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Condensed Interim Financial Statements For the 6 Months Ended 30 September 2021

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 the Performance of the Group

Consolidated Statement of Profit or Loss

1HFY22 – for the 6 months ended 30 September 2021
2HFY21 – for the 6 months ended 31 March 2021
1HFY21 – for the 6 months ended 30 September 2020

Review of Results for the 6 Months Ended 30 September 2021

Review of Results

Revenue

The Group recorded revenue of $123.1 million for 1HFY22, representing a 133.1% increase over $52.8 million recorded in 1HFY21, and a 1.9% decline from the $125.5 million recorded in 2HFY21.

The year-on-year improvement reflects the higher level of construction activity, compared to the same period a year ago when mandatory work stoppage was imposed by the Government on the construction sector as part of the effort to contain the spread of COVID-19. Nevertheless, the Group experienced a slow start in 1HFY22 in view of the manpower shortage and safe management measures imposed by the local authorities, as well as delays in commencement of new projects secured in Singapore. While there was a gradual pick-up in activity in June 2021, overall productivity was affected by the challenging working conditions at project sites due to the unexpected heavy rainfall in August 2021, and the disruption in the supply of steel cages due to manpower shortage experienced by the suppliers.

In Malaysia, revenue for 1HFY22 was affected by the suspension of construction activities due to the implementation of Movement Control Order 3.0 from 12 May 2021 to 31 May 2021, and total nationwide lockdown from 1 June 2021 to 1 August 2021.

The Group’s equipment trading division contributed higher revenue of $26.9 million in 1HFY22 (2HFY21: $1.9 million).

Gross Profit/(Loss) and Gross Profit/(Loss) Margins

On the back of the significantly higher activities year-on-year, the Group recorded a turnaround in gross profit and gross profit margin to $14.1 million and 11.4%, from the gross loss and gross loss margin of $6.5 million and 12.2% in 1HFY21.

However, the Group was also faced with margin pressure amid rising material and manpower costs compared to 2HFY21. The price hike across the global market due to supply chain disruptions was sustained by high demand and competition. Additional costs were also incurred to comply with safety and other pandemic control measures required. Consequently, gross profit and gross profit margin was lower compared to 2HFY21’s gross profit of $17.3 million and gross profit margin of 13.8%.

To mitigate the cost impact, the Group negotiated with main contractors or project owners for locked-in prices for key construction materials.

The Group received $1.7 million of COVID-19 support grants from the Singapore government in 1HFY22 (1HFY21: $6.4 million). This was mainly in the form of Jobs Support Scheme grants and foreign workers’ levy rebates.

Other Income

Other Income

The Group recorded lower other income of $0.5 million for 1HFY22 (1HFY21: $3.3 million), in the absence of a $2.8 million gain that was recorded in 1HFY21 from the disposal of leasehold property located at No 2, Tanjong Penjuru Crescent (“2TPC”) to a joint venture with LOGOS group in 1HFY21.

Other income for 2HFY21 was comparable to the $0.5 million recorded in 2HFY21.

Operating Expenses

Operating Expenses

Other operating expenses for 1HFY22 increased by 5.5% to $12.5 million (1HFY21: $11.9 million) as the Group had implemented a series of cost reduction measures, such as salary reduction and mandatory clearance of annual leave across the board during Circuit Breaker and Movement Control Order periods in 1HFY21.

The Group recorded a foreign exchange loss of $0.4 million for 1HFY22 (1HFY21: $0.01 million). This was mainly due to the strengthening of Chinese Renminbi against Singapore Dollar for the payments to China suppliers in 1HFY22, while taking into account the weakening of the currencies in the countries where the Group operates, especially Thailand, against regional currencies in 1HFY22.

The Group received $0.8 million in grants, mainly from the Jobs Support Scheme and foreign worker levy rebates, which helped to defray the operating expenses incurred in 1HFY22.

Net Finance Expenses

Net Finance Expenses

Net interest expenses by 11.9% to $1.3 million for 1HFY22 (1HFY21: $1.5 million). The decrease was mainly due to a year-on-year decrease in average loans and borrowings. In addition, the lower interest rates charged by financial institutions during the period also contributed to the decrease in net interest expenses.

Net interest expenses for 1HFY22 was higher than the $1.2 million in 2HFY21 following the higher usage of project financing facilities in 1HFY22.

(Loss)/Profit for the period

The Group recorded net profit before tax of $0.4 million in 1HFY22, a turnaround from a loss before tax of $13.7 million in 1HFY21, and positive earnings before interest, tax, depreciation and amortization (EBITDA) of $13.1 million (1HFY21: $0.1 million).

Loss per share for 1HFY22 was 0.003 cent (1HFY21: 0.50 cent).


Statement Of Financial Position

Non-Current Assets

Net book value of property, plant and equipment as at 30 September 2021 was $122.0 million (31 March 2021: $125.0 million).

