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Condensed Interim Financial Statements For the 6 Months Ended 30 September 2022

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

1HFY23 – for the 6 months ended 30 September 2022
2HFY22 – for the 6 months ended 31 March 2022
1HFY22 – for the 6 months ended 30 September 2021

Review of Results for the 6 Months Ended 30 September 2022

Review of Results

Revenue

The Group recorded a revenue of $118.0 million for 1HFY23, representing a 4.1% and 19.0% decline over that for 1HFY22 of $123.1 million and 2HFY22 of $145.7 million respectively. This was mainly due to a drop in the construction activity in Singapore on the back of lower supply of public and private construction projects in 1HFY23 as compared to 2HFY22.

The Group’s construction activities in Malaysia have continued to register improvements since the easing of COVID-19 containment measures in August 2021. The productivity has also picked up following the resumption and completion of work for projects secured in previous quarters.

The Group has adopted a cautious approach in tendering for new projects in view of the escalating material and energy costs in the first half of 2022. With the stabilisation of construction material prices, the Group has successfully secured $140 million worth of contracts between July 2022 and September 2022, which has boosted its order book to $220 million as at 30 September 2022 (25 May 2022: $150 million). However, work on these new projects has been delayed and is expected to commence in the coming quarters.

Gross (Loss)/Profit

The Group recorded a gross loss of $0.5 million (1HFY22: gross profit of $14.1 million; 2HFY22: gross profit of $13.6 million) and gross loss margin of 0.4% (1HFY22: gross profit margin of 11.4%; 2HFY22: gross profit margin of 9.4%) in 1HFY23.

The low level of construction activity had given rise to low project margins that were further weighed down by rising material and energy costs as a result of global supply chain disruptions and geopolitical instability. Nevertheless, the projects were able to cover the variable project costs and generated a positive contribution margin of 28.9% in 1HFY23.

At gross profit level, the positive project contribution was also able to cover major project overheads such as depreciation and staff costs in 1HFY23. The Group believes that its current workforce is at the optimal level required to undertake the newly secured projects.

Other Income

Other Income

Other income for 1HFY23 was lower compared to the $1.3 million in 2HFY22, taking into account the lower gain from the disposal of older equipment in 1HFY23.

In 1HFY23 and 2HFY22, the Group capitalised on the higher steel prices in the sale of its scrap steel and hence generated higher sale proceeds as compared to 1HFY22.

Operating Expenses

Operating Expenses

Other operating expenses for 1HFY23 increased by 3.2% to $11.6 million, from $11.2 million for 2HFY22, mainly due to increased business activities.

The Group recorded higher depreciation charge of $1.6 million for right-of-use assets compared to $0.9 million for 1HFY22 and 2HFY22 respectively, in view of the inclusion of its headquarters located at No 2, Tanjong Penjuru Crescent following the commencement of the lease in April 2022. Depreciation for the said right-of-use asset amounted to $1.2 million in 1HFY23.

The Group recorded a foreign exchange loss of $1.2 million for 1HFY23 (1HFY22: $0.4 million; 2HFY22: $0.7 million), due to the weakening of the Malaysia Ringgit and Thailand Baht against its functional currency, the Singapore Dollar.

The Group received $0.1 million (1HFY22: $0.8 million; 2HFY22: $0.2 million) in grants, mainly from the Jobs Support Scheme and foreign worker levy rebates.

Net Finance Expenses

Net Finance Expenses

Net interest expenses was higher at $1.7 million for 1HFY23 (1HFY22: $1.3 million; 2HFY22: $1.4 million), mainly due to a 70% rise in its floating interest rate during the period to approximately 6.0% as at 30 September 2022.

The Group recorded an interest expense of $0.6 million (1HFY22 and 2HFY22: $Nil) for the lease liability relating to its headquarters located at No 2, Tanjong Penjuru Crescent, in 1HFY23.

Share of Profit/(Loss) of Associates

As disclosed in note 2.1(a) on pages 12 to 13, the Group changed the accounting policy of an associate company’s investment property from the cost model to the fair value model retrospectively on 1 April 2022.

The associate company’s investment property was revalued during 2HFY22 based on a valuation performed by an independent professional valuer. The Group’s share of the revaluation gain of $5.2 million has been recognised in 2HFY22.

(Loss)/Profit for the period

Taking into account the above, the Group recorded a net loss before tax of $16.8 million in 1HFY23 (1HFY22: net profit of $0.4 million).

Loss per share for 1HFY23 was 0.475 cent (1HFY22: 0.003 cent).


