Financial Statements And Related Announcement - Second Quarter And/ Or Half Yearly Results
Group Income Statement
Statement of Comprehensive Income
Review of Performance
Group revenue decreased by 5.4% to $79.8 million for the quarter ended June 30, 2017 ("2Q2017"), compared to $84.3 million in 2Q2016, due mainly to lower contributions from the Group's Structural Steelworks and Mechanical Engineering businesses.
On a segmental basis, revenue contribution from Structural Steelworks decreased 8.6%, from $53.9 million in 2QFY2016 to $49.3 million in 2QFY2017. Senoko Food Hub and Changi Jewel were the key contributors to Structural Steelwork's revenue in the quarter under review.
Mechanical Engineering revenue decreased from $9.7 million in 2QFY2016 to $0.2 million in 2QFY2017, due to the completion of the fabrication of Heat Recovery Steam Generator ("HRSG") non-pressure parts for two power plants in Qatar and Egypt.
Revenue from Specialist Civil Engineering projects increased by 21.4%, from $19.4 million in 2QFY2016 to $23.5 million in 2QFY2017 due to higher contribution from Thomson-East Coast MRT projects. The contributions for the review quarter came from the Thomson-East Coast MRT and the Hong Kong MTR.
The Group incurred a gross loss of $0.5 million in 2QFY2017 as compared to gross profit of $7.5 million in 2QFY2016. This is mainly due to lower margins from certain projects as well as the overall lower level of strutting and fabrication activities in Singapore and Hong Kong, which resulted in overhead costs not being fully absorbed and therefore depressing the Group's overall gross margin.
General and administrative expenses decreased from $5.1 million in 2Q2016 to $3.3 million in 2Q2017, mainly due to lower staff costs, professional fees and other general and administrative expenses. Finance costs decreased from $1.4 million to $1.2 million, mainly due to lower borrowings.
The Group reported a net loss of $4.1 million in 2Q2017 compared to a net profit of $0.9 million in 2Q2016.
Net asset value per share decreased from 62.94 Singapore cents as at 31 December 2016 to 61.31 Singapore cents as at 30 June 2017. The Group's net gearing remained at a healthy level of 0.33 times as at 30 June 2017, unchanged from 0.33 times as at 31 December 2016.
Backed by its strong track record and expertise as a steel specialist accumulated over the years, Yongnam will continue to focus on opportunities presented by the infrastructure sector in Singapore and the region.
Upcoming mega public sector infrastructure projects in Singapore this year, which the Group has bidded for, include various major contracts for the Circle Line 6 and North-South Corridor. The Group is also bidding for various infrastructure projects in Hong Kong and Australia. Public sector demand is expected to be supported by various upcoming mega infrastructure projects in the medium term, such as the Jurong Regional Line, Cross Island Line, the Kuala Lumpur – Singapore High Speed Rail and various infrastructure developments for Changi Airport Terminal 5.
The Group is currently in active pursuit of $1.2 billion worth of new infrastructure and commercial projects in Singapore, Hong Kong, Australia, Malaysia and the Middle East. As at 30 June 2017, the Group's order book stood at $205 million.
The Group expects its overall business outlook to remain challenging in 2017 as it continues to invest time and resources in bidding for potential projects. Most of the potential projects, if awarded, are slated to commence contributions only in 2018.
To enhance its cost competitiveness and operational efficiency, the Group, where possible, will continue to relocate part of its factory operations in Singapore to a new site in Johor, Malaysia, leaving fabrication with higher automation processes to be carried out in Singapore. This move will enable the Group to ensure cost savings in foreign worker levy, lower fabrication labour cost as well as ancillary staff cost such as accommodation and transportation.