCMG”) to sell XCMG equipment in the South Asia and Southeast Asia regions, serving as an additional revenue source for the Group. The Group retains its focus on managing asset utilisation and the optimisation of cost and operational efficiencies to reinforce its competitive position.
New contracts secured during the year were mainly public sector infrastructure projects which included geotechnical and foundation works for several MRT stations. Amid the manpower shortage arising from border closures, the commencement of some projects had to be delayed. Nonetheless, the gradually stabilising Covid-19 situation coupled with the effective management of the pandemic in Singapore signal improvements in the labour situation and we expect to make progress on these projects in the coming year.
Strengthening Innovative Capabilities
Despite the challenges, there were opportunities to build up our capabilities. We embarked on two projects with support from the Building Construction Authority (BCA), and have successfully applied for patents for our Mobile Site Reporting (“MSR”) System, an on-site production reporting mobile application that electronically captures real-time site data; and the RC Pile Handler, which is capable of transferring heavy and elongated objects, such as reinforced concrete (“RC”) piles, in a safe and efficient way using its grip mechanism. With the MSR System, we are able to achieve 25% savings on manpower and 150% improvement in site recording efficiency, among others. For each RC pile project using the RC Pile Handler, there is a productivity gain of 50% increase in number of RC piles handled per day and 73% cost savings per RC pile installed.
We are currently working on the development of several projects that aim to reduce costs and increase productivity.
The uncertain and evolving nature of the pandemic has reinforced the need to be adaptable and resilient. The Group is cautiously optimistic about Singapore’s construction industry outlook, as BCA’s estimates of between $23 billion and $28 billion for 2021 indicate a healthy demand for construction services. However, the prevailing competition is likely to persist following the construction lull in FY21. Construction margins are also expected to face pressure from rising material and manpower costs, which have been exacerbated by the tightening of border restrictions in Singapore on 23 April 2021. In addition, the implementation of the latest MCO in Malaysia from 12 May 2021 to 7 June 2021, the total lockdown imposed from 1 to 28 June 2021, and ongoing manpower challenges are anticipated to further impact the Group’s construction activities in Malaysia.
To this end, the Group will maintain a prudent approach towards tenders for construction projects. While we seek to offer competitive prices to our customers, we will continue to exercise care to ensure sustainable margins and continued value creation for our stakeholders.
On behalf of my fellow Board members, I would like to thank CSC’s management and staff who have demonstrated resilience amidst a challenging economic environment. I also wish to convey my heartfelt appreciation to my fellow Directors who have been a strong pillar of support and counsel for the Group. Finally, I am grateful to all our shareholders, customers, business partners and associates for steadfast support and trust in us.