News

Half Year Financial Statement For The Period Ended 30 June 2003

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year

 

	Note	The Group	The Group	The Group
		S$'000	S$'000	%
		30 June 2003	30 June 2002	Increase/
				(Decrease)
Turnover	i	28,814	23,248	24
Cost of works	ii	(25,359)	(20,058)	26
Gross Profit	iii	3,455	3,190	8
Other income including interest income	iv	63	109	(42)
Administrative expenses		(1,778)	(1,392)	28
Other operating expenses	v	(20)	(7)	186
Profit from operating before taxation, minority interests, extraordinary items, finance cost	vi	1,720	1,900	(9)
Finance costs	vii	(96)	(144)	(33)
Operating profit before taxation	viii	1,624	1,756	(8)
Taxation	ix	(419)	(464)	(10)
Net profit after taxation	x	1,205	1,292	(7)


Explanatory Notes

i) Turnover


Turnover increased by $5.6 million or 24% from $23.2 million for 1H2002 to $28.8 million for 1H2003. This was due mainly to an increase in turnover from road maintenance activities.


ii) Cost of works

Cost of works increased by $5.3 million or 26% from $20.1 million for 1H2002 to $25.4 million for 1H2003 which was in line with the increase in turnover.


iii) Gross profit

Gross profit improved by $0.3 million or 8% from $3.2 million for 1H2002 to $3.5 million for 1H2003 resulting from the cost control measures in place.


iv) Other income

The decrease in other income of $0.04 million or 42% was largely attributable to a lower rental income and gain on disposal of fixed assets.

v) Other operating expenses


Other operating expenses increased by $0.01 million or 186% from $0.01 million for 1H2002 to $0.02 million for 1H2003. This was due mainly to a higher loss on disposal of fixed assets in 1H2003.

vi) Profit from operations before taxation and finance costs

Profit from operations before taxation and finance costs declined by $0.2 million or 9% due mainly to the increase in the cost of works as explained in note (ii).


vii) Finance costs

Finance costs decreased by $0.01 million or 33% from $0.1 million for 1H2002 to $0.09 million for 1H2003. This was due mainly to lower finance interest incurred for the financing of the fixed assets following repayment of hire purchase creditors and term loans from funds generated from operations.


viii) Profit from operations after finance costs but before taxation


Profit from operations after finance costs but before taxation was lower as a result of lower profit from operations before taxation and finance costs as explained in note (vi) above which was partially offset by a decrease in finance costs of $0.01 million as explained in note (vii).

 

ix) Taxation


Taxation decreased by $0.1 million from $0.5 million for 1H2002 to $0.4 million for 1H2003 following the decrease in profit before taxation.


x) Net profit after taxation


Net profit after taxation decreased by $0.1 million from $1.3 million for 1H2002 to $1.2 million for 1H2003 as a result of lower profit before taxation as explained in note (viii) above.

Additional disclosure


i) Operating profit before taxation (note ix) was arrived:

	The Group	The Group	The Group
	S$'000	S$'000	%
	30 June 2003	30 June 2002	Increase/
			(Decrease)
After charging:-
Amortisation of goodwill	106	120	(12)
Auditors' remuneration
- Audit	22	14	57
- Others	2	1	100
Depreciation of fixed assets	178	187	(5)
Directors' remuneration	682	298	129
Directors' fee	60	-	nm
Interest
- Hire purchase	51	54	6
- Bank overdrafts	-	10	nm
- Long term bank loans	45	78	(42)
Loss on disposal of fixed assets	20	7	186
Staff costs	450	454	(1)
After crediting:-
Fixed deposits income	12	14	14
Gain on disposal of fixed assets	-	30	nm
Gain in foreign exchange	3	-	nm


nm: not meaningful


ii) Included in the cost of works are the following:-



Depreciation of fixed assets	621	449	38
Staff costs	3,886	3,328	17

 

iii) Amount of any adjustment for under or overprovision of tax in respect of prior years


