Chip Eng Seng has guided that it will report a net loss for FY2020 ended Dec 31, 2020, compared to the net profit of some $32.6 million for the FY2019 ended Dec 31, 2019.

The company, on Aug 3, 2020, announced a net loss of $25.7 million for the 1HFY2020 ended June 30, 2020.

Based on its preliminary review, the company says it expects to incur a wider net loss for FY2020 compared to 1HFY2020.

The losses are mainly due to the negative impact of the Covid-19 pandemic on the group’s businesses.

The company’s consolidated financial results for FY2020 will be released around mid-February.

As at Dec 31, 2020, the company has four on-going development projects in Singapore.

They are: Grandeur Park Residences, Park Colonial, Parc Komo and Kopar at Newton.

Construction works for the first three projects were affected by the closure of their construction sites for a few months in FY2020.

As a result, these developments did not manage to achieve their construction milestones, which in turn, affected revenue recognition and progressive payments from property buyers.

The company, has, however, reported higher sales for these projects as at Jan 3, compared to Aug 3, 2020.

Despite that, the group was unable to recognise as much revenue for the 2HFY2020 ended December.

The group’s residential property market in Australia was also impacted by the “weakened economic conditions” and “plunge in consumer sentiment” for FY2020.

“The group has thus recalibrated its strategy by exploring opportunities to divest certain of its development sites in Australia so that it can re-deploy capital towards asset classes that can generate better returns,” it says in a Jan 11 statement.

Moving forward, the group says it will continue to “exercise caution” in acquiring land plots and development projects in Singapore and abroad.

The group has also reported that demand for construction was low in 2QFY2020 and 3QFY2020.

In 1QFY2020, the group secured three public sector projects with a total contract value of $758.3 million.

<hr/><strong>SEE: <a href="https://www.theedgesingapore.com/news/company-news/boustead-singapore-sells-wholly-owned-subsidiary-chip-eng-seng-subsidiary-728-mil"  target="_blank">Boustead Singapore sells wholly-owned subsidiary to Chip Eng Seng subsidiary for $7.28 mil</a></strong><hr/>

It was then able to secure new projects, both from the Housing and Development Board (HDB) for $17.8 million and $32.9 million, only towards the end of FY2020.

The bulk of the supply of works for the two new projects will be in FY2021, and revenue will, accordingly, be recognised from FY2021.

As at Dec 31, 2020, the group’s order book for its construction business segment stands at $1.3 billion.

The group’s hotels in Singapore, Australia and the Maldives have not seen “significant” recovery in occupancy rates and revenue due to stringent travel restrictions throughout FY2020.

To mitigate the operating costs of its hotels, the group says it is continuing with its cost-containment measures such as the temporary closure of non-essential facilities.

<strong>Property investment and education</strong>

There was an overall decline in the occupancy rate of CES Centre in FY2020, reports the group, compared to the full-year period in FY2019.

As such, the group will recognise “significant impairment losses” in FY2020 with respect to its investment properties.

In FY2020, the pandemic also contributed to the delay in licensing and completion of renovation for the group’s new schools in the pipeline.

Schools include its Invictus-branded international schools in Singapore’s Centrium Square campus and Hong Kong’s Tai Tum campus.

The delay impacted the group’s ability to market the schools and secure enrolment numbers.

The group says it was able to meet all its financial obligations that matured in FY2020. It also took steps to conserve its cashflow by postponing non-strategic investments and non-essential capital expenditures.

“Based on the company’s cashflow projection for FY2021, the financial impact on the group caused by the Covid-19 pandemic is not expected to affect the Group’s ability to fulfil its financial obligations in FY2021, barring unforeseen circumstances,” it says.

Shares in Chip Eng Seng closed flat at 44 cents on Jan 8.

Chip Eng Seng to report net loss for FY2020

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