KSH Holdings, the construction, property development and property management group, today announced a net profit after taxation of $8.5 million for the half year ended September 30, 2010 (1HFY2011) compared to $10.1 million in 1HFY2010.

Revenue rose 15.4% to $144.1 million from $124.9 million for the previous corresponding period.

During the financial period under review, the group’s construction business continued to be the strongest revenue contributor, comprising 98.1% of total group revenue. Revenue from this core sector increased by $19.0 million or 15.5% to $141.3 million in 1HFY2011, as compared to $122.3 million in 1HFY2010. The increase was mainly due to revenue contributed from new projects and other ongoing projects that have progressed into advanced stages of construction.

Revenue from the group’s Property Development and Management segment made up the remaining 1.9% of total revenue in 1HFY2011 at $2.8 million. Rental income from investment properties has increased $0.5 million in 1HFY2011 as compared to 1HFY2010, offset by the decrease in rental income from development property of $0.3 million in 1HFY2011 as compared to 1HFY2010.

In line with the increase of construction revenue, cost of construction increased by $22.3 million or 21.6% from $103.3 million in 1HFY2010 to $125.6 million in 1HFY2011. Average gross margin of the construction business decreased from 15.6% in 1HFY2010 to 11.1% in 1HFY2011 mainly due to rising cost and lower pricing from the later projects awarded, due to the growing competitiveness of the industry in line with an improved economy.

As a result, the group reported a profit before taxation of $10.2 million in 1HFY2011, a 20.0% decrease from 1HFY2010.

The group’s borrowings decreased by $16.5 million from $103.0 million as at March 31, 2010 to $86.5 million as at September 30, 2010. This is attributed to the decrease in use of bills payable to banks, and the repayment of finance lease obligations and bank term loans. As at September 30, 2010, the group maintained a strong balance sheet and working capital position, with cash and cash equivalents and fixed deposits of $69.2 million.