There were no material adjustments for under or overprovision of tax in respect of prior years.


iv) Amount of any pre-acquisition profits

There are no pre-acquisition profits.

v) Amount of profits on any sale of investments and/or properties


Sale of investment properties	Profit/(Loss)
nil	-


 

1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year

 

	The Group	The Group	The Company	The Company
	S$'000	S$'000	S$'000	S$'000
	30 Jun 2003	31 Dec 2002	30 Jun 2003	31 Dec 2002
Fixed assets	8,033	7,934	58	66
Subsidiaries	-	-	13,926	13,926
Investment properties	934	934	-	-
Intangible assets	1,818	1,923	-	-
Current assets
Construction in progress	2,202	849	-	-
Trade debtors	10,009	11,944	-	-
Other debtors, deposits and prepayments	532	697	108	10
Amount due from related party (trade)	-	-	865	1,844
Amount due from related parties (non-trade)	-	-	200	204
Fixed deposits	3,226	4,523	-	-
Cash and bank balances	6,457	4,948	24	92
	22,426	22,961	1,197	2,150
Current liabilities
Trade creditors	8,832	10,121	18	-
Other creditors	36	9	-	-
Amount due to a subsidiary (non-trade)	-	-	-	31
Hire purchase creditors	840	786	11	11
Long term bank loans (secured) - current portion	140	140	-	-
Accrued operating expenses	1,769	1,293	120	235
Provision for income tax	645	972	6	185
	12,262	13,321	155	462
Net current assets	10,164	9,640	1,042	1,688
Less:
Non-current liabilities
Hire purchase creditors	(1,023)	(971)	(36)	(42)
Long term bank loans (secured)	(1,795)	(1,866)	-	-
Deferred taxation	(415)	(415)	-	-
	17,716	17,179	14,990	15,638
Represented by:
Share capital	13,626	13,626	13,626	13,626
Share Premium	1,329	1,329	1,329	1,329
Dividend reserve	-	668	-	668
Unappropriated profits	2,761	1,556	35	15
	17,716	17,179	14,990	15,638

Explanatory Notes

i) Fixed assets


The net book value of fixed assets increased by $0.1 million or 1% from $7.9 million as at 31 December 2002 to $8.0 million as at 30 June 2003. This was due mainly to the addition of fixed assets comprising mainly plant and machinery to support the on-going projects.

ii) Current assets

Current assets decreased by $0.5 million from $22.9 million as at 31 December 2002 to $22.4 million as at 30 June 2003. The decrease was due mainly to:


(a) Decrease in trade debtors by $1.9 million due to settlement of billings at month end; and
(b) Increase in construction in progress by $1.4 million because the costs incurred for some of the on-going projects exceeds the progress claim certified by the customers as at 30 June 2003.

iii) Current liabilities


The decrease in current liabilities by $1.0 million or 8% from $13.3 million as at 31 December 2002 to $12.3 million as at 30 June 2003 was due mainly to a decrease in trade creditors by $1.3 million resulting from settlement of a few significant invoices near month end.

iv) Shareholders' equity

Shareholders' equity which comprised share capital, share premium and unappropriated profits, increased by $0.5 million from $17.2 million as at 31 December 2002 to $17.7 million as at 30 June 2003. This was mainly a result of profits generated from operations.



 

1(b)(ii) Aggregate amount of group's borrowings and debt securities


Amount repayable in one year or less, or on demand



As at 30/06/2003

As at 31/12/2002

Secured	Unsecured	Secured	Unsecured
980,000	0	926,000	0



Amount repayable after one year



As at 30/06/2003

As at 31/12/2002

Secured	Unsecured	Secured	Unsecured
2,818,000	0	2,837,000	0



Details of any collateral

As at 30 June 2003, properties with net book value as follows were mortaged to banks to secure banking facilities for the subsidaries:

	The Group	The Group
	As at 30 Jun 2003	As at 31 Dec 2002
	$'000	$'000
Freehold building and investment properties mortgaged to banks	3,827	3,857

Hire puchase financing is secured on the respective fixed assets.


