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Full Year 2018 Financial Statements Announcement

Financials Archive

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INCOME STATEMENT FOR THE FOURTH QUARTER ("4Q2018") AND FINANCIAL YEAR ENDED 30 JUNE 2018 ("FY2018")

Statement of Comprehensive Income for the Fourth Quarter ("4Q2018") and Financial Year Ended 30 June 2018 ("FY2018")

Balance Sheet

Review of the performance

Review on Group's Financial Results

Full Year ended 30 June 2018 (FY2018) vs Full Year ended 30 June 2017 (FY2017)

The Group reported revenue of $146.9 million in FY2018, an increase of $2.1 million or 1.5% from $144.8 million in FY2017. The increase was primarily from the Group's bored piling segment offset with the decrease in revenue of eco-friendly piling, geoservices and others segment.

Cost of sales increased from $126.5 million in FY2017 to $181.9 million in FY2018. Based on the current financial situation faced by the Group, the management has reassessed the project costs incurred to-date for all of its current projects. The higher than expected project costs was due to difficult ground conditions stumbled upon by certain major projects, coupled with stringent regulatory requirements and adverse working conditions, which has resulted in project cost overrun. Accordingly, there was a significant reduction in the estimated project margins from certain of the major projects.

In addition, the Group has to operate under unfavourable trade terms and purchase prices granted by its major suppliers and main contractors and this was aggravated following the announcement made on the receipt of letters of demand from the various financial institutions and creditors since June 2018, which has elevated the project costs estimated to complete the on-going projects.

Consequently, the Group recorded a gross loss of approximately $35.0 million in FY2018.

Other income increased was mainly due to the increase in sales of minor and other assets.

The increase in administrative expenses was mainly due to the increase in administrative staff costs and impairment loss made in relation to the trade and other receivables during the financial year.

The Group reversed from other gains of $1.1 million in FY2017 to other losses of $1.6 million in FY2018. Other losses in FY2018 include loss on disposal of available-for-sale financial assets of $1.6 million, exchange loss of $1.3 million and impairment loss made on investment in associates of $0.6 million. The losses were partially offset by a gain on disposal of property, plant and equipment of $1.9 million. Other gains in FY2017 was mainly related to exchange gain of $0.9 million.

The higher finance costs was as a result of increase in borrowings and higher interest rates.

The income tax expense was in relation to the profitable entities within the Group.

As a result of the above, the Group registered a loss for the year of $58.8 million.

3 months ended 30 June 2018 (4Q2018) vs 3 months ended 30 June 2017 (4Q2017)

The Group reported revenue of $24.2 million in 4Q2018, a decrease of $18.6 million or 43.5% from $42.8 million in 4Q2017. The decreased was mainly contributed by bored piling, ecofriendly piling, geoservices and others segments.

The cost of sales increased from $38.3 million in 4Q2017 to $70.3 million in 4Q2018. Based on the current financial situation faced by the Group, the management has reassessed the project costs incurred to-date for all of its current projects. The higher than expected project costs was due to difficult ground conditions stumbled upon by certain major projects, coupled with stringent regulatory requirements and adverse working conditions, which has resulted in project cost overrun. Accordingly, there was a significant reduction in the estimated project margins from certain of the major projects.

In addition, the Group has to operate under unfavourable trade terms and purchase prices granted by its major suppliers and main contractors and this was aggravated following the announcement made on the receipt of letters of demand from the various financial institutions and creditors since June 2018, which has elevated the project costs estimated to complete the on-going projects.

Consequently, the Group recorded a gross loss of approximately $46.0 million during the period.

Administrative expenses increased was mainly due to impairment loss made on the trade and other receivables during the period.

Other losses in 4Q2018 was mainly comprised of impairment loss made on investment in associates of $0.6 million offset with foreign exchange gain of $0.4 million. Other losses in 4Q2017 was mainly related to exchange loss of $0.5 million offset with gain on disposal of property, plant and equipment of $0.1 million.

As a result of the above, the Group registered a loss for the period of $52.5 million.

Review of Statements of Financial Position and Cash Flow

Current Assets

Current assets decreased by $36.2 million were mainly due to the followings:

  1. Decrease in trade and other receivables of $9.1 million was mainly due to collection and impairment loss made on trade and other receivables.

  2. Decrease in inventories of $3.3 million mainly due to inventories written down to its net realisable value.

  3. Decrease in construction contract work-in-progress of $10.7 million mainly due to projects completed during the year.

  4. Decrease in cash and cash equivalents of approximately $13.1 million as a result of total cashflow generated from investing and financing activities of $6.2 million offset with net cash used in operating activities amounted to $19.3 million.

Non-Current Assets

Non-current assets decreased by $7.9 million were mainly attributable to the followings:

  1. Decrease in property, plant and equipment of $3.7 million. The decrease was mainly due to depreciation charge of $16.0 million which was partially offset with the purchase of property, plant and equipment of $13.0 million.

  2. Decrease in available-for-sales financial assets mainly due to funds received and disposal.

Current Liabilities (excluding borrowings)

Decrease in trade and other payables of $4.5 million was mainly due to payments made to the trade payables during the year.

Total Borrowings

Net increase in total borrowings were mainly due to fund drawdown for working capital purpose.

Commentary

Outlook

The business environment for the next 12 months remains uncertain and challenging due to the Reorganisation. The Company will continue to update the SGX-ST, shareholders and the investing public on any material developments on a timely basis.

Currently, the Group continue to operate focusing on expeditious completion of its on-going projects as well as prudent cost management. The Group's net order book as at 30 June 2018 stood at $146.9 million, comprising projects from public infrastructure, public housing, residential, commercial and geoservices. External factors such as keen competition, rising costs and tight labour market will continue to add pressure on the Group's performance. The Group will continue to pursue new project selectively as and when opportunity is available.

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