Extracted from Annual Report 2017
As economic and geopolitical uncertainties lingered on, 2017 remained a challenging year for the construction industry, which shrunk by 8.4% for the whole of last year due to weakness in private sector construction activities. The total construction demand for 2017 was lower than expected as there was a rescheduling of a few major public sector infrastructure projects, such as NorthSouth Corridor, to 2018. The property market is showing incipient signs of recovery, however, prices and rental for industrial space continued to moderate. Manpower shortage and rising operation costs were a consistent feature in the intensely competitive construction sector. We focused on building up our fundamentals and delivering on existing projects to maintain a stable performance amidst headwinds in FY2017.
In FY2017, the Group's total revenue increased by 28% to $151.1 million mainly due to contribution from the Civil Engineering segment which rose 27% to $149.6 million. This was attributed to the higher contribution from Changi Airport joint venture project, which has progressed to a more active phase in 2017, while revenue from the Property Development segment was related to our sales of Ark@gambas project. Meanwhile, revenue from Investment Property segment remained insignificant.
Separately, the share of profits from the joint venture was $490,000 as profits arising from the joint venture residential project, The Skywoods has been fully recognised in the previous year. Current year profit was related to the finalisation of project cost.
As a result, net profit for the year decreased by 45% to $19.8 million, while cash and cash equivalents remained positive at $132.1 million as at 31 December 2017. Shareholders' equity decreased 17.8% to $201.4 million. Despite this, the Group maintained a strong balance sheet with minimal gearing as at 31 December 2017.
As a form of appreciation to our shareholders who have continued to support us over the years, we are proposing a first and final cash dividend of 1.8 cents per ordinary share, subject to approval at the Annual General Meeting (AGM) to be held on 25 April 2018. If approved, the dividend will be paid out on 22 May 2018.
During the year, there were no new civil engineering projects added to our pipeline, hence we focused on developing our existing projects. Our current project includes Shine@tuassouth, a Tuas industrial building, which we have commenced development and is expected to be completed in 2Q2018.
In view of the languishing demand for industrial property, we will continue in our promotional efforts to market the units at Shine@tuassouth and the remaining 13 units at Ark@gambas. The take up rate for Shine@tuassouth is very slow due to the sluggish market demand, in spite of this, the project did not pose any financial burden for the Group as we have financed the development cost mainly with internal funding and the current borrowing for the project stood at only $15.0 million.
As at 31 December 2017, the Group's order book for ongoing projects of the Civil Engineering segment was about $775.0 million for the Maxwell MRT station, the 2 Changi Airport projects and the Stabling Yard at Gali Batu Depot.
Where our Property Development and Investment Properties segments were concerned, profits had been fully recognised in previous years, hence contribution from both segments for FY2017 was not significant.
In light of the languishing demand in the building sector, the government has indicated that they will support the local construction industry with more public sector projects, though the impact is likely to be limited as firms continue to struggle with slower demand and labour shortages.
Building and Construction Authority (BCA) projected the total value of construction contracts to be awarded in 2018 to reach between $26.0 billion and $31.0 billion, with 60% of the projects coming from the public sector. Such public projects will include infrastructure projects like the North-South Corridor, new MRT works and the remaining package for Runway 3 by Changi Airport Group.
In view of this, we will continue to tender for infrastructure projects competitively whilst we exercise prudent cost control and strengthen our civil engineering foundation. We will also explore viable property development projects with experienced business partners.
Our own central workshop at Tampines is nearing completion in 2H2018, we will target to consolidate all our plant and equipment in one location to improve our resource planning function.
As the outlook of civil engineering and property development look set to improve, we believe that we will be able to sell more industrial units in time to come. At the same time, our Civil Engineering segment will uplift the Group's revenue through the delivery of the Changi Airport joint venture project as it advance forward positively.
We would like to take this opportunity to thank our directors, management and staff for their contribution and dedication towards moving the Group forward. We would also like to thank our customers, business associates and shareholders for their support and faith over the years as we continue to move forward together to strengthen the Group's fundamentals.