2012 Second Quarter and Half-Year Financial Statement Announcement

Transcription

1 Corporation Limited (formerly known as SM Summit Holdings Ltd) (Company Registration No W) 2012 Second Quarter and Half-Year Financial Statement Announcement PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY, HALF-YEAR AND FULL YEAR RESULTS Financial statements on consolidated results for the Second Quarter and Half-Year ended 30 June 2012 These figures have not been audited. 1(a)(i) Income statement Group Group Second Quarter ended 30 June Half-Year ended 30 June Change Change $ '000 $ '000 % $ '000 $ '000 % Revenue 17,030 3, ,005 6, Cost of sales (9,646) (776) 1,143 (16,920) (1,622) 943 Gross profit 7,384 2, ,085 4, Other gains (net) - Miscellaneous 1,023 - N/M 1,331 1 N/M Expenses - Distribution (467) - N/M (1,064) - N/M - Administrative (3,888) (148) 2,527 (7,200) (262) 2,648 - Finance (428) (264) 62 (688) (530) 30 Profit before share of loss of associated companies and joint venture Share of loss of associated companies and joint venture (net) 3,624 1, ,464 3, (144) - N/M (279) - N/M Profit before income tax 3,480 1, ,185 3, Income tax expense (858) (381) 125 (1,335) (761) 75 Net profit 2,622 1, ,850 3, Attributable to: Equity holders of the Company 2,535 1, ,694 3, Non-Controlling Interest 87 - N/M N/M 2,622 1, ,850 3, Page 1 of 16

2 1(a)(ii) Statement of Comprehensive Income Second Quarter ended 30 June Half-Year ended 30 June Change Change $ '000 $ '000 % $ '000 $ '000 % Net profit for the period Currency translation differences Financial assets, available-for-sale - Fair value loss 2,622 1, ,850 3, (488) - N/M (997) - N/M (58) - N/M (84) - N/M (546) - N/M (1,081) - N/M Total comprehensive income for the period 2,076 1, ,769 3,084 (10) Attributable to: Equity holders of the Company 1,989 1, ,613 3,084 (15) Non-Controlling Interest 87 N/M N/M 2,076 1, ,769 3,084 (10) 1(a)(iii) Notes to Income Statement After (charging) / crediting: Second Quarter ended 30 June Half-Year ended 30 June Change Change $ '000 $ '000 % $ '000 $ '000 % Interest expense (428) (264) 62 (688) (530) 30 Depreciation and Amortisation (3,650) (391) 834 (5,610) (782) 617 Allowance for doubtful debts (net) (131) - N/M (130) - N/M Currency exchange loss (net) (30) - N/M (159) - N/M The miscellaneous gains (net) comprise the following: Second Quarter ended 30 June Half-Year ended 30 June Change Change $ '000 $ '000 % $ '000 $ '000 % Other rental income N/M N/M Interest income N/M N/M Dividend income 53 - N/M N/M Currency exchange loss (net) (30) - N/M (159) - N/M Others N/M N/M Other miscellaneous gains - net 1,023 - N/M 1,331 1 N/M N/M : Not meaningful Page 2 of 16

3 ACQUISITION OF ALPHA SUNSHINE SDN BHD On 10 February 2012, the Group acquired 100% equity interest in Alpha Sunshine Sdn Bhd. Alpha Sunshine Sdn Bhd operates a newly built and operational dormitory with a capacity of 2,600 beds in Tebrau IV located in Johor, Malaysia. a) Identifiable assets acquired and liabilities assumed (provisional) : Provisional fair value $ '000 Cash and cash equivalents 16 Investment property 6,555 Property, plant & equipment 409 Trade receivables 17 Other current assets 57 Total assets 7,054 Trade and other payables (204) Loans from shareholders (2,898) Borrowings (4,126) Deferred income tax liabilities (33) Total liabilities (7,261) Net identifiable assets (207) Provisional Goodwill [ Note (i) ] 207 Consideration paid for 100% equity interest - * * Less than $1,000 Note (i) In accordance with FRS 103, Business Combinations, a purchase price allocation ( PPA ) exercise is being carried out to assess the fair values of the net identifiable assets of Alpha Sunshine Sdn Bhd. The excess of the cost of acquisition over the fair values of the net identifiable assets will be recorded as goodwill in the balance sheet and subject to an annual impairment test. The review of PPA is still ongoing and will be completed by year end. As a result, the provisional goodwill on acquisition amounted to $207,000. b) Subsequent to the acquisition, the Group repaid the loan to previous shareholders. The effects of the acquisition of Alpha Sunshine Sdn. Bhd. on the cash flows of the Group for the financial period ended 30 Jun 2012 were as follows: $ '000 Cash paid 2,898 Less: cash and cash equivalents in subsidiary acquired (16) Cash outflow on acquisition 2,882 Page 3 of 16

