KSH Achieves Revenue Of S$153.1 Million For FY2021

Mr Choo Chee Onn (朱峙安), Executive Chairman and Managing Director of KSH, said, "Our financial results have been adversely affected amidst vast challenges brought on by the global pandemic. The net loss was largely due to a revaluation of hotel and investment properties under these conditions. We reported a loss of S$3.9 million for the first half of FY2021, and we managed to recover all the losses in the second half of FY2021. We would have reported a profit for the full FY2021, if not for the adjustments relating to the revaluation of properties.

"Our results from the construction business in FY2021 has also been adversely affected by the COVID-19 pandemic that caused the slowdown in work progress and increased the cost of construction. Nevertheless, we have confidence in our construction business, backed by our strong order book of S$620.0 million and competent project teams. For prudence, we have not taken in any potential qualifying claims from the cost-sharing relief under COVID-19 (Temporary Measures) Act 2020 for our existing construction projects in the FY2021 results. Such claims will be offset against cost in the future when they materialise.

"We remain confident of the long-term prospects of our investments in hotels and investment properties, which are geographically diversified, strategically located, with stable occupancy rates. For our property segment, we have achieved good sales for our developments both in Singapore and China, with over S$416.0 million 1 of attributable share of progress billings to be recognised as sales revenue, which will contribute to the Group's results post FY2021.

"Our financial position remains healthy, with a good cash position and low gearing. We will continue to focus on preserving cash and reducing operating or non-essential capital expenditures, as we navigate prudently through these uncertain times."

1 As at 31 March 2021

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Financial Review

In FY2021, being adversely affected by the ongoing global COVID-19 pandemic that started before the beginning of the financial year, KSH achieved a total revenue of S$153.1 million, a 32.3% decrease from S$226.1 million reported a year ago. This was mainly due to the decline in revenue from the Group's main revenue driver, the construction business, which saw a S$71.8 million decrease from S$220.8 million in FY2020 to S$149.0 million in FY2021. Rental income from investment properties decreased mainly due to the investment properties in the People's Republic of China ("PRC").

Other income increased by 45.8% from S$11.5 million in FY2020 to S$16.8 million in FY2021, mainly due to grants and aids received from the Government, offset by the decrease in interest income received due to lower interest bearing loans made to associated companies and joint venture companies.

Share of results of associates and joint ventures included a loss of S$2.9 million in FY2021, from a profit of S$7.8 million in FY2020. This is mainly attributable to the Group's share of approximately S$7.9 million loss in fair value adjustments of hotel properties and a S$3.8 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.

Correspondingly, the Group reported a net loss attributable to Owners of the Company of S$3.8 million for FY2021.

The Group continues to maintain a healthy balance sheet and working capital position with strong cash and bank balances and fixed deposits of S$122.9 million and low gearing as at 31 March 2021.

The Group has a fully diluted loss per share of 0.67 Singapore cent in FY2021 and the net asset value per share as at 31 March 2021 was 56.86 Singapore cents.

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Proposed Dividend

Notwithstanding the challenging economic outlook, KSH will be proposing a final cash dividend of 1.00 Singapore cents per ordinary share to thank shareholders for their continuous support.

Prospects and Outlook

The global COVID-19 pandemic continued to ravage economies worldwide, severely affecting businesses in many countries including Singapore. The emergence of more contagious virus strains diminished hopes of a substantial reopening of international borders in the near-term. In Singapore, the Multi-Ministry Task Force ("MTF") has further tightened border measures from 7 May 2021, to manage the risk of importation from travellers and onward local transmission2.

The emergence of several clusters of infections coupled with a pattern of local unlinked community cases have led to further restrictions under the "Phase 2 (Heightened Alert)" imposed by the Singapore government on higher risk setting, in a bid to minimise virus transmission. These tightened measures will take effect from 16 May to 13 June 2021, which include working from home as the default and no cross- deployment or social gathering allowed, amongst others3.

The Ministry of Trade and Industry ("MTI") announced that Singapore's economy grew by 0.2% on a year-on-year basis in the first quarter of 2021, a turnaround from the 2.4% contraction recorded in the previous quarter, as the country continued its recovery from the COVID-19 pandemic. On a quarter-on-quarterseasonally-adjusted basis, the economy expanded by 2.0%, extending the 3.8% expansion in the preceding quarter4.

1. Ministry of Health - Updates on Local situation, border measures and shift to heightened alert to minimise transmission - 4 May 2021
2. Gov.sg - Additional restrictions under Phase 2 (Heightened Alert) to minimise transmission - 14 May 2021
3. Ministry of Trade and Industry Singapore - Singapore's GDP Grew by 0.2 Per Cent in the First Quarter of 2021 - 14 May 2021

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The Monetary Authority of Singapore ("MAS") had previously noted in April 2021 that prospects for global growth have firmed and should provide support to the ongoing recovery in the economy, with Singapore's GDP growth expected to exceed the 6% forecast range, barring a setback to the global economy5.

While the outlook of the Singapore's economy has improved, projected growth outcomes across sectors have become lopsided as prospects for certain sectors less affected by the pandemic have brightened, while sectors worst-hit have deteriorated.

Construction

The construction sector continued to be badly hit by the COVID-19 pandemic with the ongoing new variants. MAS noted that the sequential slowdown in Singapore's Q1 GDP was largely due to the construction sector, where activity continued to be capped by safe distancing measures at worksites. According to statistics from the MTI, the construction sector shrank by 20.2% on a year-on-year basis in the first quarter, improving from the 27.4% contraction in the preceding quarter.

Following the further tightening of Singapore's border measures with India announced in April due to the deteriorating COVID-19 situation in the country, the Singapore government has provided additional measures to support and mitigate the impact on the construction sector. This includes the time-limited flexibility to recruit workers from the People's Republic of China ("PRC") without having to enrol in Overseas Testing Centres ("OTCs") for skill certification, to mitigate manpower pressure. At the same time, the public sector will grant an additional 49-day Extension of Time ("EOT") to eligible construction contracts for delays due to COVID-19, and provide 0.1% of awarded contract sum for every month of delay as payment for cost sharing of non- manpower related cost increases6.

1. MAS Monetary Policy Statement - April 2021
2. Building and Construction Authority - Additional Measures to Support the Construction Sector - 26 April 2021

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