Financial Statements And Related Announcement - Half 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$4.4 million or 15.4% to $33.4 million for the financial period ended 31 December 2020 (“HY2021”) from S$29.0 million for the financial period ended 31 December 2019 (“HY2020”).

  • Marine & Offshore Segment revenue in HY2021 decreased by 7.2% or S$2.1 million as compared to HY2020. The decrease was mainly attributable to decreased revenue contribution from the mooring and rigging business.
  • The increase in revenue by Property Development Segment was from the sale of a detached property at 88 Farleigh Avenue for S$6.5 million. The sale of the property was completed in December 2020.

  Gross profit

  The Group’s gross profit of S$10.8 million in HY2021 has increased by S$0.6 million or 5.5% from S$10.2 million in HY2020. The Group recorded a gross profit margin of 32.2% in HY2021 as compared to 35.2% in HY2020.

  • Marine & Offshore Segment contributed gross profit of S$10.1 million to the Group in HY2021 as compared to S$9.8 million in HY2020. The gross profit margin increased to 38.1% in HY2021 from 34.3% in HY2020.
  • Property Development Segment contributed gross profit of S$0.7 million to the Group in HY2021, of which S$0.5 million was contributed by the Group’s property consultancy business.

  Other income

  Other income increased by S$787,000 or 488.1% to S$948,000 in HY2021 from S$161,000 in HY2020. The increase was mainly due to the receipt of the grants and support schemes extended by the Singapore Government in view of the COVID-19 pandemic in HY2021.

  Distribution expenses

  Distribution expenses decreased by S$128,000 or 17.8% to S$592,000 in HY2021 from S$720,000 in HY2020. The decrease was mainly due to no travel for marketing and exhibition activities due to the travel bans and restrictions from the COVID-19 pandemic.

  Administrative expenses

  Administrative expenses increased by S$0.4 million or 6.8% to SS$7.0 million in HY2021 from S$6.6 million in HY2020. The increase was mainly due to increase in employee benefits expenses and related staff costs.

  Other operating expenses

  Other operating expenses decreased by S$63,000 in HY2021. The decrease was mainly due to absence of depreciation on investment properties because it ceased to depreciate in HY2021 after it was classified as assets held for sale as at 30 June 2020. The investment properties were sold on 21 October 2020.

  Finance income

  The decrease in the Group’s finance income, comprising mainly interest income, remained insignificant for HY2021.

  Finance costs

  The finance costs decreased by S$236,000 or 29.5% in HY2021 from S$800,000 in HY2020. The decrease was mainly due to lower interest rate in HY2021 and repayment of term loans.

  Income tax expense

  In HY2021, the Group incurred an income tax expense of S$0.5 million as compared to S$0.3 million in HY2020.

  Profit for the period

  The Group’s profit before tax is S$1.8 million in HY2021 as compared to S$0.5 million in HY2020, representing a 270.2% improvement. After accounting for income tax of S$0.5 million, the Group’s profit for HY2020 is S$1.3 million as compared to S$0.2 million in HY2020, representing a 638.9% improvement from the prior period.

  Total comprehensive income for the period

  After accounting for foreign currency translation differences, the total comprehensive profit for HY2021 is S$1.3 million, compared to S$0.1 million in HY2020.

• BALANCE SHEET REVIEW

  Non-current assets

  Non-current assets decreased by S$0.9 million to S$12.7 million as at 31 December 2020 from S$13.6 million as at 30 June 2020. The decrease was mainly due to the amortisation of right of use asset, depreciation of investment property, and depreciation of property, plant and equipment.

  Current assets

  Current assets decreased by S$10.8 million or 20.3% to S$42.2 million as at 31 December 2020 from $52.9 million as at 30 June 2020. The decrease was mainly due to the following:

  • Inventories decreased by S$1.1 million from S$22.3 million as at 30 June 2020 to S$21.3 million as at 31 December 2020, the decrease in inventory is in line with the decrease in sales of Marine & Offshore Segment’s revenue in HY2021. Despite the decrease in the inventory, the inventory turnover days for Marine & Offshore Segment in HY2021 increased to 243 days from 210 days in FY2020.
  • Development properties decreased by S$5.8 million from $10.8 million as at 30 June 2020 to S$5.0 million as at 31 December 2020. The decrease was due to sale of its Farleigh Avenue project during the period.
  • Trade and other receivables decreased by S$2.7 million, the decrease is in line with the decrease in sales of Marine & Offshore Segment’s revenue in HY2021. Trade and other receivables turnover days for the Marine & Offshore Segment decreased by 4 days from 65 days in FY2020 to 61 days in HY2021.
  • Assets held for sale decreased by S$3.2 million as at 31 December 2020 following the disposal of two leasehold properties, which were completed on 21 October 2020.

