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Financials

Half Year Financial Statement And Dividend Announcement 2023

Financials Archive

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Condensed interim consolidated income statement

Condensed interim consolidated statement of comprehensive income

Condensed interim balance sheets

Review of Performance

Half year results: 1HFY2024 vs 1HFY2023

Revenue

The Group had a total revenue of S$147.8 million for 1HFY2024, an increase of S$6.2 million compared to S$141.6 million in the corresponding 1HFY2023. The increase was mainly due to the increase in revenue from construction business of S$6.1 million from S$139.7 million in 1HFY2023 to S$145.8 million in 1HFY2024.

Other income

The increase in other income of S$1.3 million from S$5.1 million in 1HFY2023 to S$6.4 million in 1HFY2024 was mainly due to an increase in interest income from fixed deposits.

Other operating expenses

Cost of construction increased by S$19.4 million from S$130.1 million in 1HFY2023 to S$149.5 million in 1HFY2024 as construction works done increased with escalating costs arising from prolonged construction periods as well as higher cost of materials, labour (due to shortages), overheads, utilities, logistics, workers’ dormitory, rental of equipment, and subcontractor costs due to the COVID-19 Pandemic.

There was no material difference in personnel expenses between 1HFY2024 and 1HFY2023 with the decrease in provision for bonuses, offset by increase in salaries, wages and accommodation for workers.

Finance costs increased by S$2.6 million from S$1.5 million in 1HFY2023 to S$4.1 million in 1HFY2024 mainly due to the increase in interest rates.

Other operating expenses decreased by S$4.3 million from S$7.7 million in 1HFY2023 to S$3.4 million in 1HFY2024 mainly due to decrease in unrealised foreign exchange losses.

Share of results of associates and joint ventures incurred a loss of S$2.1 million mainly attributable to an absence of contribution from Singapore property development projects which was recognised in the previous period, and sale and construction of new projects have not commenced. The losses incurred by associates and joint ventures for these projects were mainly due to pre-launch expenses, sales and marketing expenses, and operating costs that need to be recognised before commencement of sale and construction.

Tax expense increased in 1HFY2024 as compared to 1HFY2023 notwithstanding a loss from operation as deferred tax assets have not been recognised in 1HFY2024.

Overall, the Group recorded a loss attributable to owners of the Company of S$12.6 million in 1HFY2024 as compared to a profit of S$10.1 million in 1HFY2023.

Group Statement of Financial Position Review

Non-current assets as at 1HFY2024 decreased by S$81.5 million or 18.1% to S$369.2 million as compared to S$450.7 million as at FY2023 mainly due to the S$74.1 million decrease in loans owing from associates of which S$43.5 million were reclassed as current assets as it will be receivable within the next 12 months period.

The net current assets (current assets less current liabilities) of the Group was S$60.1 million as at 1HFY2024 as compared to S$55.0 million as at FY2023.

Fixed deposits, cash and bank balances has decreased by S$2.8 million from S$120.8 million in FY2023 to S$118.0 million in 1HFY2024 mainly due to a decrease in net banks borrowings, offset by repayment received for shareholders loan from joint ventures and associates.

Gearing ratio (total loans and borrowings to equity) of the Group has improved to 0.40x as at 1HFY2024 from 0.57x as at FY2023 with decrease in total loans and borrowings of S$71.3 million from S$205.6 million as at FY2023 to S$134.3 million as at 1HFY2024.

Commentary On Current Year Prospects

The global economic backdrop has remained challenging. According to the International Monetary Fund ("IMF"), global growth is expected to slow down from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024. Global inflation continues to decline, from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024 due to tighter monetary policy aided by lower international commodity prices. Core inflation is also projected to decline, and inflation is not expected to return to target until 2025 globally. Similarly, the Monetary Authority of Singapore (“MAS”) has remarked that the global economic outlook remains uncertain, and the domestic recovery could be weaker than expected and cited muted growth prospects in the near term but should improve gradually in the second half of 2024. MAS said it expects growth in 2023 to come in at the lower half of the 0.5% to 1.5% official forecast range.

Conversely, advanced estimates from the Ministry of Trade and Industry (“MTI”) show that the Singapore economy grew 0.7% year-on- year in the third quarter of 2023, an improvement from the 0.5% growth in the previous quarter.

According to MTI, the construction sector grew by 6.0% year-on-year in the third quarter, extending the 7.7% growth in the preceding quarter. Growth during the quarter was supported by expansions in both public and private sector construction output. With reference to earlier estimates of contracts worth $27 billion to $32 billion being likely to be awarded in 2023 by the Building and Construction Authority ("BCA"), it denotes that construction demand is expected to be stable and driven by the public sector. However, in the present inflationary environment, the impact of price pressures from general inflation alone has become more significant in driving construction cost escalations. This is in addition to the challenges of supply chain disruption, climate change, labour shortages, and material and manpower costs.

The overall private home prices as reported by the Urban Redevelopment Authority ("URA”) rose 0.8% in the third quarter of 2023, up from a 0.2% decline in the previous quarter . However, the average quarterly increase of private home prices of around 0.3% over the past two quarters was significantly lower than the average quarterly increase of 2.1% in the whole of 2022. The sale transaction volume totalled 5,201 in the third quarter of 2023, compared to 5,388 in the previous quarter and 6,148 in the third quarter of 2022.

Hotel performance in countries such as United Kingdom and Japan has continued to improve although uncertainties loom as global macroeconomic factors could potentially impact hotel operations and investment in the near future. While uncertainties in macroeconomic factors remain, the investment properties held by the Group in Singapore and overseas have maintained good occupancy rates and rental rates.

With the acceptance of a Letter of Award from a repeat client for a new construction project in October 2023, the Group’s construction order book stood at approximately S$166.0 million. This is expected to contribute to the Group’s results up to the financial year ending 31 March 2026.

Most of the launched development projects in Singapore under the Group are either fully sold or almost fully sold to date. The Group is currently participating in 4 joint ventures for proposed residential and mixed development in Singapore, namely the redevelopment of former Peace Centre / Peace Mansion, former Euro-Asia Apartments at 1037 Serangoon Road, former Park View Mansions and former Bagnall Court. The sale and construction of these mentioned projects are targeted to commence in the year of 2024.

The Group has investments in two projects with on-going residential development in Gaobeidian, PRC - Singapore Sino Health City - Zhong Xin Yue Lang (中新健康城 - 中新悦朗) ("ZXYL") and Zhong Xin Yue Shang (中新悦上) ("ZXYS") with equity stake of 22.5% and 33.75% respectively. Phase 1 of ZXYL has been completed with more than 83.0% of the 812 units sold. Phase 2 of ZXYL has commenced construction with more than 21.0% of the 724 launched units sold and its revenue and cost of the sold units will be recognised upon completion of construction and contribute to the share of results of associates. Completion of its construction is targeted by FY2025. Construction for Phase 1 of ZXYS has been completed with more than 93.0% of the 1,011 units sold. Construction of about 204 units of Phase 2 of ZXYS has been completed in 1HFY2024 with more than 65.0% sold and contributed positively to the results of 1HFY2024. Completion of another 1,011 units of Phase 2 ZXYS is targeted to be by FY2025. Further completed units sold after 1HFY2024 of both ZXYL and ZXYS are expected to contribute positively to the Group’s results.

The Group remains cautious on the challenges and uncertainties ahead in view of rising interest rates, foreign exchange exposure, and the performance of its construction projects affected by high construction costs.