4 ACQUISITION OF DORMITORY INVESTMENTS PTE LTD On 29 February 2012, the Group acquired 90% equity interest in Dormitory Investments Pte Ltd, a company which operates a foreign workers' dormitory with a capacity of 8,600 beds in Tuas, Singapore. a) Effect on cash flows of the Group : $ '000 Cash paid 42,750 Less: cash and cash equivalents in subsidiary acquired (3,684) Cash outflow on acquisition 39,066 b) Identifiable assets acquired and liabilities assumed (provisional) : Provisional fair value $ '000 Cash and cash equivalents 3,684 Property, plant & equipment 26,509 Trade Receivables 2,146 Inventories 34 Other current assets 15 Intangible assets 25,521 Total assets 57,909 Trade and other payables (6,762) Loans and borrowings (28) Current income tax liabilities (2,548) Deferred income tax liabilities (4,524) Total liabilities (13,862) Net identifiable assets 44,047 Less: Non-controlling interest (4,405) Net identifiable assets purchased 39,642 Provisional Goodwill [ Note (ii) ] 3,108 Consideration paid for 90% equity interest 42,750 Note (ii) In accordance with FRS 103, Business Combinations, a purchase price allocation ( PPA ) exercise is being carried out to assess the fair values of the net identifiable assets of Dormitory Investment Pte Ltd. The excess of the cost of acquisition over the fair values of the net identifiable assets will be recorded as goodwill in the balance sheet and subject to an annual impairment test. In Q1 FY2012, the PPA exercise was at a preliminary stage, and the Group had assumed, on a provisional basis, that the fair values of the net identifiable assets of Dormitory Investment Pte Ltd are equal to the carrying amounts on the acquisition of Dormitory Investment Pte Ltd. As a result, the provisional goodwill on acquisition amounted to $22,261,000, as at 31 March Of the provisional goodwill, none had been provisionally identified as relating to items that require classification as intangible assets at that time. In Q2 FY2012, new information was obtained about facts and circumstances that existed as of the acquisition date and if known, would have affected the measurement of the amounts recognized as of that date. Hence, the provisional amounts of the identified assets and liabilities were adjusted retrospectively to reflect the new information obtained. As a result, intangible assets relating to land and dormitory use rights amounting to $25,521,000 were recognized as at 30 June 2012, with a corresponding amortization charge of $1,235,000 included in the income statement for the period from 1 April to 30 June 2012, and $412,000 for the period from 1 January to 31 March The provisional goodwill on acquisition amounted to $3,108,000. The review of PPA is still ongoing and will be completed by year-end. Page 4 of 16

5 ACQUISITION OF GALLERY CONNECTION On 12 Apr 2012, the Group acquired 100% equity interest in Gallery Connection Sdn Bhd which is the registered proprietor of a piece of land located at Ulu Tiram, Johor Bahru, Malaysia and a dormitory under renovation. It has a capacity of 1,600 beds. Consequently, Gallery Connection Sdn Bhd became a subsidiary of the Group. The acquisition was accounted for as an acquisition of assets. The total consideration was allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as follows : a) Identifiable assets acquired and liabilities assumed : $ '000 Cash and cash equivalents - * Investment property 1,013 Property, plant & equipment 6 Total assets 1,019 Trade and other payables (9) Loans from shareholders (949) Total liabilities (958) Identifiable net assets 61 Consideration paid for 100% equity interest 61 * Less than $1,000 b) Subsequent to the acquisition, the Group repaid the loan to to the previous shareholders. The effects of the acquisition of subsidiaries on the cash flows of the Group for the financial period ended 30 June 2012 were as follows : $ '000 Cash paid 1,010 Less: cash and cash equivalents in subsidiary acquired - Net cash outflow on acquisition 1,010 Page 5 of 16

