SoilBuild Construction reports wider 4Q18 net loss after arbitration loss

Singapore two-dollar bills

SoilBuild Construction reported on Wednesday a fourth quarter net loss of S$4.01 million, wider than the year-earlier net loss of S$3.15 million after an unfavorable arbitration ruling.

Revenue for the quarter ended 31 December increased 46.9 percent on-year to S$78.18 million on the progress of on-going projects, it said in a filing to SGX after the market close on Wednesday.

Earlier this week, SoilBuild received an arbitration decision in connection with a case brought by its wholly owned subsidiary Soil-Build against a subcontractor for damages due to its delay in completing subcontracted work for a construction project, it said.

Under the decision, the subcontractor isn’t liable to pay Soil-Build any damages and Soil-Build must pay the subcontractor the balance amount owed of around S$1.4 million, and potential interest, which it hadn’t previously expected to be payable, the filing said.

That resulted in SoilBuild having to recognize an additional S$5.3 million in cost of sales for the project during the fourth quarter, which included the S$1.4 million, damages it previously expected to receive and other costs, such as legal fees, it said.

Excluding that amount, gross profit for the quarter would have been around S$4.7 million, it said.

SoilBuild said the major revenue contributors for the quarter were the 68 Residence project, which includes construction and completion of a 26.5 storey serviced apartment/condominium in Yangon; the Rosehill Residence project, which includes the erection of a 24-storey residential development in Yangon; the 64 Kallang Way project, which was to construct a multi-user general industrial factory development at Geylang Planning Area in Singapore; and the Bedok Food City project, which was to construct a high-rise multi-user food factory at Bedok North Avenue 4 in Singapore.

For the full year, SoilBuild reported a net loss of S$3.28 million, narrower than the year-earlier net loss of S$5.97 million, on revenue of S$208.58 million, up 4.5 percent on-year.

It issued a cautious outlook.

“The group expects the demand for construction activities in the local market to remain competitive,” it said.

“Continual efforts will be extended to tender for more new construction projects. Concurrently, the group will also implement strategies to secure more supply and delivery contracts for precast components,” it added.

It said its orderbook as of end-December was at S$400.7 million, which comprised S$261.6 million from Singapore construction projects, S$125.4 million from Myanmar construction projects, and S$13.7 million of precast and prefabrication supply contract.

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