 

1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year

 


 

	The Group	The Group
	30 Jun 2003	30 Jun 2002
	$'000	$'000
Cash flows from operating activities
Profit before tax	1,624	1,756
Adjustments for:
Depreciation of fixed assets	799	636
Amortisation of intangible assets	106	120
Loss on disposal of fixed assets	20	7
Gain on disposal of fixed assets	-	(30)
Fixed deposit interest income	(12)	(14)
Hire purchase interest	51	54
Bank overdraft interest	-	10
Long term bank loans interest	45	78
Operating profit before working capital changes	2,633	2,617
Construction in progress	(1,353)	(1,066)
Trade debtors	1,935	2,993
Other debtors, deposits and prepayments	165	(134)
Amount due from directors of the company (non-trade)	-	1,590
Amount due from directors of subsidaries (non-trade)	-	75
Amount due from related parties (non-trade)	-	118
Amount due from shareholders of the company (non-trade)	-	14
Trade creditors	(1,289)	(2,884)
Other creditors	27	(22)
Amount due to a director of a subsidary (non-trade)	-	(11)
Accrued operating expenses	476	183
Cash generated from operations	2,594	3,473
Hire purchase interest paid	(51)	(54)
Bank overdraft interest paid	-	(10)
Long term bank loans interest paid	(45)	(78)
Fixed deposit interest income	12	14
Income tax paid	(746)	(706)
Net cash generated from operating activities	1,764	2,639
Cash flows from investing activities
Purchase of fixed assets	(439)	(168)
Proceeds from disposal of fixed assets	168	659
Net cash generated (used in) / from investing activities	(271)	491
Cash flow used in financing activities
Payment to hire purchase creditors	(542)	(469)
Proceeds from long term bank loans	-	1,100
Payment of dividends to shareholders	(668)	(1,892)
Repayment of long term bank loans	(71)	(1,329)
Repayment of short term bank loans	-	(50)
Net cash generated used in financing activities	(1,281)	(2,640)
Net increase in cash and cash equivalents	212	490
Cash and cash equivalents at beginning of year	9,471	5,087
Cash and cash equivalents at end of the period (Note i)	9,683	5,577


Explanotary notes

i) For the purpose of the consolidated cash flow statement, the consolidated cash and cash equivalents at the end of the financial period comprised as follows:



	The Group	The Group
	30 Jun 2003	30 Jun 2002
Cash and cash equivalents
Fixed deposits	3,226	4,507
Cash and bank balances	6,457	1,558
Bank overdrafts	-	(488)
	9,683	5,577


ii) Net increase in cash and cash equivalents for 1H2003 of $0.2 million was due mainly to net cash generated from operations of $1.8 million partially offset by the purchase of fixed assets and repayment of hire purchase creditors, long term loans and dividend payments to shareholders, in aggregate of, $1.7 million.

For 1H2002, the positive net cash flow of $0.5 million was due mainly to the net cash generated from operating activities of $2.6 million partially offset by the purchase of fixed assets, repayment of hire purchase creditors, long term loans and dividend payments to shareholders, in aggregate of, $3.9 million.


 

1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year

 

The Group

	Issued Capital	Share Premium	Dividend Reserve	Reserves	Total
	$'000	$'000	$'000	$'000	$'000
Balance at 1 January 2002	11,426	-	-	-	11,426
Initial Public Offering	2,200	2,200	-	-	4,400
Share issue expenses	-	(871)	-	-	(871)
Profit for the year	-	-	-	2,224	2,224
Dividends for 2002 - proposed	-	-	668	(668)	-
Balance at 31 December 2002	13,626	1,329	668	1,556	17,179
Profit for the period	-	-	-	1,205	1,205
Dividends for 2002 - paid	-	-	(668)	-	(668)
Balance at 30 June 2003	13,626	1,329	-	2,761	17,716

