Financial Statements And Related Announcement - Full Yearly Results 2021

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• CONSOLIDATED INCOME STATEMENT
  
• STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
  
• BALANCE SHEET
  
• FINANCIAL PERFORMANCE REVIEW

  Revenue

  Revenue increased by S$2.5 million or 4.3% to S$61.8 million for the financial year ended 30 June 2021 (“FY2021”) from S$59.3 million for the financial year ended 30 June 2020 (“FY2020”).

  • Marine & Offshore Segment revenue in FY2021 decreased by 7.0% or S$4.1 million in FY2021 as compared to FY2020. The decrease was mainly attributable to decreased revenue contribution from the mooring and rigging business. The water treatment and engineering business contributed to a decrease of S$0.7 million and S$0.4 million respectively.
  • Revenue contribution from Property Segment increased by S$6.6 million in FY2021 as compared to FY2020. The increase was attributable to the sale of a detached landed property.

  Gross profit

  The Group’s gross profit of S$21.8 million in FY2021 decreased by S$0.3 million or 1.3% from S$22.1 million in FY2020. The Group’s gross profit margin also decreased to 35.3% in FY2021 as compared to 37.3% in FY2020.

  • Marine & Offshore Segment contributed gross profit of S$20.5 million to the Group in FY2021 as compared to S$21.2 million in FY2020. Despite the decrease in gross profit, the gross profit margin increased to 37.8% in FY2021 from 36.3% in FY2020. The increase in gross profit margin was mainly due to change in sales mix.
  • Property Segment contributed gross profit of S$1.3 million to the Group in FY2021, of which S$1.1 million was contributed by the Group’s property consultancy business.

  Other operating income

  Other income increased by S$0.6 million or 78.0% to S$1.4 million in FY2021 from S$0.8 million in FY2020. The increase was mainly due to the receipt of the Singapore Government’s Job Support Scheme payouts of S$0.8 million which was recognised in FY2021. The increase was offset by the absence of rental income from investment properties which were disposed of in the current year.

  Distribution expenses

  Distribution expenses decreased by S$0.2 million or 12.1% to S$1.2 million in FY2021 from S$1.4 million in FY2020. The decrease was mainly due to cancellation of business travel and trade exhibition as a result of the travel bans and restrictions arising from the COVID-19 pandemic.

  Administrative expenses

  Administrative expenses decreased by S$47,000 or 0.4% mainly due to reduction in bank charges and employee benefit expenses.

  Other operating expenses

  Other operating expenses decreased by S$1.0 million in FY2021. The decrease was mainly due to:

  • Absence of foreign exchange loss by S$0.4 million due to fluctuation in United States Dollar (“USD”) against Singapore Dollar (“SGD”).
  • Absence of fair value loss on interest rate swap of S$0.2 million.
  • Decrease in impairment loss on trade and other receivables and contract assets by S$0.1 million.
  • Absence of impairment loss on investment property of S$0.1 million.
  • Decrease in depreciation of property, plant and equipment and investment properties by S$0.2 million, which is due mainly to the absence of depreciation on investment properties as it had been disposed of during the year.
  • Decrease in bad debts written off by S$37,000 to S$2,000 in FY2021 from S$39,000 in FY2020.
  • Decrease in transportation, entertainment, telecommunication and general expenses by S$16,000 as most of the employees were working from home due to the COVID-19 pandemic.

  Finance income

  The decrease in the Group’s finance income, comprising mainly interest income from bank deposits, remained insignificant for FY2021.

  Finance costs

  Finance costs decreased by S$0.5 million or 34.5% in FY2021 from S$1.5 million in FY2020. The decrease was mainly due to lower interest rates in FY2021 and repayment of term loans.

  Income tax expense

  In FY2021, the Group incurred an income tax expense of S$0.9 million as compared to S$0.8 million in FY2020.

  Profit for the year

  Combining the profit before tax of S$4.7 million for the Marine & Offshore Segment, loss before tax of S$0.2 million for the Property Development Segment and the unallocated head office expenses of S$0.4 million, the Group’s profit before tax was S$4.1 million in FY2021 as compared to a profit before tax of S$2.0 million in FY2020. After accounting for income tax of S$0.9 million, the Group’s profit for FY2021 is S$3.2 million as compared to a profit of S$1.2 million in FY2020.

• FINANCIAL POSITION REVIEW

  Non-current assets

  Non-current assets decreased to S$13.3 million as at 30 June 2021 from S$13.6 million as at 30 June 2020. This decrease was mainly due to the following:

  • Depreciation of property, plant and equipment of S$0.3 million.
  • Utilisation of deferred tax assets in current year of S$0.1 million.

  The decrease was offset by the following:

  • Investment in associates of S$0.1 million, comprising of a 26% equity interest in Paneltec Pte. Ltd. in September 2020.

