TBKS HLDGS(01960) - 2021 - 中期财报

Company Information This section provides detailed information on the company's board, committees, secretary, registered office, principal place of business, share registrar, auditor, and principal bankers - The report provides detailed information on the company's board of directors, committee members, company secretary, registered office, principal place of business, share registrar, auditor, and principal bankers[2][3] Interim Results and Condensed Consolidated Financial Statements This section presents the Group's interim financial performance, including statements of profit or loss, financial position, changes in equity, and cash flows, highlighting key financial metrics and trends Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended December 31, 2020, the Group's revenue significantly decreased by 52.7% to RM 51.51 million from RM 108.84 million in the prior year, with profit for the period sharply declining by 85.8% to RM 2.07 million primarily due to reduced revenue and gross profit, leading to a drop in basic earnings per share from RM 0.0166 to RM 0.0021 Profit or Loss Key Data (For the six months ended December 31) | Indicator | 2020 (Unaudited) | 2019 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 51,511 Thousand Ringgit (RM) | 108,837 Thousand Ringgit (RM) | -52.7% | | Gross Profit | 9,526 Thousand Ringgit (RM) | 26,874 Thousand Ringgit (RM) | -64.6% | | Profit Before Tax | 4,123 Thousand Ringgit (RM) | 20,089 Thousand Ringgit (RM) | -79.5% | | Profit for the Period | 2,074 Thousand Ringgit (RM) | 14,650 Thousand Ringgit (RM) | -85.8% | | Basic Earnings Per Share | 0.21 Cents (RM) | 1.66 Cents (RM) | -87.3% | Condensed Consolidated Statement of Financial Position As of December 31, 2020, the Group's total assets were RM 171 million, total liabilities RM 31 million, and total equity RM 140 million, showing a relatively stable asset-liability structure compared to June 30, 2020, with a significant increase in cash and cash equivalents to RM 88.98 million and a decrease in contract assets Balance Sheet Key Items (As of December 31, 2020) | Indicator | As of December 31, 2020 (Unaudited) | As of June 30, 2020 (Audited) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 22,207 Thousand Ringgit (RM) | 23,501 Thousand Ringgit (RM) | | Current Assets | 149,030 Thousand Ringgit (RM) | 159,690 Thousand Ringgit (RM) | | Of which: Cash and Cash Equivalents | 88,977 Thousand Ringgit (RM) | 47,315 Thousand Ringgit (RM) | | Of which: Contract Assets | 34,629 Thousand Ringgit (RM) | 49,656 Thousand Ringgit (RM) | | Liabilities | | | | Current Liabilities | 26,461 Thousand Ringgit (RM) | 37,936 Thousand Ringgit (RM) | | Non-current Liabilities | 4,415 Thousand Ringgit (RM) | 5,660 Thousand Ringgit (RM) | | Equity | | | | Total Equity | 140,361 Thousand Ringgit (RM) | 139,595 Thousand Ringgit (RM) | Condensed Consolidated Statement of Changes in Equity For the six months ended December 31, 2020, the Group's total equity slightly increased from RM 139.595 million at the beginning of the period to RM 140.361 million at the end, primarily due to profit for the period of RM 2.074 million, partially offset by exchange differences on translation of foreign operations of RM 1.308 million loss - Total equity increased by 766 Thousand Ringgit (RM) during the period, primarily contributed by profit for the period, but affected by exchange losses[24] Condensed Consolidated Statement of Cash Flows During the period, net cash from operating activities was RM 8.298 million, a 44.8% year-on-year decrease, while net cash inflow from investing activities was RM 36.772 million, mainly from disposal of financial assets and changes in pledged deposits, with net cash outflow from financing activities of RM 2.219 million, resulting in a significant increase in cash and cash equivalents to RM 88.977 million at period-end Cash Flow Statement Summary (For the six months ended December 31) | Item | 2020 (Unaudited) | 2019 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 8,298 Thousand Ringgit (RM) | 15,043 Thousand Ringgit (RM) | | Net Cash from/(used in) Investing Activities | 36,772 Thousand Ringgit (RM) | (6,890) Thousand Ringgit (RM) | | Net Cash (used