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Unaudited Financial Statements and Related Announcement for the Third Quarter and Three Months ended 31 March 2017

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

3QFY2017 vs 3QFY2016

The Group posted revenue of approximately S$107.94 million in 3QFY2017 as compared to S$82.42 million in the previous corresponding period in 3QFY2016. The difference in the reported revenue in the said current quarter was attributed largely to the Group's development project, Ace@Buroh which has obtained its temporary occupancy permit ("TOP") during the 3QFY2017.

In 3QFY2017, there was almost no contribution to the revenue from Construction due to the completion of most of the third party construction contracts in the earlier quarters. Revenue from Property Development in 3QFY2017 came in at approximately S$105.03 million largely due to the development project, Ace@Buroh as mentioned above and sale of four units over at the other development project, Loyang Enterprise. Revenue from Property Investment for 3QFY2017 was approximately S$2.91 million, 11.5% higher as compared to S$2.61 million in 3QFY2016. The increment was attributed mainly to rental income received from the leased units in Loyang Enterprise.

For 9MFY2017, the Group posted revenue of approximately S$126.31 million as compared to S$88.30 million in 9MFY2016. The increase in revenue was essentially attributed to revenue from Property Development, amounting to approximately S$117.64 million for 9MFY2017 as compared to S$79.81 million in 9MFY2017. The revenue contribution from Property Development arose as a result of the recognition of revenue from the development project at Ace@Buroh after obtaining the TOP and coupled with the sale of some units over at the development project at Loyang Enterprise. The Group has completed all its third parties construction contracts in 9MFY2017 as compared to multiple on-going third party construction contracts in 9MFY2016, hence the lower revenue recognised in 9MFY2017. Revenue recognised from Property Investment increased by 11.2% from approximately S$7.66 million in 9MFY2016 to approximately S$8.51 million in 9MFY2017. The increment was attributed mainly to rental income received from the leased units in Loyang Enterprise.

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

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

The Group recorded a gross profit of approximately S$2.15 million in 3QFY2017, as compared to S$11.16 million in 3QFY2016. For 9MFY2017, gross profit recorded was also lower at S$7.64 million as compared to S$13.08 million in 9MFY2016. The reason for the lower gross profit in 3QFY2017 and for 9MFY2017 was due to higher cost incurred in the development projects.

Other income

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

Other income for 3QFY2017 was higher at approximately S$0.77 million as compared to S$0.27 million in 3QFY2016. For 9MFY2017, other income was also much higher at approximately S$4.46 million as compared to S$0.55 million in 9MFY2016. The increase was largely attributed to one-off income derived from discounts and goodwill received from suppliers and sub-contractors for our previously completed projects.

General and Administrative Expenses

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

General and administrative expenses increased significantly from approximately S$4.67 million in 3QFY2016 to S$26.57 million in 3QFY2017. For 9MFY2017, general and administrative expenses was also much higher at approximately S$32.37 million as compared to S$11.14 million in 9MFY2016. The factors contributing to the increases were largely due to the recognition of sales commission arising from the sale of units over at the development project, Ace@Buroh and an impairment on property, plant and equipment amounting to approximately S$15.91 million. The Group has decided to write down the book value of its property, plant and equipment after performing a valuation on it. The overall increase in general and administrative expenses was partially offset by reduction in other expenses which, amongst others, lower depreciation, repair and maintenance and other staff and related costs.

Finance Costs

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

Finance costs decreased by 19.3% from approximately S$2.52 million in 3QFY2016 to S$2.04 million in 3QFY2017. The decrease is due to the absence of interest from REPS that was redeemed in 1QFY2017 and lower outstanding bank loans. The decrease was partially offset by a lower interest capitalisation rate due to the lesser on-going projects as compared to 3QFY2016 and interest from third party loans.

For 9MFY2017, finance costs increased by 9.2% from approximately S$6.29 million in 9MFY2016 to S$6.86 million in 9MFY2017. The increments were mainly due to interest from third party loans and lower project capitalisation rate as most of the Group's projects had obtained TOP. The increase was partially offset by reduction in interest from bank loans due to the lower outstanding bank loans.

Share of profits of associate

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

The share of profits of associate for 3QFY2017 was approximately S$0.46 million as compared to S$0.83 million in 3QFY2016. The decrease was due to lower unrealised foreign exchange gain in the subsidiary of the associate in Malaysia for this quarter compared to the corresponding period. For 9MFY2017, the share of profits of associate was also lower at approximately S$1.11 million, down from S$1.13 million in 9MFY2016.

