BENG SOON MACH(01987) - 2021 - 中期财报

Company Information This section provides fundamental information about the company Management Discussion and Analysis This section provides an overview of the company's operations, financial performance, and future outlook Overall Review and Business Overview The Group, a leading demolition service provider in Singapore, saw improved financial performance in H1 2021 as the construction market recovered from COVID-19, completing seven projects and having nine ongoing - The Group is a well-established demolition service provider in Singapore, serving both public and private sectors, specializing in demolishing power plants, chemical plants, and high-rise commercial and residential properties[9] H1 2021 Completed Projects | Client | Project Description | Completion Date | Cumulative Recognized Revenue (S$ Thousand) | | :--- | :--- | :--- | :--- | | Client A | Demolition of existing commercial building | February 17, 2021 | 219 | | Client B | Demolition of existing commercial building | March 16, 2021 | 774 | | Client C | Demolition of existing commercial building | March 31, 2021 | 651 | | Client D | Demolition of existing oil tank | March 29, 2021 | 167 | | Client E | Demolition of factory building | April 30, 2021 | 616 | | Client F | Residential house demolition | May 6, 2021 | 11 | | Client G | Demolition of show flat | May 20, 2021 | 118 | - As of June 30, 2021, the Group had nine demolition projects underway, spanning commercial, residential, chemical, and power plant sectors[27] - The Group's business recovered from the COVID-19 pandemic, with revenue increasing in H1 2021 compared to the prior period, improving financial performance from a gross loss to a gross profit[40] Outlook and Prospects The Board is cautiously optimistic about the recovery of Singapore's construction and demolition demand, driven by public sector projects, and plans to diversify into e-commerce while maintaining its core demolition services - Singapore's Building and Construction Authority forecasts total construction demand to recover to S$23 billion to S$28 billion in 2021, primarily driven by public sector projects, with the Board cautiously optimistic about the industry's recovery[41] - While consolidating its core demolition services, the Group is actively seeking business diversification, having commenced e-commerce operations in September 2020 and remaining optimistic about its prospects[42] Financial Review In H1 2021, the Group's financial performance significantly improved, with total revenue increasing by 129.7% to S$8.5 million due to market recovery, and effective cost control reducing cost of sales by 15.1%, transforming a S$5.6 million gross loss into a S$0.6 million gross profit, ultimately narrowing loss attributable to equity holders by 68.8% to S$2.9 million Revenue Total revenue for H1 2021 was approximately S$8.5 million, a 129.7% increase from S$3.7 million in the prior period, primarily driven by the recovery of Singapore's construction market, increased demand for demolition services and scrap material disposal, and new e-commerce revenue Revenue Details (For the six months ended June 30) | Revenue Source | 2021 (S$ Thousand) | 2020 (S$ Thousand) | | :--- | :--- | :--- | | Net contract amount | 4,495 | 2,103 | | Proceeds from disposal of scrap materials | 3,264 | 1,407 | | Proceeds from earth disposal | 296 | 90 | | E-commerce | 367 | - | | Other income | 118 | 68 | | Total Revenue | 8,540 | 3,668 | Cost of Sales Cost of sales for H1 2021 was approximately S$7.9 million, a 15.1% decrease from S$9.3 million in the prior period, mainly due to reduced subcontractor and transportation expenses, reflecting varying project cost structures - Cost of sales decreased by 15.1% year-on-year, primarily due to lower subcontractor fees and transportation expenses[53] Gross Profit and Gross Margin The Group's gross profit significantly improved, transforming from a gross loss of approximately S$5.6 million in H1 2020 to a gross profit of approximately S$0.6 million in H1 2021, an increase of 110.7%, with gross margin improving from -153.3% to 7.2%, mainly due to revenue recovery covering fixed costs and effective cost reduction measures - Gross profit improved from a gross loss of S$5.6 million in H1 2020 to a gross profit of S$0.6 million in H1 2021[54] - Gross margin improved from -153.3% in H1 2020 to 7.2% in H1 2021[54] Other Financial Indicators During the period, administrative expenses remained stable at S$3.8 million, other income decreased to S$0.4 million due to reduced government grants, and finance costs decreased by 50.0% to S$0.1 million due to lower bank loan interest and lease liabilities, resulting in a significant 68.8% reduction in loss attributable to equity holders to S$2.9 million - Administrative expenses remained stable at approximately S$3.8 million compared to the prior period[55] - Other income decreased to S$0.4 million, primarily due to reduced COVID-19 related government grants received[56] - Finance costs decreased by 50.0% year-on-year to approximately S$0.1 million[57] - Loss attributable to equity holders significantly decreased by 68.8%, from S$9.3 million in the prior period to S$2.9 million[60] Capital Structure, Liquidity and Financial Resources The Group's capital structure has remained stable since its listing, with net current assets of approximately S$15.2 million and cash and cash equivalents of approximately S$7.7 million as of June 30, 2021, total equity of approximately S$36.4 million, and total debt of approximately S$12.6 million, confirming sufficient financial resources to meet its obligations Key Financial Position Indicators (June 30, 2021) | Indicator | Amount (S$) | Change vs. End of 2020 | | :--- | :--- | :--- | | Net current assets | Approx. 15.2 million | -6.2% | | Cash and cash equivalents | Approx. 7.7 million | -15.4% | | Total equity | Approx. 36.4 million | -7.4% | | Total debt | Approx. 