In 1HFY22, the Group acquired new property, plant and equipment amounting to $5.7 million. This included a leasehold property worth $3.2 million. In addition, inventories amounting to $2.3 million were capitalised as property, plant and equipment following the reassessment of the economic uses of these inventories. The Group disposed of plant and equipment with carrying values of $0.5 million and recorded a $0.3 million gain on the disposal. Depreciation charge for 1HFY22 was $9.8 million (1HFY21: $10.3 million).

Net Current Assets

As at 30 September 2021, net current assets stood at $21.5 million (31 March 2021: $18.2 million). Current ratio (current assets / current liabilities) improved to 1.13 (31 March 2021: 1.11).

The Group held higher inventories of $34.4 million as at 30 September 2021 (31 March 2021: $31.4 million) as it had anticipated an increase in construction and equipment sale and leasing activities.

Trade and other receivables and contract assets increased by $11.8 million (31 March 2021: $109.1 million), while trade and other payables and contract liabilities increased by $5.9 million (31 March 2021: $86.3 million), in line with the higher level of business activities towards the end of 1HFY22.

Loans and Borrowings

As at 30 September 2021, total loans and borrowings stood at $84.9 million (31 March 2021: $76.7 million), as the Group drew down more trade facilities to better manage its cash flow. In addition, new finance lease loans and term loan were also drawn down to refinance its unencumbered equipment and the acquisition of a leasehold property.

The debt-to-equity ratio as at 30 September 2021 was 0.59 (31 March 2021: 0.52).

Equity and Net Asset Value

As at 30 September 2021, the Group’s equity stood at $144.3 million (31 March 2021: $147.7 million), while net asset value per ordinary share was 4.0 cents (31 March 2021: 4.1 cents).


Cash Flow

Cash Flow

Cash Flow from Operating Activities

Net cash inflow from operating activities was lower at $0.2 million for 1HFY22 (1HFY21: $5.9 million; 2HFY21: $16.8 million). The Group recorded a temporary increase in trade and other receivables of $16.5 million in 1HFY22, as a result of timing differences between billings and receipt of payments from customers. Majority of these receivables were subsequently collected in October 2021.

Cash Flow from Investing Activities

The Group recorded a net cash outflow from investing activities of $8.7 million for 1HFY22, compared to a net cash inflow of $12.4 million in 1HFY21. This was mainly due to the receipt of $16.9 million from the disposal of 2TPC in 1HFY21. In addition, the Group made a partial payment of $3.3 million for the acquisition of an additional 15% stake in ICE Far East Pte. Ltd. and its subsidiaries (“ICE Group”) in 1HFY22, thereby raising its stake in ICE Group to 100%.

The net cash outflow for 1HFY22 was higher than 2HFY21, taking into account the acquisition of additional 15% stake in ICE Group.

Cash Flow from Financing Activities

Net cash inflow from financing activities was $1.6 million for 1HFY22 (1HFY21: outflow of $11.4 million; 2HFY21: outflow of $0.5 million), as the Group had drawn down additional loan facilities and utilized more trade facilities to finance the business operations in 1HFY22.

Cash and Cash Equivalents

Taking into consideration all the above, the Group’s cash and cash equivalents stood at $24.5 million as at 30 September 2021 (30 September 2020: $21.0 million; 31 March 2021: $31.3 million).

Outlook

The Singapore construction industry is currently spurred by the public sector, and it is likely to continue to be so in the ensuing months.

As the country is now moving towards becoming a COVID-19-resilient nation with high vaccination coverage for all residents, including migrant workers, and coupled with the institution of safe management measures at project sites, the Group expects less work disruption at the sites arising from COVID-19 cases as compared to the prior year.

Nevertheless, the Group is mindful that construction margins remain under pressure as the cost of materials and manpower continued to increase. Prices of key construction materials and consumables such as rebar, concrete and diesel have increased over the last six months and are not expected to drop in the next six months.

Since the tightening of border restrictions in Singapore on 23 April 2021, the construction sector, including its supply chain, has been affected by manpower shortage. While the Singapore government has committed to support the construction sector by relaxing entry restrictions for new migrant workers from South Asia, the Group is still awaiting further details on the relaxation of border restrictions.

Nevertheless, the Group expects that the relaxation of border restrictions for migrant workers is likely to occur in a controlled manner. In the short term, the inflow of new migrant workers is thus unlikely to adequately replace the high number of trained migrant workers who had chosen to return to their home countries. The Group will continue to focus on the efficient deployment of its workforce.

In Malaysia, after nearly three months of suspension of all construction activities, the nationwide lockdown was lifted on 2 August 2021. Given the backlog of projects, the Group’s construction activities are quickly being resumed and productivity is expected to pick up in the next six months.

The Group continues to maintain a prudent approach towards tenders for construction projects. It will continue to focus on managing asset utilisation and the optimisation of cost and operational efficiencies to reinforce its competitive position. Capital and cash flow management remain key priorities as the Group maintains a tight rein on costs.

The Group has successfully secured several significant public sector residential and infrastructure projects over the past months, which has lifted its order book to approximately $200 million as at 10 November 2021 (28 May 2021: $160 million). Barring unforeseen circumstances, the bulk of this order book should be delivered within the next 12 months.



Page Last Updated: 12/11/2021.