Income Tax

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

With the ensuing losses for the period, income tax for the quarter was a credit at approximately S$0.22 million as compared to a tax expense of S$2.10 million in 3QFY2016.

Notwithstanding the loss for the 9MFY2017, income tax expense was approximately S$0.02 million as compared to S$2.16 million in 9MFY2016. This was due to previously under provided income tax payable.

Loss/Profit for the period, net of tax

3QFY2017 vs 3QFY2016/ 9MFY2017 vs 9MFY2016

As a result of the foregoing, the Group registered a net loss of approximately S$30.51 million in 3QFY2017 as compared to a net profit of S$2.97 million in 3QFY2016 and a net loss of S$31.54 million in 9MFY2017 as compared to a net loss of S$4.81 million in 9MFY2016.

STATEMENT OF FINANCIAL POSITION

As at 31 March 2017, total current assets stood at approximately S$198.74 million as compared to S$300.84 million as at 30 June 2016. The reduction in total current assets was attributed largely to properties under development after the development project, Ace@Buroh obtained its TOP. Units of the said project that has been sold were recognised as revenue in the current quarter while unsold units are being held as properties held for sale. The reduction in current assets was partially offset by increases in trade and other receivables and also completed properties held for sale.

Total non-current assets increased to approximately S$224.09 million as at 31 March 2017 as compared to approximately S$213.55 million as at 30 June 2016. The increment was attributed largely to an increase in investment property from approximately S$127.48 million to approximately S$150.60 million but was partially offset by a reduction in the property, plant and equipment from approximately S$31.19 million to S$11.47 million.

As at 31 March 2017, total current liabilities reduced significantly to approximately S$263.17 million as compared to approximately S$386.58 million as at 30 June 2016. This was a result of repayment in bank loans, reduction in loan due to associate during the period, redemption of the RCPS and REPS and a reduction in total trade and other payables. In addition, the reduction in current liabilities was also due to a re-classification of a bank loan from current liabilities to non-current liabilities as at 31 March 2017. The overall reduction in current liabilities was partially offset by the additional loan of S$20.00 million from third party taken up during the period under review.

Total non-current liabilities increased to approximately S$26.98 million as at 31 March 2017 as compared to approximately S$19.54 million as at 30 June 2016. The increase was mainly due to a reclassification of a bank loan from current liabilities to non-current liabilities.

STATEMENT OF CASH FLOWS

Net cash inflow from operating activities

For the financial period 3 months ended 31 March 2017, the Group generated positive net cash inflow from operating activities of approximately S$9.35 million as compared to approximately S$26.26 million in 3QFY2016. The net cash inflow was primarily due to proceeds from properties under development, which was partially offset by the outflow from trade and other receivables, trade and other payables and completed properties held for sale.

Net cash outflow in investing activities

The Group recorded net cash outflow of approximately S$4.13 million for 3QFY2017 from investing activities as compared to net cash outflow of approximately S$6.05 million in the corresponding period last year. The net cash outflow in 3QFY2017 related mainly to the additions to investment properties which was partially offset by disposal of property, plant and equipment.

Net cash inflow from financing activities

The Group recorded net cash inflow of approximately S$1.44 million from financing activities in 3QFY2017 as compared to a net cash inflow of S$7.87 million in the corresponding period last year. The net cash inflow was largely due to increase in loan from third party and net increase in bank loans.

As a result of the above, the Group recorded a net increase in cash and cash equivalents of approximately S$6.66 million in 3QFY2017.

Cash and cash equivalents as at 31 March 2017 stood at (including bank overdraft and fixed deposits pledged that totalled approximately S$4.70 million) approximately S$36.01 million.

Commentary

The Group's remaining property development project, namely Ace@Buroh has obtained the TOP on 30 March 2017. It's another milestone reached by the Group where it has now completed all its development projects for sale. The Group is working closely with its designated marketing agents and recently, the Group has re-launched our marketing effort for the remaining unsold units for both Ace@Buroh and Loyang Enterprise. Barring any unforeseen circumstances, the Group is cautiously optimistic that with the right pricing and marketing strategies, the Group should be able to move more of the unsold units in Ace@Buroh and Loyang Enterprise in the forthcoming periods.