First Quarter Results Financial Statement And Related Announcement
Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
NM – not meaningful
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 1Q FY2019, total revenue increased 18% year-on-year to $107.0 million. Total profit rose 200% year-on-year to $18.1 million and profit attributable to equity holders of the Company (“net profit”) climbed 315% year-on-year to $12.2 million, mainly supported by a combination of better operating performance and sizeable other gains.
Sizeable other gains were recorded mainly due to a completed sale of 25 Changi North Rise under the Group’s separately listed Real Estate Solutions Division (under Boustead Projects Limited), along with currency exchange movements.
For a comparative review after adjusting for other gains/losses net of non-controlling interests, net profit for 1Q FY2019 would have been approximately S$3.3 million or 72% higher year-on-year than 1Q FY2018.
Each division’s revenue performance for 1Q FY2019 is summarised below.
With the gradual improvement in the outlook of the global oil & gas industries, the Energy-Related Engineering Division’s revenue grew 4% year-on-year to $19.4 million. Client enquiries and major oil & gas expenditures were under more active review as compared to one year earlier.
Carrying forward a healthy order book backlog at the end of FY2018, the Real Estate Solutions Division’s (under Boustead Projects) revenue rose 7% year-on-year to $48.8 million. Higher designand-build revenue was partially offset by lower leasing revenue.
The Geo-Spatial Technology Division lifted revenue 51% higher year-on-year to $38.7 million. Revenue was supported by steady demand across exclusive markets in Australia and parts of South East Asia, and further boosted by a change in revenue recognition in adopting SFRS(I) 15.
The Group’s overall gross profit for 1Q FY2019 increased 26% year-on-year to $41.5 million, with the overall gross margin improving to 39% compared to 36% in 1Q FY2018. Nonetheless, gross margin pressure exists across the Group.
Other gains for 1Q FY2019 were $7.9 million, mainly due to the $5.9m gain on sale of 25 Changi North Rise by Boustead Projects and currency exchange gains of $1.5 million. This sharply contrasted with other losses for 1Q FY2018 of $1.6 million, mainly due to currency exchange losses.
Total overhead expenses for 1Q FY2019 increased 12% year-on-year to $25.0 million (selling and distribution expenses of $8.4 million, and administrative expenses of $16.6 million), in line with team expansions at the Real Estate Solutions Division and Geo-Spatial Technology Division in order to execute strategic growth plans.
Finance expenses for 1Q FY2019 declined 15% year-on-year to $0.4 million following the scheduled repayment of borrowings by Boustead Projects in relation to the leasehold portfolio.
Share of loss of an associated company and joint ventures for 1Q FY2019 was 63% higher year-onyear at $1.6 million, largely driven by 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 1Q FY2019 increased 183% year-on-year to $23.9 million, mainly supported by a combination of better operating performance with improved margins and sizeable other gains. A breakdown of PBT by divisions is provided as follows.
The PBT performance of the Energy-Related Engineering Division for 1Q FY2019 benefitted from significant currency exchange gains, resulting in broad-based profitability across all three divisions in 1Q FY2019.
Total profit for 1Q FY2019 rose 200% year-on-year to $18.1 million due to reasons mentioned earlier. The Group’s effective tax rate was 25% compared to 29% in 1Q FY2018.
Net profit for 1Q FY2019 climbed 315% year-on-year to $12.2 million due to reasons mentioned earlier.
During 1Q FY2019, cash and cash equivalents (after taking into account the effects of currency translation) increased by $15.1 million to $280.5 million, largely driven by net cash inflows for operating activities, and partially offset by net cash outflows for investing and financing activities.
Net cash inflows for operating activities amounted to $22.0 million, after accounting for a positive change in working capital of $1.8 million.
Net cash outflows for investing activities amounted to $5.1 million, mainly due to $15.5 million paid to acquire the new Healthcare Division (under WhiteRock Incorporation Pte Ltd) net of cash acquired, and partially offset by $10.5 million in proceeds from the sale of 25 Changi North Rise by Boustead Projects.
Net cash outflows for financing activities amounted to $1.3 million, solely for the scheduled repayment of borrowings by Boustead Projects in relation to the leasehold portfolio.
At the end of 1Q FY2019, the Group’s financial position remained healthy and also included the consolidated balance sheet of the new Healthcare Division.
Under assets, cash and cash equivalents increased to $280.5 million as explained under the earlier section on 1Q FY2019 Statement of Cash Flows. Total trade receivables, other receivables and prepayments were significantly higher due to greater invoicing to clients, prepayments and the inclusion of the Healthcare Division. Similarly, the exponential rise in inventories was largely due to the Healthcare Division. Properties held for sale dropped to $26.2 million with the sale of 25 Changi North Rise by Boustead Projects. The exponential rise in investments in associated companies was largely due to the Healthcare Division.
Reclassifications of financial assets held for trading and available-for-sale financial assets to investment securities were due to the adoption of SFRS(I) 9 as explained earlier in Note 5.
Under liabilities, total trade and other payables were significantly higher mainly due to greater invoicing by subcontractors and suppliers, deferred revenue and the inclusion of the Healthcare Division. Total borrowings edged up with the inclusion of the Healthcare Division, partially offset by the scheduled repayment of borrowings by Boustead Projects in relation to the leasehold portfolio.
Under equity, adjustments to other reserves and retained profits were due to the adoption of SFRS(I) 1 and SFRS(I) 9 as explained earlier in Note 5.
The Group’s net asset value per share strengthened to 67.1 cents at the end of 1Q FY2019 from 63.5 cents at the end of FY2018, while the net cash position (i.e. net of all bank borrowings) strengthened to $208.5 million at the end of 1Q FY2019, translating to a net cash per share position of 42.3 cents. In addition, the Group held $66.3 million in investment securities at the end of 1Q FY2019, of which about half of the amount is highly liquid.
The Group won $69 million in contracts since the start of FY2019. The current order book backlog stands at a healthy $304 million (unrecognised project revenue remaining at the end of 1Q FY2019 plus the total value of new orders secured since then), of which $102 million is under the EnergyRelated Engineering Division and $202 million is under the Real Estate Solutions Division.
As mentioned in the Group’s FY2018 Annual Report released in July 2018, the Group continues to see a gradual improvement in the outlook across the sectors in which the Group operates in, although the business environment still remains challenging. In addition, the newly acquired Healthcare Division, which joined the Group at the end of 1Q FY2019, will make maiden contributions in the remaining quarters of FY2019.
With a healthy balance sheet and net cash position, and wide range of financing options, the Group continues to be in an excellent position to capitalise on any good acquisition and investment opportunities that may arise.
Barring unforeseen circumstances and shifts in the global economic outlook, the Group believes that it can continue to deliver steady results in FY2019.