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Financials

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

FY2017 vs FY2016

Revenue

The Group posted revenue of approximately S$134.54 million in FY2017 as compared to S$75.78 million in FY2016. The increase in the reported revenue for FY2017 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") during the financial year. 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 rose by 91.1% in FY2017 to approximately S$122.82 million as compared to approximately S$64.26 million in FY2016. 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. As at end of FY2017, the said project has registered sales of 83.2% hence resulting in a higher revenue contribution from property development as compared to the preceding financial year.

Revenue recognised from the provision of construction services to third parties was down by approximately 83.4% to approximately S$0.16 million in FY2017 as compared to approximately S$0.94 million in FY2016. The drop in revenue was due to the completion of most of the Group's third parties construction contracts.

Revenue recognised from property investment increased by 9.3% to approximately S$11.57 million in FY2017 as compared to approximately S$10.58 million in FY2016. The increment was attributed mainly to rental income received from the leased units in Loyang Enterprise.

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

The Group recorded a higher gross profit of approximately S$13.11 million in FY2017 as compared to approximately S$11.06 million in FY2016. This was largely attributed to higher sales achieved from the development project, Ace@Buroh in FY2017 as compared to the development project, Loyang Enterprise in FY2016. Despite higher gross profit for FY2017, the Group's GPM was lower at 9.7% as compared to 14.6% in FY2016. The reason for the lower GPM was attributed to the higher cost incurred in the development project, Ace@Buroh.

Other income

Other income for FY2017 was higher at approximately S$6.36 million as compared to S$2.39 million in FY2016. Amongst others, the increase was largely attributed to one-off income derived from goodwill received due to the finalisation of the final accounts for the Group's previously completed projects.

Other expenses

Other expenses for FY2017 increased to approximately S$66.27 million as compared to S$6.36 million back in FY2016. The Group undertook a property valuation exercise on all its property assets through an independent and reputable property valuation company. The results of the valuation exercise reflected the current downturn in the industrial property market segment. Consequent to the revaluation, the Group took an impairment loss on property, plant and equipment of approximately S$15.86 million which related solely to a property under Construction in Progress in the property, plant and equipment and the write-down in the value of the asset was to better reflect the current economic value of the said asset; a loss on revaluation of its investment properties of approximately S$27.22 million; a loss on revaluation of asset held for sale of approximately S$11.46 million; and a loss on revaluation of completed property held for sale of approximately S$10.47 million.

General and Administrative Expenses

General and administrative expenses increased by 7.4% from approximately S$17.01 million in FY2016 to S$18.27 million in FY2017. The increase was largely due to sales commissions which more than doubled from approximately S$3.21 million in FY2016 to approximately S$7.48 million in FY2017. This was a result of the recognition of sales commission arising from the sale of units of the development project, Ace@Buroh which obtained its 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$4.76 million in FY2016 to S$2.77 million in FY2017.

Finance Costs

Finance costs decreased by 6.5% from approximately S$10.09 million in FY2016 to S$9.43 million in FY2017. The decrease was due to the absence of interest from RCPS and lower outstanding bank loans during the year.

Share of profits of associate

The share of profits of associate in FY2017 amounted to approximately S$5.38 million as compared to S$3.40 million in the preceding financial year. The increase was mainly attributed to the completed BMW warehouse project which started contributing to the rental income in the current financial year.

Income Tax

Notwithstanding the loss for the year, income tax expense for FY2017 was approximately S$1.22 million. This was due to previously under provision of income tax in prior year.

Loss for the year

As a result of the foregoing, the Group registered a total loss of approximately S$70.34 million (of which $66.27 million was due to impairment and revaluation losses) in FY2017 as compared to a loss of S$16.89 million in FY2016.

STATEMENT OF FINANCIAL POSITION

As at 30 June 2017, total current assets stood at approximately S$173.60 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 year while unsold units are being held as completed properties held for sale. The cash and cash equivalents and trade and other receivables were also lower as at 30 June 2017. The overall reduction in current assets was partially offset by increases in asset held for sale which essentially represent the Group's investmentst in the associate, Pan Asia Logistics Investments Holdings Pte Ltd and Pan Asia Logistics Holdings Singapore Pte Ltd ("PAL group").

Total non-current assets stood at approximately S$142.85 million as at 30 June 2017 as compared to approximately S$213.55 million as at 30 June 2016. The reduction was a result of a write-down in the book value of a property under property, plant and equipment, and the transfer of the Group's investment in the PAL group to asset held for sale and classified under the total current assets.

As at 30 June 2017, total current liabilities reduced significantly to approximately S$164.82 million as compared to approximately S$386.58 million as at 30 June 2016. This was largely attributed to a reduction in the outstanding trade and other payables, redemption of the RCPS and REPS and a reduction in total bank loans and overdrafts. 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$63.93 million as at 30 June 2017 as compared to approximately S$19.54 million as at 30 June 2016. The increase was largely due to the refinancing of a bank loan which was classified as current liabilities as at 30 June 2016.

STATEMENT OF CASH FLOWS

Net cash inflow from operating activities

For the financial period ended 30 June 2017, the Group generated positive net cash inflow from operating activities of approximately S$26.86 million as compared to approximately S$30.16 million in FY2016. The net cash inflow was primarily due to proceeds from properties under development and completed properties held for sale, which was partially offset by the outflow from trade and other payables.

Net cash outflow in investing activities

The Group recorded net cash outflow of approximately S$0.30 million for FY2017 from investing activities as compared to net cash outflow of approximately S$16.88 million in the corresponding period last year. The net cash outflow in FY2017 related largely to the increase in the purchase of property, plant and equipment but partially offset by similar disposals.

Net cash inflow from financing activities

The Group recorded net cash outflow of approximately S$51.80 million from financing activities in FY2017 as compared to a net cash inflow of S$8.59 million in the corresponding period last year. The net cash outflow was largely due to a net repayment in bank loans and the redemption of both the RCPS and REPS. The cash outflow was partially offset by loan from third party and the issuance of new share capital.

As a result of the above, the Group recorded a net decrease in cash and cash equivalents of approximately S$25.25 million in FY2017.

Cash and cash equivalents as at 30 June 2017 stood at (including bank overdraft and fixed deposits pledged that totalled approximately S$9.48 million) approximately S$10.78 million.

Commentary

Notwithstanding the current state of the industrial real estate market in Singapore, the Group will start 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 will also be tapping on its business networks to pursue overseas businesses in the region.

The Group owns a diverse portfolio of development and investment properties as well as fixed assets. As part of its continuous review, the Group will assess 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.

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