KSH : Announces Revenue Of S$34.5 Million Amid Challenging Operating Environment Due To Ongoing COVID-19 Pandemic

Mr Choo Chee Onn (朱峙安), Executive Chairman and Managing Director of KSH Holdings, said, "Our performance has taken an impact from the pandemic, with a stoppage of construction works for most of the months in HYFY2021 during the Circuit Breaker period, thereby leading to a loss in construction and a significant decrease in profit from the property development businesses. We are heartened to note that for our Construction segment, all of our projects are now in progress. We are focused on the smooth execution of all existing construction projects on hand to meet delivery schedules, backed by a strong order book of more than S$537.0 million."

"For Property, despite challenging market sentiments, the four ongoing residential projects in Singapore were well-received by the market, and have been substantially sold, with positive margins. Notably, we have more than S$480.0 million attributable share of progress billings from property development projects, to be recognised as sales revenue by associates and joint ventures. Additionally, our Gaobeidian residential development project has been well-received by the market, having sold approximately 436 units to-date. Construction of the Gaobeidian township project is in progress and the sale of units are expected to contribute to the Group's profit, if any, after construction has been completed, which is likely to be in FY2022.

"Looking ahead, we are backed by our healthy balance sheet with a strong cash position and low gearing, supported by a strong order book and revenue visibility. We are in a good position to deal with the challenges ahead and will stand ready for the recovery from the impact of the pandemic."

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Financial Review

KSH achieved a total revenue of S$34.5 million in HYFY2021, a 72.7% decrease from S$126.6 million reported a year ago. This was mainly due to the decline in revenue from construction business - the Group's main revenue driver - by 73.7% from S$123.9 million in HYFY2020 to S$32.6 million in HYFY2021, affected by the Circuit Breaker measures to control the COVID-19 pandemic. The cost of construction in HYFY2021 has included unproductive prolongation costs for various projects, site overheads, staffs and labour costs, and others due to the implementation of Circuit Breaker measures. As a result, the construction business has suffered a gross loss of S$5.0 million in HYFY2021. Similarly, rental income from investment properties decreased by 29.5% to S$1.8 million in HYFY2021, as affected by the COVID-19 pandemic in the People's Republic of China ("PRC").

Other income increased by 53.5% to S$9.2 million in HYFY2021, mainly due to grants and aids received from Government, offset by the decrease in interest income received due to decrease in interest bearing loans made to associated companies and joint venture companies.

Share of results of associates and joint ventures suffered a loss of S$0.3 million in HYFY2021, as compared to a profit of S$7.9 million in HYFY2020. The loss was mainly from the Group's share of approximately S$1.0 million loss from associates with hotel operations and ongoing hotel developments as affected by movement and travel restrictions due to the global COVID-19 pandemic. Profit from the Group's four ongoing residential development projects in Singapore2 has decreased substantially as construction works cannot be carried out for most of the months in HYFY2021 due to Circuit Breaker measures implemented to control the COVID-19 pandemic.

2 Affinity@Serangoon, Riverfront Residence, Park Colonial and Rezi 24

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Although there were additional sales with positive margin based on the average selling prices achieved from these residential development projects in Singapore, no revenue has been recognised by the associates and joint venture companies carrying these projects when construction stopped. Nevertheless, expenses such as sales commission on new units sold has to be recognised based on percentage of construction works completed and interest has to be expensed off in full according to accounting standards applied. This timing mismatch in recognition of revenue and expenses has led to the substantial decrease in the profit of associates and joint ventures in HYFY2021.

Correspondingly, the Group reported a net loss attributable to Owners of the Company of S$4.1 million for HYFY2021.

The Group continued to maintain a solid balance sheet and working capital position with strong cash and bank balances, fixed deposits and structured deposits of S$118.1 million and low gearing as at 30 September 2020.

The Group has a fully diluted loss per share of 0.72 Singapore cent in HYFY2021 as compared to a fully diluted earnings per share of 1.05 Singapore cents in HYFY2020 and the net asset value per share as at 30 September 2020 was 57.62 Singapore cents.

Prospects and Outlook

Singapore entered into Phase Two re-opening on 18 June 2020 following the end of the Circuit Breaker, which was implemented from 7 April to 1 June 2020. The Circuit Breaker was a bid to slow the spread of COVID-19 and had led to the suspension of non-essential services and closure of most workplace premises.

Singapore resumed most business activities while limiting close contact amongst individuals and enforcing safe distancing principles in businesses and community as community infection rates have generally remained stable.

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