2nd Quarter and Half Year Financial Statements And Dividend Announcement For The Period Ended 30 June 2017
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Review of Group Performance
For 2Q2017, the Group’s revenue decreased by 31.2% to S$28.6 million as compared with revenue for 2Q2016 as a result of decrease in contribution from both Residential property and Hospitality and commercial segments. During the quarter, fewer projects were completed as compared with 2Q2016.
The gross margin decreased from 20.0% in 2Q2016 to 13.8% for 2Q2017, as a result of lower margins recorded in projects completed during the quarter.
Marketing and distribution expenses increased by 28.9% to S$1.5 million in 2Q2017. This was attributed to increase in staff costs relating to restructuring and showroom related expenses.
General and administrative expenses decreased from S$1.9 million in 2Q2016 to S$1.8 million in 2Q2017. The decrease was mainly due to foreign exchange loss.
As a result, the Group achieved lower profit before tax of S$0.7 million for 2Q2017, a decrease of 87.4% as compared with S$5.2 million for 2Q2016. After taking into account tax expenses, the Group’s net profit after tax was S$0.6 million for 2Q2017.
The Group’s revenue for 1H2017 increased by 0.6% to S$63.0 million as compared with the revenue for 1H2016. The increase was a result of an increase in contribution from Hospitality and commercial segment, offset by the decrease from the Residential property segments.
The gross margin decreased from 20.9% in 1H2016 to 16.6% for 1H2017, as a result of lower margins recorded in projects completed during the half year.
For 1H2017, marketing and distribution expenses increased by 28.4% to S$3.0 million as compared with S$2.4 million in 1H2016. This was attributed to increase in staff costs relating to restructuring, travelling expenses and showroom related expenses.
General and administrative expenses increased from S$3.5 million in 1H2016 to S$4.5 million in 1H2017. The increase was mainly due to exchange loss in 1H2017 as compared with an exchange gain in 1H2016, increase in staff costs relating to restructuring and executive search fees.
As a result, the Group achieved a lower profit before tax of S$3.1 million for 1H2017, as compared with S$7.5 million for 1H2016. After taking into account the tax expenses, the Group’s net profit after tax was S$2.4 million for 1H2017.
Balance Sheet (30 June 2017 vs 31 December 2016)
Property, plant and equipment decreased by S$1.4 million mainly due to depreciation charges, offset by the purchase of equipment during the period.
Contracts work-in-progress increased by S$9.3 million to S$14.6 million [Note 1(b)(4)] as at 30 June 2017. The increase was due to higher amount of work in progress pending certification by client as at 30 June 2017.
Total current trade receivables decreased to S$36.7 million [Note 1(b)(1)] as at 30 June 2017 as compared with S$66.2 million as at 31 December 2016. The decrease is mainly due to collections from customers during the current period and the decrease in revenue for 2Q2017 as compared to 4Q2016.
Other receivables and deposits decreased by S$1.9 million to S$4.9 million [Note 1(b)(1)]. The decrease was mainly due to lesser deposits made to suppliers and subcontractors.
Trade payables decreased by S$18.6 million to S$41.6 million [Note 1(b)(5)]. The decrease was mainly due to payment made to creditors during the period and lower accruals of project-related expenses due to less projects in the current period.
Accrued operating expense decreased by S$3.3 million to S$3.2 million [Note 1(b)(5)]. The decrease was mainly due to the payment of bonus in 1Q2017.
2Q2017 vs 2Q2016
For 2Q2017, there was net cash outflow of S$12.0 million. The cash outflow is mainly due to the payment of dividends in May 2017, slightly offset by cash inflow from operating activities.
1H2017 vs 1H2016
For 1H2017, there was net cash outflow of S$11.2 million. The cash outflow is mainly due to the payment of dividends in May 2017, slightly offset by cash inflow from operating activities.
We continue to see opportunities and prospects in the region, underpinned by a thriving tourism and hospitality sector that continues to increase demand for hotel accommodation. However, the residential sector in Singapore remains challenging. We are continuing our expansion into international markets such as Middle East, Thailand and China, as well as in different niche segments.
The Group remains well-positioned to grow, with an order book of S$141.8 million, a strong balance sheet and a healthy cash position of S$42.5 million as at 30 June 2017. Following the completion of our restructuring, we see the business returning to more normal levels of revenue and backlog relative to our historic performance.