6 ACQUISITION OF APPROACH IMPACT On 30 May 2012, the Group acquired 100% equity interest in Approach Impact Sdn Bhd which is the owner of a piece of land at Tampoi, Malaysia. Consequently, Approach Impact Sdn Bhd became a subsidiary of the Group. The acquisition was accounted for as an acquisition of assets. The total consideration was allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as follows : a) Identifiable assets acquired and liabilities assumed : $ '000 Cash and cash equivalents 16 Investment property 4,863 Total assets 4,879 Trade and other payables (7) Loans from shareholders (4,798) Total liabilities (4,805) Net identifiable assets 74 Consideration paid for 100% equity interest 74 b) Subsequent to the acquisition, the Group repaid the loan to to the previous shareholders. The effects of the acquisition of subsidiaries on the cash flows of the Group for the financial period ended 30 June 2012 were as follows : $ '000 Cash paid 4,872 Less: cash and cash equivalents in subsidiary acquired (16) Cash outflow on acquisition 4,856 Page 6 of 16

7 1(b)(i) Balance Sheet Group Company 30 Jun Dec Jun Dec 11 $ '000 $ '000 $ '000 $ '000 Current assets Cash and cash equivalents 25,497 38,584 7,387 18,644 Trade and other receivables 16,822 18,829 11,655 13,404 Inventories 2,006 2, Other current assets 2,155 1, ,480 61,778 19,893 32,826 Non-current assets Trade and other receivables 9,550 9, , ,620 Financial assets, available-for-sale 4,197 4,281 4,197 4,281 Investments in associated companies 1,350 1,364 1,298 1,298 Investments in joint venture 4,352 4, Investments in subsidiaries ,326 11,326 Investment properties 85,879 70, Property, plant & equipment 36,711 10, Intangible assets 27, , , , ,637 Total assets 215, , , ,463 Current liabilities Trade and other payables (21,260) (18,392) (1,516) (2,058) Current income tax liabilities (5,616) (2,652) (340) (375) Borrowings (11,226) (3,697) - (3) (38,102) (24,741) (1,856) (2,436) Non-current liabilities Borrowings (65,629) (34,022) - - Other payables (1,074) (1,940) (220) (511) Deferred income tax liabilities (5,024) (807) (89) (59) (71,727) (36,769) (309) (570) Total liabilities (109,829) (61,510) (2,165) (3,006) Net assets 105, , , ,457 Equity Share capital 89,431 89, , ,742 Other reserves 16,090 17, Accumulated (losses) / retained earnings (4,139) (5,565) 7 (1,554) 101, , , ,457 Non-Controlling Interest 4,561 (25) - - Total equity 105, , , ,457 Total borrowings 76,855 37,719 Gearing ratio * 42% 27% Gearing ratio (adjusted)** 29% 17% * The gearing ratio is computed as total borrowings divided by total capital. Total capital is calculated as total borrowings plus net assets ** The gearing ratio (adjusted) is computed as total borrowings divided by total capital. Total capital is calculated as total borrowings plus revalued net asset value ( RNAV ). RNAV is the aggregate of net assets of the Group as at 30 June 2012 and the notional surplus arising from the revaluation of the investment property located at Toh Guan Road East on a redevelopment basis of $138 million as at 31 December 2011 based on valuation made by external independent professional valuer. The notional surplus is not recorded in the financial statements but is used only for the computation of the gearing ratio (adjusted). Page 7 of 16

8 1(b)(ii) Group's borrowings and debt securities (a) Amount repayable in one year or less, or on demand As at 30 Jun 12 $'000 As at 31 Dec 11 $'000 Secured 11,226 3,697 Unsecured - - Sub-Total 11,226 3,697 (b) Amount repayable after one year As at 30 Jun 12 $'000 As at 31 Dec 11 $'000 Secured 65,629 34,022 Unsecured - - Sub-Total 65,629 34,022 Total Debt 76,855 37,719 (c) Details of any collateral The Group's secured borrowings includes bank borrowings and lease liabilities. The borrowings are secured by fixed charges over the investment properties and certain property, plant and equipment of the subsidiaries. Page 8 of 16

