Extracted from Annual Report 2016
2016 had been a challenging year characterised by uncertainties in the global economy and political environment. Singapore's construction sector grew by 0.2% in 2016 due to the sluggish demand from the private sector. Manpower shortage, rising operation costs and strong competition had led to an erosion of margins for construction companies, especially when the property market remained subdued.
Nevertheless, the Group managed to score several achievements in the form of successful public infrastructure tenders during the year and continued to deliver strong financial performance in FY2016.
During the year in review, the Group reported a 32% decrease in revenue to $118.1 million, although revenue contribution from the Civil Engineering segment increased by $40.1 million, with the ramping up of construction work for the stabling yard at Gali Batu. The decrease is attributed to the fact that our sales of Ark@KB project was recognised in March 2015 and there were no other development project recognition for our Property Development segment during the current financial period. Concurrently, revenue from our Investment Property segment was only S$0.2 million as our workers' dormitory has ceased operation since end 2015.
Meanwhile, the share of result of joint venture was $11.5 million as compared to $8.0 million reported for FY2015, mainly due to the recognition of sales and obtainment of Temporary Occupation Permit (TOP) in May for the Skywoods project. All units for the project were fully sold as of July 2016.
In view of the above, net profit for the year fell marginally by 2.1% to $35.9 million but our cash and cash equivalents gained 31.3% to reach $206.0 million as of 31 December 2016. Shareholders' equity surged 10.6% to stand at $245.0 million.
In view of the Group's stable performance, we are proposing a first and final cash dividend of 2.5 cents per ordinary share and a special cash dividend of 10.0 cents per ordinary share, subject to approval at the Annual General Meeting (AGM) to be held on 25 April 2017. This is in line with our commitment to share our earnings with our shareholders as a form of appreciation for their support.
During the year, the Group was awarded a $1.1 billion project from Changi Airport Group ("CAG") through a joint venture ("JV") with Sembcorp Design and Construction Pte Ltd, of which the Group owns 60% participating interest. The project secured was for the proposed development works to effect three-runway operations at Changi Airport. Commencing in August 2016, the project is expected to be substantially completed by 2022, leading the Group to achieve a new order book milestone of S$950 million.
To date, the Group's order book includes Maxwell MRT station construction, two Changi Airport projects and the Stabling Yard at Gali Batu Depot. Concurrently, the construction of our latest B2 industrial development property located at Tuas South Ave 7 (Shine@tuassouth) has also commenced with completion expected in 2018. We have marketing plans in place to promote the units and are well-poised to capture greater sales opportunities when the market recovers.
Where our Property Development segment is concerned, we have completed sales for our Joint Venture residential project, The Skywoods and received the TOP for it. Sales response for the project had been positive, contributing significantly to the profitability of the Group, allowing us to repay our $60 million loan and boosting our cash balance to $206.0 million.
Going forward, we expect Singapore's property development sector to remain challenging against the backdrop of weak demand and a tepid business environment, coupled with increasing industrial competition. As such, we will be more selective in committing to new property development projects as we focus on the marketing efforts of our Shine@tuassouth project.
At the same time, we foresee the local public sector construction demand to remain firm amidst strong government support for several large public transport infrastructure projects, such as the North-South Corridor and the Circle Line being planned in the pipeline.
With these potential prospects in mind, the Group is positioning itself by leveraging on its strong civil engineering track record to tender for more infrastructure projects, while rigorously managing its current projects. Given our strong balance sheet and minimal gearing, we are confident of our ability to source for business opportunities and commit to them despite the global economic uncertainties.
On behalf of the Board of Directors, we would like to extend our appreciation to our Executive Director, Mr. Chua Sey Kok who will not be seeking re-appointment in the upcoming AGM, so as to focus on the new JV project for Changi Airport. We thank him for his insightful guidance and valuable contribution during his term of service.
On the same note, we would also like to express our gratitude towards our directors, management and staff for their commitment and effort in building up the Group's foundation. Finally, we would like to thank our customers, business associates and valued shareholders for their loyal support throughout these years. We look forward to creating greater value for everyone in the journey ahead.
Ong Seh Hong
Independent Non-Executive Chairman
Chua Leong Hai
Executive Director and CEO