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Unaudited Financial Statements and Related Announcement for the Financial Year ended 30 June 2018

Financials Archive

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Consolidated Statement of Comprehensive Income

Profit & Loss

Balance Sheet

Balance Sheet

Review of Performance

STATEMENT OF COMPREHENSIVE INCOME

Revenue

The Group posted revenue of approximately S$25.27 million in FY2018 as compared to S$134.54 million in FY2017. The decrease in the reported revenue for FY2018 was attributed largely to the Group's property development segment as a result of its development project, Ace@Buroh which has obtained its temporary occupancy permit ("TOP") in FY2017 while no project obtained TOP in FY2018. The Group adheres to the accounting requirement known as the completion of contract ("COC") method used for commercial and industrial properties, hence revenue recognised from the property development segment is expected to be volatile from year to year.

Revenue recognised from property development decreased by 92.2% in FY2018 to approximately S$9.63 million as compared to approximately S$122.82 million in FY2017. As the Group's property development project, Ace@Buroh, achieved its TOP in March 2017, the revenue from this property project was recognised in FY2017 which accounted for 83.2% of available units while revenue for FY2018 is made up of sales of several units of Ace@Buroh and Loyang Enterprise.

Revenue recognised from the provision of construction services to third parties increased by approximately 112.2% to approximately S$0.33 million in FY2018 as compared to approximately S$0.16 million in FY2017. The increase in revenue was due the finalisation of accounts for a past project during the current year.

Revenue recognised from property investment increased by 32.3% to approximately S$15.31 million in FY2018 as compared to approximately S$11.57 million in FY2017. The increment was attributed mainly to rental income received from the leased units in Loyang Enterprise and Ace@Buroh.

Gross Profit ("GP") / Gross Profit Margin ("GPM")

The Group recorded a lower gross profit of approximately S$8.25 million in FY2018 as compared to approximately S$13.11 million in FY2017. This was largely attributed to lowers sales achieved from the development projects, Ace@Buroh and Loyang Entreprise in FY2018 as compared to FY2017. Despite lower gross profit for FY2018, the Group's GPM was higher at 32.6% as compared to 9.7% in FY2017. The reason for the higher GPM was attributed to the higher rental contribution from our investment properties.

Other income

Other income for FY2018 was higher at approximately S$12.25 million as compared to S$6.36 million in FY2017. Amongst others, the increase was largely attributed to one-off income derived from gain on disposal of non-current assets held for sale and investment properties, gain on revaluation of investment properties and liquidated damages income.

Other expenses

Other expenses for FY2018 decreased to approximately S$0.96 million as compared to S$66.27 million back in FY2017. In FY2017, the Group undertook a property valuation exercise on all its property assets through an independent property valuation company. The results of the valuation exercise reflected the downturn in the industrial property market segment. With the industrial property market segment beginning to stablise, less impairments were required in FY2018, hence resulting in the significant drop in other expenses.

General and Administrative Expenses

General and administrative expenses decreased by 54.7% from approximately S$18.27 million in FY2017 to S$8.27 million in FY2018. The decrease was largely due to sales and rental commissions which decreased by approximately S$6.80 million from FY2017 to S$0.69 million in FY2018. This was a result of the recognition of sales commission arising from the sale of units of the development project Ace@Buroh when it obtained TOP in FY2017. Other than that, the Group embarked on a cost-cutting exercise which saw its staff and related costs decreased from approximately S$2.77 million in FY2017 to S$1.71 million in FY2018. The decrease in professional fees, depreciation due to the sales of property plant and equipment further attributed to the decrease in general and administrative expenses.

Finance Costs

Finance costs decreased by 21.0% from approximately S$9.43 million in FY2017 to S$7.45 million in FY2018. The decrease was due to the lower outstanding bank loans and lower interest rate of loan from controlling interests during the year.

Share of Profits of Associate

There was no share of profits of associate for FY2018 as the investments in associate has been classified as assets held for sale and the Group no longer equity account for the said investment.

Income Tax Credit (Expense)

For FY2018, income tax was a credit of S$0.78 million as compared to a tax expense of S$1.22 million for FY2017. The tax credit for FY2018 was due to adjustments made to prior year taxation based on the Estimated Chargeable Income statement received from the tax authorities which resulted in a tax refund.