9 1 (c) Consolidated Cash Flow Statement Second Quarter Half-Year ended 30 June ended 30 June $ '000 $ '000 $ '000 $ '000 Cash flows from operating activities Net profit 2,622 1,564 3,850 3,084 Adjustment for: Tax expense , Depreciation and amortisation 3, , Net loss from sale of property, plant and equipment (2) - (2) - Interest income (106) - (207) - Dividend income (53) - (105) - Interest expense Share of loss of associated companies and joint venture (net) Currency translation differences (43) - (322) - Operating cash flow before working capital changes 7,498 2,600 11,126 5,157 Changes in operating assets and liabilities, Inventories Trade and other receivables 1, ,170 2 Other current assets 121 (23) (221) (23) Trade and other payables (1,605) 71 (533) 102 Cash generated from operations 8,146 2,658 15,067 5,238 Income tax paid - net (1,072) (667) (1,255) (860) Net cash provided by operating activities 7,074 1,991 13,812 4,378 Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of investment property (2,361) (181) (4,520) (181) Purchase of property, plant and equipment (2,476) (3) (2,532) (3) Acquisition of interest in subsidiaries, net of cash acquired (6,107) - (47,814) - Acquisition of additional interest in a subsidiary (854) - (3,328) - Interest received Dividend received Release of short term bank deposits charged as security to bank 1,568-1,568 - Net cash used in investing activities (10,014) (184) (56,257) (184) Cash flows from financing activities Proceeds from borrowings 5,542-39,742 - Repayment of borrowings (2,956) (866) (4,503) (1,733) Interest paid (428) (264) (688) (530) Dividends paid to shareholders (2,268) - (2,268) - Dividends paid in relation to pre-completion dividends - - (1,095) - Net cash (used in) / provided by financing activities (110) (1,130) 31,188 (2,263) Net (decrease) / increase in cash and cash equivalents held (3,050) 677 (11,257) 1,931 Cash and cash equivalents at beginning of the period 28,560 4,157 36,906 2,903 Effects of exchange rate changes on cash and cash equivalents (13) - (152) - Cash and cash equivalents at end of the period 25,497 4,834 25,497 4,834 Page 9 of 16

10 1(d)(i) Statement of Changes in Equity As at 30 June 2012 vs 30 June 2011 Attributable to equity holders of the Company Share Capital Retained Total Non-Controlling Total GROUP Capital Reserves Earnings Equity Interest Equity 2012 $'000 $'000 $'000 $'000 $'000 $'000 Balance as at 1 Jan ,431 17,171 (5,565) 101,037 (25) 101,012 Dividends relating to interim paid Non-controlling interest share in a subsidiary Adjustment on acquisition of additional shares in a subsidiary from minority shareholder Total comprehensive (expense) / income for the year - - (2,268) (2,268) (2,268) ,405 4, (1,081) 3,694 2, ,769 Balance as at 30 Jun ,431 16,090 (4,139) 101,382 4, ,943 Share Other Retained Total Non-Controlling Total GROUP Capital Reserves Earnings Equity Interest Equity 2011 $'000 $'000 $'000 $'000 $'000 $'000 Balance as at 1 Jan 2011 Total comprehensive income for the period Balance as at 30 Jun ,000-4,184 5,184-5, ,084 3,084-3,084 1,000-7,268 8,268-8,268 Share Other Retained COMPANY Capital Reserves Earnings 2012 $'000 $'000 $'000 Total $'000 Balance as at 1 Jan 2012 Dividends relating to interim paid Total comprehensive income for the year Balance as at 30 Jun , (1,553) - - (2,268) - (84) 3, , ,458 (2,268) 3, ,934 Share Other Retained COMPANY Capital Reserves Earnings 2011 $'000 $'000 $'000 Balance as at 1 Jan , ,898 Dividends relating to 2010 paid - - (1,812) Total $'000 44,103 (1,812) Total comprehensive income for the period Balance as at 30 Jun (1,377) 40, (1,333) 40,958 Page 10 of 16

