Financial Statements And Related Announcement - Half Yearly Results 2022

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• CONSOLIDATED INCOME STATEMENT
  
• STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
  
• CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
  
• FINANCIAL PERFORMANCE REVIEW

  Revenue

  Revenue decreased by S$6.9 million or 20.6% to S$26.5 million for the financial period from 1 July 2021 to 31 December 2021 ("HY2022") from S$33.4 million for the financial period from 1 July 2020 to 31 December 2020 ("HY2021").

  • Marine & Offshore Segment revenue decreased by 2.4% or S$0.6 million in HY2022 as compared to HY2021. This was mainly due to the decrease in revenue contribution from the water treatment and engineering businesses of S$0.7 million and S$0.4 million respectively, partially offset by the increase in revenue contribution from the mooring and rigging business.
  • Revenue contribution from Property Segment decreased by S$6.3 million in HY2022 as compared to HY2021. The decrease was mainly due to the absence of sale of a detached landed property, and this had also contributed to the decrease in cost of sales.

  Gross profit

  The Group's gross profit of S$10.8 million in HY2022 increased marginally by S$13,000 or 0.1% compared to HY2021. The Group's gross profit margin increased to 40.6% in HY2022 as compared to 32.2% in HY2021.

  • Marine & Offshore Segment contributed gross profit of S$10.2 million to the Group in HY2022 as compared to S$10.1 million in HY2021. The gross profit margin increased to 39.5% in HY2022 from 38.1% in HY2021.The increase in gross profit margin was mainly due to the change in sales mix.
  • Property Segment contributed gross profit of S$0.6 million to the Group in HY2022, of which S$0.5 million was contributed by the Group's property consultancy business.

  Other operating income

  Other operating income decreased by S$899,000 or 94.8% to S$49,000 in HY2022 from S$948,000 in HY2021. The decrease was mainly due to the reduction of the Singapore government's Jobs Support Scheme payouts of S$0.7 million and absence of foreign exchange gain S$0.2 million which was recognised in HY2021.

  Distribution expenses

  Distribution expenses increased by S$0.1 million or 19.5% to S$0.7 million in HY2022 from S$0.6 million in HY2021 due to rising freight costs in line with the increase in the amount of inventory purchased.

  Administrative expenses

  Administrative expenses increased marginally by S$14,000 or 0.2% in HY2022. The increase was mainly due to increase in professional fees.

  Other operating expenses

  Other operating expenses increased by S$0.3 million in HY2022. The increase was mainly due to:

  • Foreign exchange loss by S$0.2 million due to fluctuation in Euro ("EUR") against Singapore Dollar ("SGD").
  • Increase in warehouse rental expenses by S$0.1 million.

  Finance income

  Finance income, comprising mainly interest income from bank deposits, remained insignificant for HY2022.

  Finance costs

  Finance costs decreased by S$116,000 or 20.5% to S$448,000 in HY2022 from S$564,000 in HY2021. The decrease was mainly due to lower interest rates in HY2022 and repayment of term loans.

  Income tax expense

  In HY2022, the Group incurred an income tax expense of S$0.2 million as compared to S$0.5 million in HY2021.

  Profit for the period

  Combining the profit before tax of S$1.1 million for the Marine & Offshore Segment, loss before tax of S$0.2 million for the Property Segment and the unallocated head office expenses of S$0.3 million, the Group's profit before tax was S$0.6 million in HY2022 as compared to a profit before tax of S$1.8 million in HY2021. After accounting for income tax expense of S$0.2 million in HY2022, the Group's profit for HY2022 is S$0.4 million as compared to a profit of S$1.3 million in HY2021.

• BALANCE SHEET REVIEW

  Non-current assets

  Non-current assets increased to S$15.5 million as at 31 December 2021 from S$13.3 million as at 30 June 2021. This increase was mainly due to the following:

  • Acquisition of warehousing facility in Texas, United States of S$2.5 million.
  • Acquisition of plant and equipment of S$0.9 million.
  • Increase in right-of-use assets by S$0.1 million.

  The increase stated above was partially offset by the following:

  • Amortisation of right-of-use assets and depreciation of property, plant and equipment of S$0.8 million.
  • Modification of lease contracts of S$0.3 million.
  • The effect of movements in exchange rates for property, plant and equipment of foreign subsidiaries of S$0.1 million.
  • Disposal of investment in associate of S$0.1 million, comprising of a 26% equity interest in Paneltec Pte. Ltd. in November 2021.