12.6 million | -9.2% | Gearing Ratio The gearing ratio, calculated as total borrowings and lease liabilities divided by total equity, slightly increased to approximately 29.5% as of June 30, 2021, from 29.0% at the end of 2020 - As of June 30, 2021, the Group's gearing ratio was approximately 29.5%, a slight increase from 29.0% as of December 31, 2020[68] Use of Proceeds from Listing The company listed in November 2019, raising approximately HK$77.5 million net proceeds, with approximately HK$43.1 million remaining unutilized as of H1 2021, primarily allocated for excavator purchases, staff expansion, and qualification enhancement, expected to be fully utilized by December 31, 2022 Use of Proceeds from Listing and Utilization (As of June 30, 2021) | Purpose | Planned Amount (HK$ Thousand) | Unutilized Amount (HK$ Thousand) | | :--- | :--- | :--- | | Strengthening excavator fleet | 51,200 | 31,795 | | Repayment of bank borrowings | 13,500 | - | | Staff expansion | 9,100 | 9,100 | | Qualification enhancement | 2,200 | 2,200 | | General working capital | 1,500 | - | - As of the end of H1 2021, unutilized net proceeds amounted to approximately HK$43.1 million, expected to be used for equipment acquisition, recruitment, and qualification enhancement by December 31, 2022[87] Corporate Governance and Other Information This section details the company's corporate governance practices, including director and shareholder interests, share option schemes, and audit committee oversight Directors' and Major Shareholders' Interests The report discloses the shareholdings of directors and major shareholders, with Executive Director and Chairman Mr. Tan Chee Beng holding 50.56% of the company's shares through controlled corporations and spouse's interests, and his spouse, Ms. Lee, also deemed to hold 50.56% Directors' and Major Shareholders' Shareholdings (As of June 30, 2021) | Name/Entity | Capacity | Number of Shares Held | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Tan Chee Beng | Controlled corporations and spouse's interests | 505,600,000 | 50.56% | | Ms. Lee | Controlled corporations and spouse's interests | 505,600,000 | 50.56% | | TCB Investment Holdings | Beneficial owner | 341,700,000 | 34.17% | | K Luxe Holdings Limited | Beneficial owner | 163,900,000 | 16.39% | Share Option Scheme The company adopted a ten-year share option scheme on October 15, 2019, to incentivize and retain talent, with a total of 100 million shares (representing 10% of issued share capital) available for grant as of H1 2021, though no options have been granted, exercised, cancelled, or lapsed - A total of 100 million shares, representing 10% of the issued share capital, are available for issuance under the share option scheme, with no options granted or outstanding as of the period end[110] Corporate Governance The company complied with the Corporate Governance Code in H1 2021, with one deviation where the roles of Chairman and Chief Executive Officer are held by the same person (Mr. Tan), which the Board believes contributes to effective management and business development, balanced by sufficient independent non-executive directors - The company complied with the Corporate Governance Code, with a deviation from the requirement that the roles of Chairman and Chief Executive Officer should be separate, as Mr. Tan serves as both, which the Board believes is in the Group's best interest[114] Audit Committee The Audit Committee, comprising three independent non-executive directors and chaired by Mr. Leung Yau Man, reviewed and approved the unaudited interim financial results for the six months ended June 30, 2021, confirming their preparation in accordance with applicable accounting standards and listing rules, with adequate disclosures - The Audit Committee, composed of three independent non-executive directors, has reviewed and approved the unaudited interim financial results for the current period[119] Condensed Consolidated Financial Statements This section presents the Group's condensed consolidated financial statements, including the statement of comprehensive income, statement of financial position, and explanatory notes Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2021, the Group reported revenue of S$8.54 million, a 133% increase year-on-year, with gross profit turning from a S$5.62 million loss to a S$0.61 million profit, and loss for the period significantly narrowing from S$9.07 million to S$3.00 million Condensed Consolidated Statement of Comprehensive Income Summary (For the six months ended June 30) | Item | 2021 (S$) | 2020 (S$) | | :--- | :--- | :--- | | Revenue | 8,540,040 | 3,667,624 | | Cost of sales | (7,928,096) | (9,289,222) | | Gross profit/(loss) | 611,944 | (5,621,598) | | Loss after income tax | (3,004,143) | (9,067,305) | | Loss attributable to equity holders of the Company | (2,944,630) | (9,067,305) | | Basic loss per share (S$ cents) | (0.29) | (0.93) | Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets were S$48.85 million, total liabilities S$12.58 million, and total equity S$36.28 million, with both total assets and total equity decreasing compared to the end of 2020, reflecting the impact of operating losses during the period Condensed Consolidated Statement of Financial Position Summary | Item | June 30, 2021 (S$) | December 31, 2020 (S$) | | :--- | :--- | :--- | | Total assets | 48,851,346 | 53,116,961 | | Total liabilities | 12,576,052 | 13,856,309 | | Total equity | 36,275,294 | 39,260,652 | Notes to the Condensed Consolidated Interim Financial Statements The notes to the financial statements provide detailed explanations of key accounting policies, financial risk management, revenue breakdown, various expenses, earnings per share calculation, and major asset and liability items, highlighting that revenue primarily stems from demolition services, with significant expenses in subcontractor fees, employee benefits, and depreciation, and basic loss per share at S$0.29 cents - Note 4.1: The Group monitors capital on a gearing ratio basis, which increased to 8% as of June 30, 2021, from 6% at the end of 2020[141] - Note 5: Revenue primarily derived from providing demolition services, accounting for 94.3% of total revenue[154] - Note 10: Basic loss per share was S$0.29 cents, a significant reduction from S$0.93 cents in the prior period[175]