11 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. There were no changes in the Company's issued share capital. The Company does not have any outstanding convertibles and treasury shares as at 30 June 2012 and 30 June (d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. 30 Jun 12 Total number of issued shares excluding treasury shares 756,060, Dec ,060,841 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. There were no treasury shares during the current financial year reported on. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the Company's auditors. 3 Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter). Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied. The Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting year compared with the audited financial statements as at 31 December If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. There are no significant changes in the Group's accounting policies and method of computation. Page 11 of 16

12 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Group Second Quarter ended First Half ended 30 June 30 June Based on weighted average number of ordinary (a) shares on issue 0.34 cent 0.37 cent 0.49 cent 0.73 cent (b) On a fully diluted basis 0.34 cent 0.37 cent 0.49 cent 0.73 cent Note: The earnings per share is calculated based on weighted average number of ordinary shares in issue of 756,060,841 (2011: 424,851,370) ordinary shares. 7 Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the : (a) current period reported on; and (b) immediately preceding financial year. Group Company 30 Jun Dec Jun Dec 11 Net asset value per ordinary share cents cents cents cents Revalued net asset value* per ordinary share cents cents - - * Note The Group and Company net asset per ordinary share is calculated based on existing issued share capital of 756,060,841 (2011: 756,060,841) ordinary shares. Revalued net asset value ("RNAV") is the aggregate of net assets of the Group as at 30 June 2012 and the surplus arising from the revaluation of the investment property located at Toh Guan Road East on a redevelopment basis of $138 million as at 31 December 2011 based on valuation made by external independent professional valuer. 8 Group Performance Review A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. It must include a discussion of the following: (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. On 1 August 2011, the Company completed its acquisition of Westlite Dormitory (Toh Guan) Pte Ltd, formerly known as Dormitory (Westlite) Pte Ltd, ( Westlite ) via a reverse acquisition exercise. In accordance with FRS 103, the Group s consolidated financial statements were prepared as a continuation of Westlite s financial statements. As such, Q and 1H 2011 financial results comprised the financial results of Westlite, while Q and 1H 2012 financial results included three months and six months financial results of the enlarged group ( the Group ) respectively. Second quarter 2012 (Q2 2012) financial performance In Q2 2012, the Group recorded a revenue of S$17.03 million, a four-fold increase from Q s turnover of S$3.13 million. This increase was mainly attributable to the inclusion of the Group s Optical Disc Business of $6.62 million and contributions from the new dormitories that the Group acquired during first quarter of this year of $6.80 million. Correspondingly, the Group s gross profit improved 213% or S$5.02 million from S$2.36 million in Q to S$7.38 million for Q Page 12 of 16

