Operations And Financial Review
FY 2023 compared with FY 2022 Performance and segmental review
Revenue
Group revenue for the financial year 2023 (FY2023) was $202.0 million, increase of $59.3 million (+41.6%) as compared to the previous financial year (FY2022). Both Civil Engineering and Property Development segment recorded higher revenue. Construction activities picking up for Aviation Park and Serangoon MRT station was the key contributors for the $30.6 mil increased revenue for Civil engineering segment. Sales of industrial building units at Shine@Tuas south was the key factor for $28.6 mil jump in revenue for FY2023 for Property Development segment.
Gross Profit
Gross profit increased by $12.8 million (+123%) to $23.2 million mainly due to higher revenue and improve gross margin in property development segment. The gross profit for Property development increased significantly with more units sold with improve market conditions. Civil Engineering segment was higher mainly due to finalisation of accounts with subcontractors for completed projects.
Other Income
Other income amount to $15.0 mil, increase of $3.6 million (+30.6%). The key contributors were higher interest income of $2.3 million the legal cost award of $1.1 million for the GS HLS JV arbitration case, and higher rental income from Shine@TuasSouth.
Distribution and selling costs
Higher distribution cost was related to the commission expenses for sales of development properties.
Share of profits of joint venture
Share of loss of joint venture was 0.4 million for FY2023 compare a profit of $3.1 million in FY2022. As the joint venture residential project obtained TOP status in December 2022, majority of the revenue was recognised in the prior years.
Profit before tax and tax expenses
In summary, the higher FY2023 profit before tax was contributed by the higher sales and gross profit, other income offset by the share of loss from joint venture. Effective tax rate is lower in FY2023 (13.7%) vs FY 2022 (15.8%) mainly due to the deferred tax asset in previous year for some entities not recognised due to uncertainties in realisation. Earning per share improved from 3.22 cents to 5.19 cents.
Financial position and cash flow review
Total assets of the group as at 31 December 2023 was $341.0 million, reduce by $4.3 million from $345.3 million as at 31 December 2022. Mainly due to the lower investment in joint venture due to shareholder loan repayment and sales of development properties, offset by the higher cash balance and contract assets.
Increase in cash and short term deposits of $23.4 million was mainly due to the loan repayment of $38.0 million from joint venture, offset by the net cash outflow for the addition and redemption of investment securities of $5.1 million, dividend payment of $5.1 million and cash used in operations of $7.7 million. Net cash used in operations was mainly due to increase in contract asset and reduction in contract liabilities for the civil engineering projects, offset by the proceed from the sales of development units.
There was much higher contract asset of $32.3 million as the contract activities picked up for the new projects pending for progress certification by customers. Development properties was $20.7 million lower with the cost of sales recognised for the units sold in FY2023.
Total liabilities of the group as at 31 December 2023 was $81.9 million, decreased by $26.3 million from $108.2 million as at 31 December 2022, mainly due to the lower contract liabilities as the advance payment for civil engineering projects was progressively utilised with progress payment certified by customer, the provisions for maintenance cost for completed projects was also much lower as the cost was utilised during the year.
Shareholders equity was $259.1 million, about $21.9 million higher than 31 December 2022. Mainly due to the current period net profit after tax of $26.6 million, additional capital injection of minority shareholder for a subsidiary of $0.5mil, offset by the dividend payment of $5.1 million and fair value loss for investment securities recognised in comprehensive income of $0.1 million. Net tangible assets per share was 50.6 cents as at 31 December 2023 compared to 46.3 cents as at 31 December 2022.