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(1): Comparatives have been restated to conform with current year's presentation.Click here to enlarge the image
Third quarter ended 31 March 2017 ("3Q17") vs third quarter ended 31 March 2016 ("3Q16")
Group revenue of USD 49.67 million was 25.7% lower than 3Q16. A 15.8% increase in electronics manufacturing services revenue was offset by a reduction in property sales revenue.
Profit after tax of USD 5.42 million was 37.7% lower than USD 8.71 million in 3Q16. Higher profit contribution from electronics manufacturing services was partially offset by a decrease in profit contribution from property sales which related to 7% of Unison on Tenth apartments that were sold during 3Q17. Results in 3Q16 were boosted by sale of 39% of Unison of Tenth apartment units on project completion, and a one-off gain on investment reclassification.
Mark-to-market gains on investment securities and derivative financial instruments totaled USD 1.80 million in the current quarter, as compared to a net loss of USD 0.62 million in 3Q16. Depreciation expense was lowered on exchange translation. Other gains comprised a net foreign exchange gain of USD 1.51 million that mainly resulted from stronger Singapore and Australian dollars. These exchange rate fluctuations against US dollar also contributed to other comprehensive income of USD 4.67 million.
Share of associates' results of USD 0.05 million comprised share of Finbar Group Limited's ("Finbar") results for the half year ended 31 December 2016 and share of Pacific Star Development Limited's ("PSDL") results for the current quarter. A loss was recorded by Finbar due to downward revaluation of its investment property in Perth.
Earnings per share in 3Q17 was US cents 0.52, as compared to US cents 0.92 cents in 3Q16.
Nine months ended 31 March 2017 ("9M17") vs nine months ended 31 March 2016 ("9M16")
Group revenue of USD 156.18 million was 9.9% lower than the same period last year. Decrease in property revenue was partially offset by an 8.8% increase in electronics manufacturing services revenue.
Profit after tax of USD 8.83 million was 0.4% lower than USD 8.87 million in 9M16. Profit contribution from electronics manufacturing services was significantly higher in 9M17. Profit from property sales had decreased as Toccata apartments were fully sold in FY2016, and fewer Unison on Tenth units were sold in 9M17. 9M16 profit was boosted by a one-off gain on investment reclassification.
Mark-to-market gains on investment securities and derivative financial instruments totaled USD 3.07 million, as compared to a drop in fair value of USD 2.51 million in 9M16. Employee benefits expense increased by 34.6% to USD 9.23 million due to higher provision for staff cost. Other expenses in 9M16 was lowered by a reversal of over-accruals. Other gains amounted to USD 0.69 million as compared to USD 3.07 million in 9M16. Other comprehensive income of USD 0.36 million mainly related to exchange translation differences.
Earnings per share was US cents 0.79, as compared to US cents 0.88 in 9M16.
As at 31 March 2017, the Group remained in a healthy financial position. Net assets attributable to equity holders of the company amounted to USD 281.77 million, an increase from USD 280.78 million as at 30 June 2016. Cash and cash equivalents increased by 30.1% to USD 98.89 million.
Development properties decreased by 29.4% to USD 23.88 million due to ongoing sale of Unison on Tenth apartments which resulted in a residual stock of 18% as at 31 March 2017.
As at 30 June 2016, the Group's investment in convertible loans to PSD Holdings Pte Ltd ("PSDH") was USD 20.18 million, recorded as investment securities held as non-current assets. In 2Q17, the Group invested in a convertible loan to Major Star Holdings Limited ("MSH") of USD 14.71 million. The convertible loan agreements with PSDH were then novated to MSH in November 2016. These loans were subsequently converted to a 77.2% stake in MSH with a residual loan receivable from MSH of USD 7.74 million. The investment in MSH was classified as an investment in subsidiary held as current asset as at 31 December 2016. MSH was an investment company which had a 50% interest in PSDH. PSDH in turn held 100% interest in Pacific Star Development Pte Ltd ("PSD"), the subject of a Reverse Takeover ("RTO") transaction with LH Group Limited ("LH"), a company listed on the SGX-ST.
The RTO took place during 3Q17, and LH was renamed as Pacific Star Development Limited ("PSDL"). In accordance with the convertible loan agreement terms, MSH procured the issuance of 59,151,600 shares in PSDL to the Group, and canceled its shares held by the Group through a share buyback. The investment in subsidiary was thus reclassified to an investment in associate to account for the Group's 37.34% interest in PSDL during the current quarter. This contributed to the increase of USD 25.83 million in investment in associates to USD 59.06 million as at 31 March 2017.
Conversion of trade receivables to additional property development loan resulted in a decrease in trade and other receivables and a corresponding increase in other receivables held as non-current assets. The Group's fund portfolio recorded within investment securities held as non-current assets was rebalanced and continued to be financed by a short-term borrowing during the quarter. Investment securities held as current assets decreased by 61.6% to USD 11.14 million due to divestment of quoted equity investments.
Net asset value of the Group was US cents 30.35 per share as at 31 March 2017, as compared to US cents 30.19 as at 30 June 2016.
Despite the continuing recovery in global equities, the Group remains cautious on the global economic growth outlook amidst international trade and geopolitical uncertainties. Property market demand in Western Australia may continue to remain soft over the next 12 months.
The Board of Directors will continue to exercise prudence when considering new investments.
Save as disclosed herein, there are no known material factors or events which may affect the earnings of the Group between this date up to which the report refers and the date on which the report is issued.