  Current assets

  Current assets of S$43.6 million as at 30 June 2021 decreased by S$9.3 million or 17.7% from S$52.9 million as at 30 June 2020. The decrease was mainly due to the following:

  • Assets held for sale decreased by S$3.2 million following the disposal of two leasehold properties in the current year.
  • Inventories decreased by S$1.1 million from S$22.3 million as at 30 June 2020 to S$21.2 million as at 30 June 2021. The decrease in inventory is in line with the decrease in sales of Marine & Offshore Segment’s revenue in FY2021. Despite the decrease in the inventory, the inventory turnover days for Marine & Offshore Segment in FY2021 increased to 236 days from 210 days in FY2020. The increase in inventory turnover days was mainly due to slowdown in sales during the year.
  • Development properties decreased by S$5.4 million from S$10.8 million as at 30 June 2020 to S$5.4 million as at 30 June 2021. The decrease was due to the sale of the Farleigh Avenue project during the period.
  • Trade and other receivables decreased by S$1.2 million, which is in line with the decrease in sales of Marine & Offshore Segment’s revenue in FY2021.
  • Tax recoverable decreased by S$0.1 million

  The decrease stated above was offset by the increase in cash and cash equivalents by S$1.7 million. Please refer to the “Cash Flows Review” section below for details.

  Non-current liabilities

  Non-current liabilities decreased by S$3.0 million or 19.3% to S$12.3 million as at 30 June 2021 from S$15.3 million as at 30 June 2020. The decrease was mainly due to the following:

  • Non-current portion of loans and borrowings decreased by S$2.8 million, mainly due to (i) reclassification of land and construction loans of S$3.3 million to current portion and (ii) repayment of term loans of S$2.1 million. The decreases were offset by S$2.6 million increase in term loans.
  • Decrease in lease liabilities by S$0.1 million as a result of payments of lease liabilities of S$0.3 million and termination of lease contracts of S$0.3 million. The decreases were mitigated by addition of new leases of S$0.5 million.
  • Fair value adjustment on derivatives financial liabilities of S$0.1 million.

  Current liabilities

  Current liabilities decreased by S$10.0 million or 27.4% to S$26.4 million as at 30 June 2021 from S$36.4 million as at 30 June 2020. The decrease was mainly due to the following:

  • Decrease in lease liabilities of S$0.3 million as a result of payments of lease liabilities of S$0.6 million and termination of lease contracts of S$0.2 million. The decreases were mitigated by addition of new leases of S$0.5 million.
  • Current portion of loans and borrowings decreased by S$9.2 million, mainly due to (i) repayment of land and construction loans of S$4.5 million as the Group sold its development at 88 Farleigh Avenue and (ii) repayment of term loans and trust receipts of S$28.5 million. The decreases were offset by a reclassification of land and construction loans of S$3.3 million from the non-current portion as well as a S$20.5 million increase in term loans and trust receipts.
  • Trade and other payables decreased by S$0.1 million due to decrease in purchases as a result of decrease in Marine & Offshore Segment revenue in FY2021.
  • Contract liabilities decreased by S$0.1 million.
  • Current tax liabilities decreased by S$0.3 million.

  Shareholders' equity

  Shareholders’ equity increased by S$3.2 million or 21.7% to S$18.1 million as at 30 June 2021 from S$14.9 million as at 30 June 2020. The increase was mainly due to the net profit recorded for FY2021 amounting to S$3.2 million.

• CASH FLOWS REVIEW

  Cash flows from operating activities

  Operating cash inflows before changes in working capital was S$6.7 million in FY2021. Net cash inflow used in working capital was S$7.6 million due to the following:

  • Cash inflows arising from a decrease in inventories of S$1.2 million;
  • Cash inflows arising from a decrease in development properties of S$5.5 million;
  • Cash outflows arising from an increase in contract costs of S$0.1 million;
  • Cash inflows arising from a decrease in trade and other receivables of S$1.1 million;
  • Cash inflows arising from a decrease in contract assets of S$0.1 million;
  • Cash outflows arising from an increase in trade and other payables of S$0.1 million; and
  • Cash outflows arising from an increase in contract liabilities of S$0.1 million.

  After deducting income taxes paid of S$1.0 million, net cash from operating activities in FY2021 was S$13.3 million.

  Cash flows used in investing activities

  Net cash from investing activities in FY2021 was S$2.4 million, attributed to the following:

  • Investment in an associate company amounting to S$0.1 million;
  • Purchase of property, plant and equipment by the Marine & Offshore Segment totalling S$0.8 million;
  • Proceeds from sale of assets held for sale amounting to S$3.2 million; and
  • Proceeds from sale of plant and equipment amounting to S$0.1 million.

  Cash flows from financing activities

  Net cash used in financing activities in FY2021 was S$14.0 million, mainly attributable to the following:

  • Interest paid of S$1.1 million;
  • Repayment of bank borrowings and lease liabilities totalling S$36.0 million; and
  • Proceeds from bank borrowings amounting to S$23.1 million.

  As a result of the above, cash and cash equivalents increased by approximately S$1.7 million during FY2021. Cash and cash equivalents as at 30 June 2021 were S$7.0 million.

• COMMENTARY

  Marine & Offshore Segment

  The COVID-19 pandemic continues to undermine the global economy and business environment as some countries re-impose lockdowns amid the resurgence of COVID-19 driven by the Delta variant. The Group continues to maintain a cautious outlook for the rest of the financial year.

  We will continue to be progressive in our mooring and rigging business by exploring and assessing accretive business opportunities while being prudent with operational cost management.

  Property Development Segment

  We expect the operating conditions in the property development segment to remain challenging due to constraints in manpower, higher operating costs and time resources, in view of the prevailing COVID-19 pandemic.

  Notwithstanding the current economic climate, we remain vigilant in our Property Development Segment with an emphasis of maintaining good cash conservation and cost management measures.