REVENUE AND EARNINGS
Revenue (external sales)
Gross Profit
In $’ million
FY 2014
% FY 2013
restated
%
Civil Engineering
57.4 21.9
76.5 88.2
Properties Development
193.5
74.0
-
-
Properties Investment
10.7
4.1
10.2
11.8
261.6 100.0 86.7 100.0
In $’ million
FY 2014
FY 2013 restated
Civil Engineering
37.5
29.7
Properties Development
52.6
-
Properties Investment
7.4
7.1
97.5
36.8
Revenue increased by $174.9 million (201.8%) to $261.6 million
for the financial year ended 31 December 2014, mainly due to the
recognition of revenue from the industrial development property
project, Ark@Gambas, which obtained TOP in November 2014. In
line with the adoption of INT FRS 115, revenue and related costs
for industrial development project is recognized on completion of
project. As at 31 December 2014, about 87% of Net saleable area
was sold for Ark@Gambas. The civil engineering segment revenue
was $19.1 million lower due to the substantial completion of the
Marina Coastal Expressway project and the two new projects that
was awarded in 2014 and just commenced construction activities.
The revenue from Properties investment segment were mainly
rental income from workers dormitory, which was marginally
higher by $0.5 million to $10.7 million.
Gross profit increased by $60.9 million (164.9%) to $97.5 million
for the current financial year mainly due to the recognition of the
Ark@Gambas project of $52.6 million and the increase of $9.8
million of civil engineering segment due to the finalization of
account for the completed projects and the construction profit
for Ark@Gambas recognized in tantum with tthe inter company
construction project. The gross profit for workers dormitory
remained stable.
Other income increased by $0.4 million to $2.6 million mainly due
to a one time bond early redemption fee of $0.2 million and higher
interest income of $0.2 million.
Distribution cost was $0.2 million higher as the agent commission
cost for Ark@Gambas was recognized in line with the sales
recognition.
Administrative expenses was $2.8 million (66.3%) higher than
previous year mainly due to the higher performance bonus accrued
and higher staff cost and bonus for 2014.
The decrease in the fair value of investment properties was
related to the impairment of the workers’ dormitory. The workers
dormitory is stated at fair value determined on the discounted cash
flow method provided by an independent valuer and the fair value
is expected to be $4.3 million lower with the projection of cash
inflow reduced over the lease period. The lease is expiring at end
of 2015.
The fair value of the investment securities was adjusted downward
by $0.2 million in accordance with the market price of the quoted
shares market value as at end of 31 December 2014.
With the revised FRS 28 and FRS 111, the Joint venture project
for the Dairy Farm Project, the Skywoods, is accounted for using
the equity method, and the share of profit for the current financial
year was $0.04 million compared to share of loss of $1.8 million
in FY2013. Previously this joint venture is accounted for using
proportionate consolidation.
Profit before taxation increased by $58.1 million to $87.4 million,
resulting mainly from the higher revenue and gross profit.
FINANCIAL POSITION
The Group’s non-current assets was $10.5 million higher as at 31
December 2014 was mainly due to the acquisition of the held –to-
maturities security of $7.6 million and higher deferred tax assets
of $6.7 million offset by decrease in investment property by $4.3
million due to the fair value adjustment of the worker dormitory.
The Group’s current assets increased by $10.9 million to $355.2
million. This was mainly due to the higher cash and short term
deposit of $62.7 million and higher trade receivable of $27.0
million, also higher prepayment of $7.5 million for the advance
payment for the Tuas site, offset by the lower development
properties of $84.4 million due to the cost recognition of Ark@
Gambas.
The Group’s current liabilities decreased by $5.7 million to
$193.0 million. This was mainly due to the lower progress
billings to customers and progress billings in excess of
work-in-progress with the recognition for completed projects,
offset by the higher provision for tax and project defect and
warranty cost for completed projects. The remaining bank loan of
$5.0 million was reclassified as current.
CASH FLOW
Net increase of cash and short term deposits of $62.7 million
for FY2014 was mainly due to cash generated from operating
activities arising from TOP of Ark@Gambas project, advance
from Maxwell station project, which was partially offset by the
dividend payment, acquisition of held-to-maturities security and
repayment of bank loans.
OPERATIONS AND FINANCIAL REVIEW
Hock Lian Seng Holdings Limited
Annual report 2014
8
