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Financial Statements

Third Quarter Results Financial Statement And Related Announcement

Financials Archive

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Unaudited Financial Statements and Related Announcement for the Third Quarter Ended 31 December 2017

Income Statement

NM – not meaningful

Comprehensive Income Statement

NM – not meaningful

Review of Performance

Overview

The Group’s revenue is largely derived from project-oriented businesses and as such, quarterly results would not accurately reflect the full-year performance. Full-year to full-year comparisons are more appropriate for analytical purposes.

For 3Q FY2018, the Group registered revenue of $102.2 million, total profit of $12.1 million and profit attributable to equity holders of the Company (“net profit”) of $7.8 million. Revenue, total profit and net profit were 12%, 14% and 17% lower year-on-year respectively.

For 9M FY2018, the Group registered revenue of $297.4 million, total profit of $30.6 million and net profit of $17.8 million. Revenue, total profit and net profit were 13%, 16% and 26% lower year-onyear respectively.

The swing from other gains in 3Q/9M FY2017 to other losses in 3Q/9M FY2018 was mainly due to the currency exchange effects, which significantly lowered total profit and net profit. After adjusting for other gains/losses net of non-controlling interests, net profit for 3Q FY2018 and 9M FY2018 would be 40% and 16% higher year-on-year respectively than the previous year’s comparative periods.

Greater contributions by the Group’s separately listed Real Estate Solutions Division (under Boustead Projects Limited) to total profit in both 3Q FY2018 and 9M FY2018, resulted in the greater dilutive effect of non-controlling interests on net profit.

3Q FY2018 Division Revenue

Segment Revenue

Each division’s revenue performance for 3Q FY2018 is summarised below.

The prolonged global oil & gas recession continued to weigh on revenue at the Energy-Related Engineering Division, which came in at $25.4 million. Final investment decisions on major oil & gas capital expenditures saw a minor pickup during the quarter. The division’s revenue growth of 15% year-on-year was mainly attributable to a marked improvement in revenue contribution by the division’s water & wastewater engineering business, with a focus on the energy sector.

Faced with a challenging industrial real estate sector in Singapore, the Real Estate Solutions Division (under Boustead Projects) registered revenue that was 28% lower year-on-year at $47.9 million, with lower revenue contributions from both the design-and-build and leasing businesses.

Firm demand for products and services at the Geo-Spatial Technology Division lifted revenue 6% higher year-on-year to $28.4 million.

3Q FY2018 Group Profitability

The Group’s overall gross profit for 3Q FY2018 increased 3% year-on-year to $38.9 million, with the overall gross margin improving to 38% compared to 33% in 3Q FY2017, largely due to the better gross margin achieved by Boustead Projects. Nonetheless, gross margin pressure remains present across the Group.

Other losses for 3Q FY2018 were $1.3 million, mainly due to currency exchange losses and fair value losses which together amounted to $1.4 million. This contrasted with other gains for 3Q FY2017 of $3.1 million, mainly due to currency exchange gains.

Total overhead expenses for 3Q FY2018 edged down 6% year-on-year to $21.9 million (selling and distribution expenses of $7.3 million, and administrative expenses of $14.6 million). The previous year’s comparative period included administrative expenses based on full strength teams at the Energy-Related Engineering Division before these teams were right-sized in 4Q FY2017.

Finance expenses for 3Q FY2018 declined 6% year-on-year following the scheduled repayment of borrowings by Boustead Projects in relation to the industrial leasehold portfolio.

Share of loss of an associated company and joint ventures for 3Q FY2018 was $1.2 million, due to Boustead Projects eliminating construction and project management profits attributable to projects which Boustead Projects has entered into with an associated company and joint ventures.

Profit before income tax (“PBT”) for 3Q FY2018 fell 13% year-on-year to $15.4 million, mainly due to other losses, and partially offset by higher gross profit and lower overhead expenses. A breakdown of PBT by divisions is provided as follows.

The Group achieved broad-based profitability in 3Q FY2018.

Total profit for 3Q FY2018 declined 14% year-on-year to $12.1 million. The Group’s effective tax rate was 21% compared to 20% in 3Q FY2017.

Net profit for 3Q FY2018 decreased 17% year-on-year to $7.8 million, mainly due to greater contributions by Boustead Project

3Q FY2018 Statement of Cash Flows

During 3Q FY2018, cash and cash equivalents (after taking into account the effects of currency translation) decreased $6.2 million to $280.8 million, largely as a result of net cash outflows for investing and financing activities.

Net cash inflow for operating activities amounted to $9.6 million, after accounting for a negative change in working capital of $7.7 million.

Net cash outflow for investing activities amounted to $6.2 million, mainly due to $5.3 million in additional loans extended to an associated company and joint ventures.

Net cash outflow for financing activities amounted to $7.7 million, mainly for the scheduled repayment of borrowings and dividend payments to shareholders as well as non-controlling interests.

Statement of Financial Position

At the end of 9M FY2018, the Group’s financial position remained healthy.

Under assets, cash and cash equivalents increased to $280.8 million from $276.5 million at the end of FY2017. Total trade receivables significantly climbed on greater invoicing by the Group for completed work. Total other receivables and prepayments fell, mainly due to the receipt of proceeds from the disposal of an available-for-sale financial asset. Net contracts work-in-progress rose to $12.9 million due to uninvoiced work completed for clients. Total available-for-sale financial assets increased, largely due to reinvestment allocations made as part of the Group’s Cash Management Programme.

Under liabilities, total borrowings decreased to $85.0 million following the scheduled repayment of borrowings by Boustead Projects in relation to the industrial leasehold portfolio.

The Group’s net asset value per share strengthened to 62.8 cents at the end of 9M FY2018 from 61.7 cents at the end of FY2017, while the net cash position (i.e. net of all bank borrowings) was $195.8 million at the end of 9M FY2018, translating to a net cash per share position of 37.5 cents. In addition, the Group held $72.3 million in available-for-sale financial assets and financial assets held for trading at the end of 9M FY2018, of which almost three quarters of the amount is highly liquid.

Commentary On Current Year Prospects

The Group’s current order book backlog stands at about $350 million (unrecognised project revenue remaining at the end of 3Q FY2018 plus the total value of new orders secured since then), of which $83 million is under the Energy-Related Engineering Division and $267 million is under the Real Estate Solutions Division.

The current macro economic environment continues to be highly challenging and competitive, with a great amount of uncertainty contributed by global political events. In light of this, the Group will continue to apply prudent cost management measures and invest in business development initiatives.

Given the Group’s healthy net cash position of $195.8 million, available-for-sale financial assets and financial assets held for trading of $72.3 million, and wide range of financing options, the Group continues to uphold an excellent position to capitalise on any good acquisition and investment opportunities that may arise.

The Group believes it will continue to be profitable in FY2018.

Balance Sheet


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