The Company

	Issued Capital	Share Premium	Dividend Reserve	Reserves	Total
	$'000	$'000	$'000	$'000	$'000
Balance at 1 January 2002	11,426	-	-	-	11,426
Initial Public Offering	2,200	2,200	-	-	4,400
Share issue expenses	-	(871)	-	-	(871)
Profit for the year	-	-	-	683	683
Dividends for 2002 - proposed	-	-	668	(668)	-
Balance at 31 December 2002	13,626	1,329	668	15	15,638
Profit for the period	-	-	-	20	20
Dividends for 2002 - paid	-	-	(668)	-	(668)
Balance at 30 June 2003	13,626	1,329	-	35	14,990

1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year


There have been no changes to the issued share capital of the Company since 31 December 2002.



2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. the Singapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalent standard)


The figures have not been audited or reviewed.



3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter)

 

Not applicable.

 

4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied


The Group has applied the same accounting policies and methods of computation in the financial statements for the current reporting period compared with the financial statements as at 31 December 2002.



5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change


Not applicable.



6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

 

		The Group	The Group
		30 Jun 2003	30 Jun 2002
(a)	Based on the weighted average number of ordinary shares on issue (cents)	0.88	0.95
(b)	On fully diluted basis (cents)	na	na

Earnings per ordinary share for the half year ended 30 June 2002 and 30 June 2003 was calculated based on the number of shares in issue of 136,260,940 ordinary shares of $0.10 each.



 

7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year

 

	The Group	The Group	The Company	The Company
	30 Jun 2003	31 Dec 2002	30 Jun 2003	31 Dec 2002
Net asset value per ordinary share (cents)	11.67	11.20	11.00	11.48

Net asset value per ordinary share as at 31 December 2002 and 30 June 2003 was calculated based on the number of shares in issue of 136,260,940 ordinary shares of $0.10 each.


 

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

 

	Turnover	Turnover	Increase/ (Decrease)	Profit before interest and tax	Profit before interest and tax	Increase/ (Decrease)
	30/6/2003	30/6/2002		30/6/2003	30/6/2002
	$'000	$'000	%	$'000	$'000	%
Road construction	12,953	13,664	(5)	841	1,603	(48)
Road maintenance	15,861	9,584	66	879	297	196
Total	28,814	23,248	24	1,720	1,900	(9)

 

(i) Turnover

 

Despite the continued softness in the construction industry, our Group registered robust growth and posted a 24% rise in turnover. Our turnover grew from $23.2 million for 1H2002 to $28.8 million for 1H2003.

The increase was mainly attributable to higher turnover generated from our new road maintenance projects which accounted for, approximately $10 million of our turnover from road maintenance activities for 1H2003. However, these contributions were dampened by a drop in turnover generated by our road construction activities.

(ii) Profitability

 

Our Group reported a profit from operations before taxation of $1.6 million as compared to $1.8 million for the previous corresponding period. The slight drop of $0.2 million or 8% was due mainly to the decrease in profit before taxation and finance costs from the road construction activities of $0.8 million. The decrease resulted from an increase in cost of works which was due mainly to an increase in construction material costs as a percentage of revenue from the road construction activities increased from 22.8% for 1H2002 to 29.4% for 1H2003. The slow-down in the construction industry has exerted an upward pressure on the construction material prices in particular cement, ready-mix concrete and steel reinforcement bars.


(iii) Cashflow

 

The cashflow of our Group improved significantly from $5.6 million as at 30 June 2002 to $9.7 million as at 30 June 2003. The improvement was due mainly to the cash proceeds from the Company's IPO and cash generated from operations. Our Group is in healthy financial position and we will retain additional cash reserves in our Group for future expansion.


 

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results


Not applicable.



10. A commentary at the date of the announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months


The construction market in Singapore continues to be in the doldrums. According to the latest report by the Ministry of Trade and Industry, total contracts awarded plummeted by 44% and overall certified payments suffered a 22% drop in the first quarter 2003 as compared to the fourth quarter of 2002.