  Current assets

  Current assets of S$43.6 million as at 31 December 2021 increased by S$33,000 or 0.1% as compared to 30 June 2021. The increase was mainly due to the following:

  • Inventories increased by S$4.0 million from S$21.2 million as at 30 June 2021 to S$25.2 million as at 31 December 2021. This is in line with Group's strategy to boost its supply chain resilience by increasing its inventory in order to minimise any unforeseen impact on supply chain disruption due to the COVID-19 pandemic. The inventory turnover days for Marine & Offshore Segment in HY2022 increased to 272 days from 236 days for the full year ended 30 June 2021 ("FY2021").
  • Development properties increased by S$0.1 million from S$5.4 million as at 30 June 2021 to S$5.5 million as at 31 December 2021. The increase arose from the redevelopment of a landed residential property located at 16 Lorong Salleh in Singapore.

  The increase stated above was offset by the following:

  • Trade and other receivables decreased by S$0.7 million, which is in line with the decrease in sales of Marine & Offshore Segment's revenue in HY2022. Trade and other receivables turnover days for the Marine & Offshore Segment decreased from 65 days in FY2021 to 62 days in HY2022.
  • Contract assets decreased by S$0.2 million from S$0.3 million as at 30 June 2021 to S$0.1 million as at 31 December 2021.
  • Cash and cash equivalents decreased by S$3.2 million from S$7.0 million as at 30 June 2021 to S$3.8 million as at 31 December 2021. Please refer to the "Cash Flows Review" section below for details.

  Non-current liabilities

  Non-current liabilities increased by S$0.1 million or 0.4% to S$12.4 million as at 31 December 2021 from S$12.3 million as at 30 June 2021. The increase was mainly due to the following:

  • Non-current portion of loans and borrowings increased by S$0.1 million, due to increase in term loan of S$1.9 million for the acquisition of warehousing facility in Texas, United States. The increase was partially offset by (i) repayment of term loans of S$1.2 million and (ii) repayment of lease liabilities of S$0.6 million.

  Current liabilities

  Current liabilities increased by S$2.1 million or 7.8% to S$28.5 million as at 31 December 2021 from S$26.4 million as at 30 June 2021. The increase was mainly due to the following:

  • Current portion of loans and borrowings increased by S$2.9 million, due to increase in (i) utilisation of trade facilities by S$1.9 million, and (ii) the drawdown of short-term revolving credit facilities by S$1.0 million for working capital purposes.

  The increase stated above was partially offset by the following:

  • Trade and other payables decreased by S$0.8 million mainly as a result of the completion of the 16 Lorong Salleh development project in HY2022.

  Shareholders' equity

  Shareholders' equity increased by S$0.1 million or 0.6% to S$18.2 million as at 31 December 2021 from S$18.1 million as at 30 June 2021. The increase was mainly due to the net profit recorded for HY2022 amounting to S$0.4 million, partially offset by the decrease in other reserves of S$0.3 million.

• CASH FLOWS REVIEW

  Operating cash inflows before changes in working capital was S$1.8 million in HY2022. Net cash outflows used in working capital was S$4.2 million due to the following:

  • Cash outflows arising from an increase in inventories of S$4.1 million;
  • Cash outflows arising from an increase in development properties of S$0.2 million;
  • Cash inflows arising from a decrease in contract costs of S$0.1 million;
  • Cash inflows arising from a decrease in trade and other receivables of S$0.7 million;
  • Cash inflows arising from a decrease in contract assets of S$0.2 million; and
  • Cash outflows arising from a decrease in trade and other payables of S$0.9 million.

  After deducting income taxes paid of S$0.3 million, net cash flows used in operating activities was S$2.7 million in HY2022.

  Net cash flows used in investing activities was S$1.4 million in HY2022 mainly due to the purchase of property, plant and equipment by the Marine & Offshore Segment.

  Net cash flows from financing activities was S$0.9 million in HY2022, mainly due to the following:

  • Proceeds from bank borrowings amounting to S$12.6 million.
  • Interest paid of S$0.5 million; and
  • Repayment of bank borrowings and lease liabilities totalling S$11.2 million.

  As a result of the above, cash and cash equivalents decreased by S$3.2 million in HY2022 from S$7.0 million as at 30 June 2021 to S$3.8 million as at 31 December 2021.

• COMMENTARY

  Marine & Offshore Segment

  The Group continues to see the ongoing challenges presented in the global supply chain brought on by the COVID-19 pandemic. The Group has taken steps to boost its supply chain resilience by increasing its inventory in order to minimise any unforeseen impact of a supply chain disruption caused by the COVID-19 pandemic.

  The Group continues to maintain a cautious outlook for the rest of the year and 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

  The Group is closely monitoring external factors that may impact the performance of the Property Segment, such as the prevailing COVID-19 pandemic, manpower shortages and the Singapore government's recent announcement on 15 December 2021 of the new property cooling measures, which include higher additional buyers' stamp duty, tighter debt thresholds and lower loan limits.

  Notwithstanding the current economic climate, we will continue to explore strategic investments and remain vigilant in the current business environment