13 Miscellaneous other gain of S$1.02 million comprises mainly of other rental and interest income received by the Group and a write-back of a provision for certain contractual obligations which no longer required. The distribution cost of S$0.4 million was incurred by the Group s optical disc business as part of its daily operations. The Group s administrative expenses in Q increased by S$3.74 million, mainly due to the inclusion of expenses from the Optical Disc Business, amortisation of intangible assets which arose from the acquisition of the Tuas dormitory and an increase in salary costs and professional fees associated with the expansion of the Group s Dormitory Business. The S$0.14 million share of losses from associated companies mainly relates to the Group s 45% share in the losses incurred by Lian Beng- (Mandai) Pte Ltd ( LBCM Group ). The loss was due to marketing and administrative expenses incurred from the sale of ramp-up industrial building units. The revenue generated from the sale will only be recognised in FY2013, when construction is completed. The Group reported a net profit of S$2.62 million for Q2 2012, a 68% increase from S$1.56 million in Q The Optical Disc Business and Dormitory Business contributed $0.22 million and $2.40 million of the net profit respectively. First half 2012 (1H 2012) financial performance The key highlight of the Group s first half financial results was contribution from the newly acquired dormitories in Tuas, Singapore and Johor, Malaysia during 1Q Fully functional dormitories with a bed capacity of 12,800 as at 30 June 2012, both acquisitions were immediately accretive adding S$8.8 million to the Group s 1H 2012 revenue. Revenue more than tripled from S$6.26 million in 1H 2011 to S$30.01 million in 1H Part of the rise was also due to the inclusion of the Group s Optical Disc Business revenue of S$14 million in the first half of the year under review. Gross profit improved S$8.45 million or 182% from S$4.64 million in 1H 2011 to S$13.09 million in 1H 2012, driven by growth in both business units. The Group s Dormitory Business unit accounted for S$4.75 million out of the S$8.45 million increase largely attributable to the newly acquired dormitories and an increase in rental rates at Westlite. Overall gross margin for 1H 2012 normalised at approximately 43.6% given the enlarged portfolio of the Group. Miscellaneous gains and cost increases for 1H 2012 was correspondingly similar to Q There was a newly recorded net gain of S$1.33 million from rental and interest income and a write-back of a provision for certain contractual obligations which are no longer required. Distribution cost of S$1.06 million was mainly expenses of the Group s Optical Disc Business which has manufacturing operations spanning Singapore, Indonesia and Australia. Administrative cost in 1H 2012 increased S$6.94 million, of which the Optical Disc Business accounted for S$4.01 million. The remaining administrative cost expansion was attributed to the Dormitory Business. Finance expenses grew in line with the increased borrowings made by the Group to finance its acquisitions. Similar to 2Q 2012, the share of losses from associated companies of S$0.28 million was a result of revenue and cost recognition timing differences related to the Group s 45% share in the losses incurred by LBCM Group. Revenue from the sales of the factory units is expected to be recognised by the joint venture in 2013 when Mandai development is completed. As a result of the above, the Group posted net profit of S$3.85 million for 1H 2012 as compared to S$3.08 million in 1H The Group s Dormitory Business contributed S$3.53 million, or 91.7% to overall net profit in 1H Review of Group balance sheet The increase of S$15.69 million in investment property was mainly due to the acquisition and development of dormitory projects in Johor, Malaysia. Property, plant and equipment increased S$26.03 million mainly due to the inclusion of fixed assets in the Tuas dormitory that the Group acquired in Singapore. The increase was partially offset by depreciation expense charged during the first half of the year. Intangible assets increased S$27.19 million due to the excess of purchase cost of two dormitory acquisitions over the carrying amount of the net identifiable assets of these acquisitions at the date of acquisition. In accordance with FRS 103, Business Combinations, a purchase price allocation exercise ( PPA ) was carried out to assess the fair values of the net identifiable assets of these acquisitions. The PPA is still ongoing and will be completed by year-end. On the finalisation of the PPA, the actual amount of goodwill (if any) arising from these acquisitions may be different. Trade and other payables and income tax liabilities increased mainly due to the acquisition of dormitories during 1H FY2012. Borrowings increased S$39.14 million mainly due to bank loans obtained to finance the Group s dormitory acquisitions in 1H Gearing ratio, adjusted for the revaluation of the investment property located at Toh Guan Road East, stood at a comfortable 29%. Review of Company Balance Sheet Page 13 of 16

14 Review of Company Balance Sheet Trade and other receivables (current and non-current) at the company level increased S$11.91 million due to the loans made to a subsidiary to acquire dormitory assets, which caused a corresponding fall in cash and cash equivalents as at 30 June Review of Cash Flow Statement The Group generated positive net cash of S$7.07 million from its operating activities in Q This is an improvement of SS$4.32 million compared to Q Net cash used in investing activities of S$10.0 million in Q was mainly attributed to the acquisition of additional equity interest in a dormitory and further development of the dormitory projects in Malaysia. Net cash provided by financing activities is negligible as the proceeds from borrowings to finance the above new investment activities were offset by the repayment of current borrowings and an interim dividend paid out to shareholders recognised in Q As a result of the above, the Group recorded a net reduction in cash and cash equivalents of S$3.05 million to S$25.50 million for Q Where a forecast, or a prospect statement has been previously disclosed to shareholders, any variance between it and the actual results. The Company has disclosed in the Circular dated 30 June 2011 on Page 24 that the Westlite Vendors have provided a Profit Warranty that the aggregate Net Profit After Tax ( NPAT ) of Westlite for FY2011 and FY2012, after adjusted for the Excluded NPAT (as defined in the Circular), shall be at least $10.2 million. The NPAT of Westlite for FY2011 and FY2012 1H is broadly in line with the prospect statement disclosed in the Circular. Compliance Placement Proceeds Updates The Company had disclosed in its Offer Information Statement ( OIS ) dated 13 September 2011, on page 13 item 3, the intended use of the net proceeds from the Placement of 100 million shares. On 11 May 2012, the Company had made an announcement for the change of use of the proceeds from the said Placement. The following table provides a status update on the utilization of the net proceeds as at 30 June Intended of Use Allocated Utilization Remarks (a) Mandai Land $2.2 million $2.2 million (b) Dormitory acquisition / Development Total Proceeds $18.8 million $11.9 million $21.0 million $14.1 million Dormitories in Malaysia - Johor Tech Park, Tebrau IV and Tampoi Page 14 of 16