in)/from Financing Activities | (2,219) Thousand Ringgit (RM) | 56,993 Thousand Ringgit (RM) | | Net Increase in Cash and Cash Equivalents | 42,851 Thousand Ringgit (RM) | 65,146 Thousand Ringgit (RM) | | Cash and Cash Equivalents at End of Period | 88,977 Thousand Ringgit (RM) | 77,758 Thousand Ringgit (RM) | Notes to the Condensed Consolidated Financial Statements This section provides explanatory notes to the condensed consolidated financial statements, detailing accounting policies, segment information, revenue recognition, earnings per share, dividends, and post-reporting period events Note 1: General Information and Reorganization The Company is an investment holding company incorporated in the Cayman Islands, with its subsidiaries primarily engaged in civil and structural engineering in Malaysia, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on September 30, 2019 - The Group is principally engaged in the provision of civil and structural engineering services[41] Note 4: Segment Reporting The Group's operations are divided into three reportable segments: site preparation works, civil engineering works, and building construction works, with civil engineering projects being the primary revenue source during the period, contributing RM 31.117 million (60.4% of total revenue), and building construction projects contributing RM 20.394 million (39.6%), with all business and revenue derived from Malaysia Segment Revenue and Gross Profit (For the six months ended December 31, 2020) | Segment | Revenue (Thousand Ringgit (RM)) | Gross Profit (Thousand Ringgit (RM)) | | :--- | :--- | :--- | | Site Preparation Works Projects | - | - | | Civil Engineering Projects | 31,117 | 6,379 | | Building Construction Projects | 20,394 | 3,147 | | Total | 51,511 | 9,526 | - All the Group's revenue from external customers and non-current assets are located in Malaysia[77] Note 5: Revenue All of the Group's revenue is derived from providing civil and structural engineering services to customers and is recognized over time, with the total transaction price allocated to unsatisfied performance obligations amounting to RM 59.182 million as of December 31, 2020, expected to be recognized as revenue in future years - As of December 31, 2020, the total value of the Group's uncompleted contracts (transaction price allocated to remaining performance obligations) was 59,182 Thousand Ringgit (RM)[85] Note 9: Earnings Per Share For the six months ended December 31, 2020, profit attributable to owners of the Company was RM 2.074 million, resulting in basic earnings per share of RM 0.0021 based on a weighted average of 1 billion ordinary shares, with diluted earnings per share being the same as basic earnings per share due to the absence of potential dilutive ordinary shares Earnings Per Share Calculation | Indicator | For the six months ended December 31, 2020 | For the six months ended December 31, 2019 | | :--- | :--- | :--- | | Profit Attributable to Owners | 2,074 Thousand Ringgit (RM) | 14,650 Thousand Ringgit (RM) | | Weighted Average Number of Ordinary Shares | 1,000,000,000 | 880,434,782 | | Basic Earnings Per Share | 0.21 Cents (RM) | 1.66 Cents (RM) | Note 10: Dividends The Board does not recommend the payment of any interim dividend for the six months ended December 31, 2020 - No interim dividend is recommended for the current period[99] Note 18: Events After Reporting Period Subsequent to the reporting period, the Malaysian government reimposed the Movement Control Order (MCO 2.0) and declared a state of emergency in January 2021 in response to the third wave of the COVID-19 pandemic, measures that restrict economic activities and are expected to continue to have an uncertain impact on the Group's results and performance, with management closely monitoring the situation and taking steps to minimize adverse effects - The COVID-19 pandemic, which spread globally since early 2020, has significantly impacted the Group's revenue and profitability during the current period[138] - Due to the ongoing pandemic and government control measures, the potential impact on the Group's future financial results and condition cannot be estimated[139] Management Discussion and Analysis This section provides