Profit (Loss) for the year

As a result of the foregoing, the Group registered a total profit of approximately S$4.60 million in FY2018 as compared to a loss of S$70.34 million (of which $66.27 million was due to impairment and revaluation losses) in FY2017.

STATEMENT OF FINANCIAL POSITION

As at 30 June 2018, total current assets stood at approximately S$112.69 million as compared to S$173.60 million as at 30 June 2017. The reduction in total current assets was attributed largely to completed properties held for sale whereby units from the projects Ace@Buroh and Loyang Enterprise was sold during the year and recognised as revenue, additional units leased out from these projects were also classified as investment properties. The sale of non-current assets held for sale during the year further attributed to the decrease in total current assets. The cash and cash equivalents and trade and other receivables were also lower as at 30 June 2018.

Total non-current assets stood at approximately S$163.74 million as at 30 June 2018 as compared to approximately S$142.85 million as at 30 June 2017. The increase was a result of the transfer of the Group's completed properties held for sale to investment properties.

As at 30 June 2018, total current liabilities reduced significantly to approximately S$123.77 million as compared to approximately S$164.83 million as at 30 June 2017. This was largely attributed to a reduction in the outstanding trade and other payables, a reduction in total bank loans and overdrafts and a reduction in loan from third party. The overall reduction in current liabilities was partially offset by the classification of loan from controlling interest from non-current liabilities to current liabilities.

Total non-current liabilities decreased to approximately S$60.36 million as at 30 June 2018 as compared to approximately S$63.93 million as at 30 June 2017. The decrease was largely due to the bank loan which was classified to current liabilities as at 30 June 2018, the decrease was largely offset by the increase in loan from controlling interests.

STATEMENT OF CASH FLOWS

Net cash outflow/inflow from operating activities

For the financial period ended 30 June 2018, the Group generated net cash outflow from operating activities of approximately S$6.21 million as compared to a net cash inflow of approximately S$26.86 million in FY2017. The net cash outflow was primarily due to outflow due to payment of trade and other payables and finance cost, which was partially offset by the proceeds from trade and other receivables and completed properties held for sale.

Net cash inflow/outflow from investing activities

The Group recorded net cash inflow of approximately S$13.47 million for FY2018 from investing activities as compared to net cash outflow of approximately S$0.30 million in the corresponding period last year. The net cash inflow in FY2018 related largely to proceeds from the disposal of investment properties, non-current assets held for sale and property, plant and equipment.

Net cash outflow from financing activities

The Group recorded net cash outflow of approximately S$15.34 million from financing activities in FY2018 as compared to a net cash outflow of S$51.80 million in the corresponding period last year. The net cash outflow was largely due to a repayment in bank loans, loan from third parties and profit sharing paid to non-controlling interests. The cash outflow was partially offset by additional loan from third party and controlling interests and the decrease in fixed deposits pledged during the year.

As a result of the above, the Group recorded a net decrease in cash and cash equivalents of approximately S$8.08 million in FY2018.

Cash and cash equivalents as at 30 June 2018 stood at (excluding bank overdraft and fixed deposits pledged that totalled approximately S$3.72 million) approximately S$2.70 million.

Commentary

Notwithstanding the current state of the industrial real estate market in Singapore, the Group has started looking for attractive industrial land for development opportunities. Given its success in Addition & Alteration ("A&A") works and rental income from its Kim Yam Road, Herencia property, the Group will continue to look out for opportunities to undertake A&A to similar buildings to generate a recurrent income stream. The Group is pursuing overseas businesses in the region and has signed a Strategic Cooperation Agreement with Ping An Industrial and Logistics Co., Ltd to develop and manage warehouses in various cities in China. The Group is currently exploring various cities for the potential collaboration with Ping An Industrial and Logistics Co., Ltd.

The Group owns a diverse portfolio of development and investment properties as well as fixed assets. As part of its continuous review, the Group is assessing the relevance of the properties and fixed assets against its overall strategies. The Group may monetise some of these assets through sales so as to further strengthen the financial strength of the Group as it explores new business opportunities.