15 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. Dormitory Business The Group s dormitories at Toh Guan and Tuas are expected to continue operating at high occupancy levels on the back of strong demand for purpose built workers dormitory in Singapore. Upgrading works at Westlite Toh Guan has commenced and will enhance its capacity from approximately 5,300 beds to 8,000 beds. As about 10% of the dormitory units have to be vacated to accommodate the upgrading works, revenue contributed from Westlite Toh Guan is expected to decline marginally. To date, the joint venture with Lian Beng Group, LBCM Group, has sold all its 142 ramp-up factory units at its Mandai Development. Sales revenue from these factory units will be recognised when construction is completed in LBCM Group has also received planning approval to build an additional dormitory block on the remaining plot of freehold land at the site. This new block will add another 1,540 beds to the already approved 4,750 beds, yielding a total of approximately 6,290 beds for the Mandai dormitory development. Based on current progress, the entire development of Mandai dormitory, including the third block, is expected to be completed between Q2 and Q In Malaysia, the Group s development plans for its portfolio dormitories are on track. Its newly acquired dormitory at Tebrau IV with 2,600 beds is expected to reach occupancy levels in excess of 90% in Q Ulu Tiram dormitory recently completed refurbishments, boosting bed capacity to approximately 1,600 beds. The Group expects Ulu Tiram to contribute further to the Group s revenue in the second half of the year while construction of the Group s Johor Tech Park dormitory with 6,000 beds is expected to be completed in Q In addition, the Group is planning to build a 7,000-bed dormitory on a piece of newly acquired land at Tampoi. As part of an ongoing process, the Group is conducting its due diligence on certain identified dormitory sites in Malaysia and more updates will be provided when available. On 22 May 2012, the Group obtained a mandate from its shareholders to expand its scope of business to include the student accommodation business and additional countries in the Asia Pacific region. The Group is actively exploring these additional areas of business for growth opportunities. Optical Disc Business The operating environment for the Optical Disc Business is expected to remain challenging. This is due to falling demand for physical media as customers increasingly rely on the internet to virtually disseminate their products. This arose on the back of easier mobile downloads and the increase in content purchase over the internet. The Group will continue to calibrate its manufacturing costs according to demand changes. Despite the decrease in profitability, the business is expected to continue generating healthy cash flows for the Group to meet the investment needs of its Dormitory Business. 11 Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? None (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? None (c) Date Payable Not applicable (d) Books Closure Date Not applicable 12 If no dividend has been declared / recommended, a statement to that effect. No dividend has been declared / recommended for the second quarter ended 30 June 2012 Page 15 of 16

16 PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT 13 Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year. Not applicable for first half year announcement. 14 In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. As explained in note 8 15 Sales and Profit Breakdown Not applicable for first half year announcement. 16 A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year. Not applicable for first half year announcement. 17 Interested Person Transactions ("IPTs") The Company does not have a shareholders' mandate for interested person transactions. 18 Disclosure of person occupying a managerial position in the issuer or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(13) in the format below. If there are no such persons, the issuer must make an appropriate negative statement. Not applicable for first half year announcement. 19 Negative Assurance Confirmation by the Board On behalf of the Board of Directors of the Company, we, the undersigned, confirm that, to the best of our knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the first half ended 30 June 2012 to be false or misleading in any material aspect. For and on behalf of the Board of Directors of CENTURION CORPORATION LIMITED Kong Chee Min Executive Director Lee Kerk Chong Executive Director BY ORDER OF THE BOARD Kong Chee Min Executive Director 13 August 2012 Page 16 of 16