management's perspective on the Group's operational and financial performance, including business review, future outlook, project portfolio, detailed financial analysis, and the utilization of IPO proceeds Business Review Severely disrupted by the COVID-19 pandemic and related control measures, the Group's total revenue significantly decreased by 52.7% year-on-year to RM 51.51 million, with civil engineering project revenue declining by 69.7%, while building construction project revenue grew by 243.7% due to new project commencements, and no revenue from site preparation works projects in this period Revenue Breakdown by Project Type (For the six months ended December 31) | Project Type | 2020 (Thousand Ringgit (RM)) | Share (%) | 2019 (Thousand Ringgit (RM)) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Site Preparation Works Projects | - | 0.0 | 151 | 0.1 | | Civil Engineering Projects | 31,117 | 60.4 | 102,752 | 94.4 | | Building Construction Projects | 20,394 | 39.6 | 5,934 | 5.5 | | Total | 51,511 | 100.0 | 108,837 | 100.0 | - The decline in revenue is primarily due to the ongoing COVID-19 pandemic, leading to business disruptions, delays in contract awards, and increased market competition[147] Outlook Management anticipates a challenging FY2021 due to ongoing MCO in Malaysia and challenges in the oil and gas sector, with project delays, lack of new capital projects, and intense competition as key risks; however, management expects a potential recovery in the second half and is actively seeking new opportunities in Malaysia and neighboring countries, confident in navigating challenges with a robust balance sheet - The Malaysian economy contracted by 3.4% in Q4 2020, with a full-year contraction of 5.6%; despite initial control measures in early 2021 impacting near-term growth, the effect is expected to be less severe than in 2020, with growth trajectory likely to improve from Q2 onwards[156][157] - The Group anticipates a highly challenging FY2021 but expects a potential recovery in the second half and is actively exploring opportunities in Malaysia and neighboring countries[158] Projects on Hand As of December 31, 2020, the Group had 10 projects on hand, covering civil and building construction engineering, located in areas including Port Dickson, Pengerang, and East Malaysia, with expected completion dates ranging from March 2021 to August 2023 - As of December 31, 2020, the Group had 10 projects under construction or awaiting commencement[159] Financial Review The financial performance for the period significantly declined, with revenue decreasing by 52.7% year-on-year and cost of sales by 48.8%, leading to a 64.6% reduction in gross profit and a drop in gross profit margin from 24.7% to 18.5%, while administrative expenses decreased, ultimately resulting in profit for the period plummeting from RM 14.7 million in the prior year to RM 2.1 million Revenue The Group's revenue decreased by 52.7% from RM 108.8 million in the prior year to RM 51.5 million in the current period, primarily due to the ongoing COVID-19 pandemic and government control measures severely disrupting business, leading to delays in contract awards, new project delays, and intensified market competition - Revenue decreased by 52.7% year-on-year, primarily attributed to the negative impact of the COVID-19 pandemic and related control measures[164] Cost of Sales Cost of sales decreased by 48.8% from RM 82 million in the prior year to RM 42 million, consistent with the revenue decline, with subcontracting fees accounting for the largest proportion at 55.4%, followed by direct labor costs (16.0%) and direct materials (15.6%) Cost of Sales Breakdown (For the six months ended December 31) | Item | 2020 (Thousand Ringgit (RM)) | Share (%) | 2019 (Thousand Ringgit (RM)) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Direct Materials | 6,566 | 15.6 | 15,242 | 18.6 | | Subcontracting Fees | 23,249 | 55.4 | 52,797 | 64.4 | | Direct Labor | 6,708 | 16.0 | 8,033 | 9.8 | | Other | 4,462 | 13.0 | 5,891 | 7.2 | | Total | 41,985 | 100.0 | 81,963 | 100.0 | Gross Profit and Gross Profit Margin Due to a greater decline in revenue than in cost of sales, the Group's gross profit decreased by 64.6% from RM 26.9 