Statement Of Financial Position

Non-Current Assets

Property, Plant and Equipment

Net book value of property, plant and equipment as at 30 September 2022 was $127.1 million (31 March 2022: $128.6 million).

In 1HFY23, the Group acquired new property, plant and equipment amounting to $9.2 million. In addition, inventories (equipment and machinery) amounting to $3.5 million were capitalised as property, plant and equipment following the reassessment of the economic uses of these inventories. Plant and equipment amounting to $0.7 million were reclassified as inventories in 1HFY23. The Group disposed of plant and equipment with carrying values of $2.1 million and recorded a $0.5 million gain on the disposal. Depreciation charge for 1HFY23 was $10.6 million (1HFY22: $9.8 million).

Right-of-use Assets

Following the completion of the redevelopment of property located at No 2, Tanjong Penjuru Crescent (“2TPC”), the Group relocated its headquarters back to 2TPC in 1HFY23. Right-of- use asset and the lease liability relating to 2TPC amounting to $37.8 million and $39.1 million respectively as at 30 September 2022.

Net Current Assets

As at 30 September 2022, net current assets stood at $8.4 million (31 March 2022: $29.2 million). Current ratio (current assets / current liabilities) was 1.05 (31 March 2022: 1.18).

The Group held higher inventories of $28.7 million as at 30 September 2022 (31 March 2022: $27.2 million) as the Group procured a higher inventory level of key construction materials at lower unit prices in 1HFY23.

Trade and other receivables and contract assets decreased by $13.2 million to $113.5 million (31 March 2022: $126.7 million), while trade and other payables and contract liabilities decreased by $6.5 million to $82.0 million (31 March 2022: $88.5 million), in line with the lower level of business activity in 1HFY23.

Loans and Borrowings

The Group’s loans and borrowings reduced by 4.9% to $87.4 million as at 30 September 2022 (31 March 2022: $91.9 million) as a result of net repayment made in 1HFY23.

The debt-to-equity ratio was 0.65 as at 30 September 2022 (31 March 2022: 0.61).

Equity and Net Asset Value

In 1HFY23, the Group completed the buy-back of 7.0 million ordinary shares for a purchase consideration of $0.1 million. In this regard, there were 67.9 million shares with carrying values of $3.0 million held as treasury shares as at 30 September 2022 (31 March 2022: 60.9 million shares with $2.9 million).

As at 30 September 2022, the Group’s equity stood at $133.7 million (31 March 2022: $150.8 million), while net asset value per ordinary share was 3.8 cents (31 March 2022: 4.3 cents).


Cash Flow

Cash Flow

Cash Flow from Operating Activities

The Group generated net cash inflow of $2.4 million from operating activities for 1HFY23 (1HFY22: $0.2 million; 2HFY22: $18.0 million), despite the net loss recorded. This was a result of focused working capital management and efforts to expedite the collections of receivables.

Cash Flow from Investing Activities

Net cash outflow from investing activities was lower at $4.2 million for 1HFY23 (1HFY22: $5.4 million; 2HFY22: $7.0 million), mainly due to lower capital expenditure incurred in 1HFY23.

Cash Flow from Financing Activities

Net cash outflow from financing activities was $12.8 million for 1HFY23 (1HFY22: $1.7 million; 2HFY22: $4.0 million), taking into account the higher net repayment of bank borrowings in 1HFY23. The Group had drawn down additional loan facilities and utilized more trade facilities to finance the business operations in both 1HFY22 and 2HFY22.

Cash and Cash Equivalents

Taking into consideration the above, the Group’s cash and cash equivalents stood at $16.3 million as at 30 September 2022 (30 September 2021: $24.5 million; 31 March 2022: $31.4 million).

Outlook

Singapore’s core inflation reached a 14-year high at 5.3% in September 2022 and is expected to remain elevated before trending down in the second half of 2023 1. The Group expects the cost of major building materials and energy prices to remain high in tandem with the rise in inflation rate.

With further easing of COVID-19 restrictions in Singapore, the Group expects the resulting increase in the supply of migrant workers to the country to alleviate the manpower shortage situation. Given the backlog of recently awarded projects, the Group’s construction activities are expected to increase and contribute to revenue in the coming months.

The Group continues to maintain a prudent approach towards new projects tenders. 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 it maintains a tight rein on costs.

The Group’s order book stood at approximately $200 million as at 14 November 2022 (25 May 2022: $150 million). Barring unforeseen circumstances, the bulk of this order book should be delivered within the next nine months.



Page Last Updated: 15/11/2022.