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Hit by construction halt, Lian Beng Group earnings fall 12.8% y-o-y in FY2020

By Jovi Ho

/ The Edge Singapore |

July 29, 2020 9:00 PM SGT

Lian Beng Group posted a 12.8% y-o-y fall in earnings to $28.7 million for the FY2020 ended May 31, although revenue increased 43.8% y-o-y to $556.0 million for the same period, owing to higher revenue generated from the construction segment.

“The higher revenue from the construction segment was due to the progressive revenue recognition of construction projects for about the first 10 months of FY2020. The Group did not record much revenue for the months of April and May as a result of circuit breaker measures implemented by the Singapore government to combat the Covid-19 pandemic,” says the company via an SGX filing on July 27.

Earnings per share fell to 5.73 cents in FY2020 from 6.58 cents in FY2019.

In line with the increase in construction activity following the commencement of new projects, cost of sales outstripped the growth in revenue, rising 54.6% y-o-y to $471.58 million in FY2020. In light of the above, gross profit increased marginally by 3.3% to $84.5 million in FY2020 from $81.8 million in FY2019.

“Other operating income increased to $20.9 million in FY2020, from $11.1 million in FY2019, mainly due to S$6.7 million in government grant received through the various supplementary budgets, along with an increase of $1.6 million in interest income from loans to associates and a S$0.6 million gain on disposal of a subsidiary which holds the development site at 50 Lorong 21 Geylang,” notes the company.

In FY2020, cash and cash equivalents increased by $14.8 million to $194.6 million in May 2020, mainly due to net cash from operating activities of $94.6 million, partially offset by net cash used in investing activities of $23.3 million and financing activities of $56.5 million respectively.

In May 2020, the Group’s wholly-owned subsidiary, Lian Beng Construction (1988) Pte Ltd, secured a contract worth $174 million for the construction of a private residential development at Sims Drive.

The contract, which was secured through tender from NovaSims Development, will see Lian Beng construct five blocks of 18-storey residential flats, with a total of 566 units. The contract period is set at 36 months and is expected to commence in June 2020.

No final dividend has been declared or recommended for the financial year ended 31 May 2020 “so as to retain funds for working capital requirements of the Group in view of the uncertainty due to Covid-19 pandemic”.

“The Group has made cash conservation and cost control a top priority, and will exercise caution when exploring business opportunities in the region through acquisitions, joint ventures and/or strategic alliances during this Covid-19 period.”

As at July 29, shares in Lian Beng Group closed flat at 39.5 cents.

Read the article on the Edge Singapore

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