million in the prior year to RM 9.5 million, with the gross profit margin also falling from 24.7% to 18.5% - Gross profit decreased by 64.6% year-on-year, and the gross profit margin declined from 24.7% to 18.5%[171] Profit and Earnings Per Share Considering all factors, the Group's profit for the period significantly decreased from RM 14.7 million in the prior year to RM 2.1 million, with earnings per share correspondingly dropping from RM 0.0166 to RM 0.0021 - Profit for the six months ended December 31, 2020, was approximately 2.1 million Ringgit (RM), with earnings per share of approximately 0.21 Cents (RM)[178] Liquidity, Financial Resources and Capital Structure As of December 31, 2020, the Group's financial position remained robust, with cash and cash equivalents significantly increasing to RM 89 million, a current ratio of 5.6 times, a quick ratio of 5.6 times, a gearing ratio of 6.6%, and total equity of approximately RM 140.4 million Key Financial Ratios | Ratio | As of December 31, 2020 | As of June 30, 2020 | | :--- | :--- | :--- | | Current Ratio (times) | 5.6 | 4.2 | | Quick Ratio (times) | 5.6 | 4.2 | | Gearing Ratio (%) | 6.6 | 5.2 | - As of December 31, 2020, the Group's cash and cash equivalents were approximately 89 million Ringgit (RM), a significant increase from 47.3 million Ringgit (RM) as of June 30[184] Use of Proceeds The Group's net proceeds from listing were approximately HKD 85 million, but the utilization of proceeds has slowed due to operational disruptions and negative demand impacts from the COVID-19 pandemic, with HKD 71.7 million remaining unutilized as of December 31, 2020; to address uncertainties and enhance flexibility, the Group plans to extend the expected timeline for utilizing the unutilized proceeds to June 30, 2022 - Due to the impact of the COVID-19 pandemic, the Group plans to extend the expected timeline for utilizing unutilized proceeds to June 30, 2022[227] Summary of Use of Proceeds (As of December 31, 2020) | Purpose | Planned Amount (HKD Million) | Unutilized Amount (HKD Million) | | :--- | :--- | :--- | | Performance Bonds | 8.9 | 8.9 | | Expanding Staff Team | 10.0 | 10.0 | | Purchase of Machinery | 17.8 | 17.8 | | Pre-project Expenses for New Projects | 26.7 | 21.6 | | Business Acquisitions | 13.4 | 13.4 | | Total (Partial) | 76.8 | 71.7 | Other Information This section covers additional corporate information, including directors' and major shareholders' interests, details of the share option scheme, and the company's corporate governance practices Directors' and Major Shareholders' Interests As of December 31, 2020, Executive Directors Mr. Tan Hun Tiong and Mr. Tan Han Peng jointly held 60% of the Company's shares through their controlling company TBKS International, which is the direct controlling shareholder holding 600 million shares, while Victory Lead Ventures Limited held 150 million shares, accounting for 15% - Directors Mr. Tan Hun Tiong and Mr. Tan Han Peng are deemed to be jointly interested in 600,000,000 shares (representing 60%) of the Company[231][232][234] - Major shareholders TBKS International and Victory Lead Ventures Limited hold 60% and 15% of the Company's shares respectively[238] Share Option Scheme The Company adopted a share option scheme on September 5, 2019, with a total of 100 million shares, representing 10% of the issued share capital, available for issue under the scheme as of December 31, 2020, and no share options have been granted, exercised, cancelled, or lapsed since its adoption - No share options have been granted since the adoption of the share option scheme[244] Corporate Governance and Audit Committee The Company is committed to maintaining a high level of corporate governance and has complied with the Corporate Governance Code in Appendix 14 of the Listing Rules, with the Audit Committee, comprising three independent non-executive directors, having reviewed and approved the unaudited interim financial results for the period - The Company has complied with the principles and all relevant code provisions of the Corporate Governance Code throughout the period[250] - The interim financial results for the period are unaudited but have been reviewed and approved by the Audit Committee[254]