KSH : Achieves Net Profit Of S$22.3 Million With Revenue Growth In FY2023

Net profit attributable to Owners of the Company for FY2023 was S$22.3 million, a decrease of S$1.9 million from S$24.2 million in the same period last year although there was a profit from operations before share of results of associates and joint ventures of S$3.5 million in FY2023 as compared to a loss of S$4.3 million in FY2022. This was mainly attributable to the decrease of S$8.3 million in share of results of associates and joint ventures from S$28.8 million in FY2022 to S$20.5 million in FY2023. For the second half year ended 31 March 2023 ("2HFY2023") net profit attributable to Owners of the Company stood at S$12.2 million, a decrease of S$2.1 million or 14.6% from S$14.3 million for the same corresponding period ("2HFY2022"), due to a decrease in share of results of associates and joint ventures of S$8.7 million from S$19.0 million in 2HFY2022 to S$10.3 million in 2HFY2023, offset by a profit from operations before share of results of associates and joint ventures of S$3.2 million in 2HFY2023 as compared to a loss of S$5.4 million in 2HFY2022.

Mr Choo Chee Onn (朱峙安), Executive Chairman and Managing Director of KSH, said, "We are encouraged by the Group's resilient financial performance, with steady improvements across our construction and property segments. Our construction division has continued its gradual recovery, with an order book of more than S$240.0 million as at the end of FY2023, which is expected to contribute to the Group's financial results up to the financial year ending 31 March 2025. We are also currently working on several tenders to replenish our order book to a higher amount.

"Under property development, working closely alongside experienced partners, we have achieved healthy sales for our developments in both Singapore and the PRC, with most of the projects either fully or almost fully sold to date. For Property investments, we have maintained good occupancy and rental rates in Singapore and overseas. As for hotel investments, we continue to see recovery in occupancy and average room rates with positive trends from 'pent-up' travel demand, following the reopening of economies.

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"Looking ahead, the global outlook remains challenging with macro headwinds. We will continue to maintain prudence in capital and financial management. Additionally, we have built-up a healthy balance sheet and working capital position with cash and bank balances and fixed deposits of S$120.8 million, providing us with a good headroom to prudently pursue investment opportunities and enhance shareholder value."

Financial Review

In FY2023, with the easing from the restriction measures imposed in FY2022 to control the COVID-19 pandemic, KSH achieved a total revenue of S$301.4 million, up from S$240.3 million reported a year ago. This was mainly due to an increase in revenue from the Group's construction business, which saw a S$61.6 million increase to S$296.8 million in FY2023, up from S$235.2 million in FY2022, with the significant increase in construction works following the resumption of construction activities.

The increase in other income from S$10.3 million in FY2022 to S$11.7 million in FY2023 was mainly due to the increase in interest income from additional loans to associates to finance new projects.

Cost of construction increased in FY2023 as construction works done increased as compared to prior year with escalating construction costs. The decrease in personnel costs in FY2023 was due to the decrease in performance bonuses for Management, offset by the increase in other personnel related expenses. Finance costs increased S$2.6 million from S$2.8 million in FY2022 to S$5.4 million in FY2023 mainly due to the increase in bank borrowings and interest rates.

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Other operating expenses decreased by S$4.6 million or 29.8% from S$15.2 million in FY2022 to S$10.6 million in FY2023 mainly due to provision for legal compensation provided in FY2022, offset by increase in foreign exchange losses in FY2023.

Share of profits of associates and joint ventures was S$20.5 million in FY2023 mainly attributable to property development projects in Singapore and PRC by associated companies. Correspondingly, the Group reported a net profit attributable to Owners of the Company of S$22.3 million after excluding non-controlling interests for FY2023.

The Group continues to maintain a healthy balance sheet and working capital position with cash and bank balances and fixed deposits of S$120.8 million.

The Group has a fully diluted earnings per share of 3.96 Singapore cents in FY2023 and the net asset value per share as at 31 March 2023 was 60.06 Singapore cents.

Final Dividend

Notwithstanding the challenging economic outlook, KSH will be proposing a final cash dividend of 1.0 Singapore cent per ordinary share to thank shareholders for their continuous support. This is in line with the Group's improvement in results and commitment to enhance shareholder value.

Coupled with the interim cash dividend of 1.0 Singapore cent per share distributed earlier in the financial year, this brings the total dividend declared for FY2023 to 2.0 Singapore cents per share.

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Prospects and Outlook

According to the latest update by The International Monetary Fund, the global economic outlook is uncertain amid the financial sector turmoil, high inflationary pressure, and effects brought about by the global pandemic and the ongoing geopolitical tension between Russia and Ukraine1. Monetary Authority of Singapore ("MAS") has similarly commented that the global growth outlook remains uncertain. The impact of tighter monetary policy in the advanced economies could be amplified by fragilities in the financial system, further restraining credit growth and dampening confidence2. The risks to growth in the global economy and in Singapore are tilted to the downside.

Amid global uncertainties and challenges, the Singapore economy grew 0.1% year- on-year in the first quarter of 2023, slowing from 2.1% growth in the previous quarter, according to official estimates released last month by Ministry of Trade and Industry ("MTI")3. Singapore economy faces an uncertain and fragile outlook in the near term as businesses continue to grapple with labour shortages, higher business costs in an inflationary environment, rising interest rates and other challenges.

1. International Monetary Fund World Economic Outlook, A Rocky Recover - April 2023
2. Monetary Authority of Singapore, Monetary Policy Statement - April 2023
3. Ministry of Trade and Industry Singapore, Singapore's GDP Grew by 0.1 Per Cent in the First Quarter of 2023 - April 2023

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