  The decrease stated above was offset by the increase in cash and cash equivalents by S$2.1 million. Please refer to the “Cash Flows Review” section below for details.

  Non-current liabilities

  Non-current liabilities decreased by S$2.1 million or 13.5% to S$13.2 million as at 31 December 2020 from S$15.3 million as at 30 June 2020. The decrease was due to the following:

  • Non-current portion of loans and borrowings decreased by S$1.6 million, due to (i) classification of land and construction loans of S$3.3 million to current portion and (ii) repayment of term loans of S$0.6 million. The decreases were offset by a S$2.3 million increase in term loans.
  • Amortisation of right of use liabilities of $0.5 million.

  Current liabilities

  Current liabilities decreased by S$10.9 million or 30.0% to S$25.5 million as at 31 December 2020 from S$36.4 million as at 30 June 2020. The decrease was due to the following:

  • Amortisation of right of use liabilities of S$0.5 million.
  • Current portion of loans and borrowings decreased by S$8.8 million, 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 of S$4.3 million.
  • Trade and other payables decreased by S$1.7 million due to decrease in purchases as a result of decrease in Marine & Offshore Segment’s revenue in HY2021.

  The decrease stated above was offset by the increase in current tax liabilities by S$0.1 million.

  Shareholders' equity

  Shareholders’ equity increased by S$1.4 million or 9.1% to S$16.2 million as at 31 December 2020 from S$14.9 million as at 30 June 2020. The increase was mainly due to the net profit recorded for HY2021 amounting to S$1.3 million.

• CASH FLOWS REVIEW

  Cash flows from operating activities

  Operating cash inflows before changes in working capital was S$3.2 million in HY2021. Net cash inflow from working capital was S$8.1 million mainly due to the following (the amounts below do not add up due to rounding and exclusion of non-significant line items):

  • Cash inflows arising from a decrease in inventories of S$1.1 million;
  • Cash inflows arising from a decrease in development properties of S$5.8 million;
  • Cash inflows arising from a decrease in trade and other receivables of S$2.8 million; and
  • Cash outflows arising from a decrease in trade and other payables of S$1.6 million

  After deducting income taxes paid of S$0.4 million, net cash from operating activities in HY2021 was S$10.9 million.

  Cash flows used in investing activities

  Net cash from in investing activities in HY2021 was S$2.8 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$0.3 million; and
  • Proceeds from sale of assets held for sale amounting to S$3.2 million

  Cash flows used in financing activities

  Net cash flows used in financing activities in HY2021 was S$11.5 million, attributable to the following:

  • Interest paid of S$0.6 million;
  • Repayment of bank borrowings and finance lease liabilities totalling S$25.3 million; and
  • Proceeds from bank borrowings amounting to S$14.4 million.

  As a result of the above, cash and cash equivalents increased by S$2.2 million during HY2021. Cash and cash equivalents as at 31 December 2020 were S$7.4 million.

• COMMENTARY

  Marine & Offshore Segment

  The COVID-19 pandemic continues to undermine the global economy and business environment as some countries re-impose lockdown amid virus resurgence. Despite the on-going vaccinations effort and gradual resumption of the Group’s operations, 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 property development segment to remain challenging due to constraints in manpower, higher operating costs and time resources to comply with COVID-19 safe management measures.

  In July 2020, the Group sold two leasehold properties located at 33 Ubi Avenue 3, #01-14 and #01-15, Singapore 408868 for S$3.2 million and this enabled the Group to realise the value of the properties and result in a positive cash inflow of S$800,000 (post-deductions for the payment of mortgage loan and the agent’s commission fee), thereby improving the liquidity of the Group.

  In December 2020, the Group also sold a detached house at Farleigh Avenue for S$6.5 million to an unrelated third party.

  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.