Despite the continued contraction of the construction industry in Singapore coupled with the increasingly competitive bidding environment, we have demonstrated great resilience. We have managed to add 3 new projects to our defensive order book in the first half of 2003. At the date of this announcement, our construction order book stands healthy with a total of 16 on-going projects worth $143.6 million of which $103.1 million is expected to contribute to our Group's revenue for 2003 and thereafter. These projects include the Construction of Covered Pedestrian Overhead Bridge and Bus Bays at Woodlands Avenue 2, Widening of Kim Keat Road from Balestier Road to Lorong Limau, Construction of All Outstanding Works for Roads, Drains, Sewers and Improvement at North of Palau Merlimau, Jurong Island and the Construction of Pedestrian Overhead Bridge at Tampines Avenue 5, all secured during the first half of 2003.

Singapore has been our Group's traditional market for the past 37 years. As the construction industry continues to decline in Singapore, we are currently seeking new overseas markets for growth through regionalisation of our core business. We have identified Cambodia, India and China as our potential markets.

In view of the sluggish economic sentiments, the outlook of the construction industry is expected to remain weak. We will remain selective in tendering for projects that yield reasonable returns and continue our cost cutting exercise to maintain operational efficiency and competitiveness.

Given the gloomy outlook for the construction sector in Singapore and the uncertainities in the prevailing market conditions, we will remain focused on our core business with the aim to enhance our competitiveness.



11. Dividend


(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on? None
(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year? None

(c) Date payable

Not applicable.


(d) Books closure date

Not applicable.



12. If no dividend has been declared/recommended, a statement to that effect


No dividend has been declared/recommended for the half year ended 30 June 2003. The first and final dividend of 0.49 cents (one tier tax-exempt) for the year ended 31 December 2002 was approved at the Company's Annual General Meeting on 30 April 2003 and the dividend was paid on 29 May 2003.




13. Interested person transactions disclosure



 

	Interested Party	Relationship	For half year ended 30 June 2003	For year ended 31 Dec 2002
			$'000	$'000
a	Purchase of fixed assets
	Sin Kah Heng Motor Trading Co	Sin Kah Heng is owned by sister-in-law of Mr Or Kim Peow, our Chairman	137	348
	Or Toh Wat	Or Toh Wat is our Executive Director	-	22
	Oh Enc Nam	Oh Enc Nam is our Executive Director	-	5
	Citysafe Pte Ltd	Directors of Citysafe Pte Ltd are Mr Or Kim Peow, our Chairman, Or Toh Wat, our Group Managing Director and Or Kiam Meng, Executive Director	-	8
b	Sale of proporty
	Or Toh Wat, Or Kiam Meng and Or Lay Huat, Daniel	Or Toh Wat, our Group Managing Director, Or Kiam Meng, our Executive Director, Or Lay Huat, Daniel is son of Mr Or Kim Peow, our Chairman	-	600
c	Provision for legal services
	Loo & Partners	Mr Loo Choon Chiaw, our independent director, is the Managing Partner of Messrs Loo & Partners	1	133
d	Provision for management consultancy fees
	Or Lay Wah, Elaine	Or Lay Wah, Elaine is daughter of Mr Or Kim Peow, our Chairman	-	25
e	Sale of equipment
	Helmi Construction Pty Ltd	Helmi Construction Pty Ltd is owned by Alvin Chua who is the brother-in-law of Or Toh Wat, our Group Managing Director.	8	-

This release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, and governmental and public policy changes. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events.



 

PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT
(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

 

13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year


Not applicable.



14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments


Not applicable.



15. A breakdown of sales


Not applicable.



16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year


Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details)



	Latest Full Year ()	Previous Full Year ()
Ordinary
Preference	0	0
Total:


 

 


 

BY ORDER OF THE BOARD

Or Toh Wat
Group Managing Director
28/07/2003