18 Mar 2021 09:00

 

PROPERTY developer Chip Eng Seng is expecting to report a FY2020 net loss in mid-February 2021 as opposed to its FY2019 net profit of S$32.6 million, due to the adverse impact of Covid-19 on its businesses.

 

The full year net loss incurred will be wider than the S$25.7 million net loss it reported for H1 2020, said the group in its profit warning issued on Monday.

 

In the property segment, Chip Eng Seng' s ongoing development projects Grandeur Park Residences, Park Colonial, Parc Komo and Kopar at Newton were affected by the closure of their construction sites for several months in FY2020, which in turn dampened revenue recognition and progressive payments from property buyers.

 

Kopar at Newton recognised negligible revenue for the period as construction progress was in the initial stages at the end of the " circuit-breaker" period, added the group.

 

Chip Eng Seng said it has nonetheless built sufficient buffer into its project timelines, and will still be able to meet the stipulated deadlines for completing and delivering its development projects to its property buyers.

 

Adverse effects are also expected for contribution of FY2020 revenue from the group' s construction business due to delays in project schedules and increased project costs owing to the stoppage and subsequent slow resumption of work. Further, the group noted slow construction demand over H2 2020, with the bulk of projects secured during the period to only commence in FY2021.

 

As at end-2020, the group' s order book for its construction business segment is about S$1.3 billion. It expects a " challenging landscape" for the construction segment going forward owing to slim near-term profit margins, if any, shortage of manpower and compliance requirements to maintain safe management measures at work sites.

 

Due to ongoing travel restrictions and low demand for international travel, Chip Eng Seng' s hospitality businesses in Singapore, Australia and the Maldives have yet to see any significant recovery in occupancy rates and revenue. This has affected the valuation of the group' s hotel properties, said the group.

 

It also expects to report significant impairment losses in its property investment segment due to an overall decline in occupancy rate and valuation of CES Centre, its office investment property.

 

In the education segment, operating costs and expenses were incurred from the group' s new schools in the pipeline, including Invictus-branded international schools in Singapore, Hong Kong and Cambodia, resulting in negligible FY2020 revenue contribution from these schools.

 

The group will also be making a provision for doubtful debts with respect to its investment in American Scholar Group, which it said was severely impacted in the face of political tensions between the US and China, further exacerbated by Covid-19.

 

Chip Eng Seng recently undertook a review of its overall investments in the education business segment, and as a result terminated its collaboration with Britain' s Repton International Schools to establish international kindergartens in certain Asia-Pacific countries. Both parties will instead focus on operating international K-12 school Repton International School, Malaysia, which opened its doors in September 2020 in Johor Bahru.

 

Looking ahead, the group says it will continue to closely monitor its operations and the Covid-19 situation in order to adjust its measures and strategies accordingly, and will provide updates as and when any material developments arise.

MAINBOARD-LISTED Boustead Singapore sold its wholly-owned water solutions subsidiary on Wednesday to Chip Eng Seng Corporation for about S$7.3 million.

 

Boustead Singapore, an infrastructure-related engineering and technology group, entered into a sale and purchase agreement to sell its entire stake in Boustead Salcon Water Solutions to Chip Eng Seng Construction.

 

Chip Eng Seng Construction is wholly owned by Chip Eng Seng Corp, which has businesses in civil infrastructure and construction.

 

Meanwhile, Boustead Salcon' s principal business activities are providing design, engineering and construction services for water and wastewater treatment plants, Boustead Singapore said in a bourse filing.The disposal excludes two subsidiaries of Boustead Salcon. Boustead Singapore has entered into a buy back agreement with Boustead Salcon for these companies.

 

THE collaboration between Singapore' s Chip Eng Seng Corp and British firm Repton International Schools to establish international kindergartens in certain Asia-Pacific countries will terminate on March 31, 2021.

 

This came after Chip Eng Seng reviewed the tie-up in the context of its overall investments in the education business segment, in light of the rapidly changing environment amid the Covid-19 pandemic and other factors, the mainboard-listed company said in a filing on Monday evening.

 

Both parties will instead focus on operating international K-12 school Repton International School, Malaysia, which opened its doors in September this year in Johor Bahru.

 

Repton Malaysia caters to students aged three to 18, and its curriculum includes primary and secondary education.

 

With the focus on the K-12 school collaboration, both parties agreed to terminate their kindergarten partnership, Chip Eng Seng said.

 

The kindergarten tie-up, which began in April 2018, marked Chip Eng Seng' s first steps in diversifying into the education sector. The company' s other businesses include construction, civil infrastructure, precast technology, property development and hospitality.

 

Under the partnership, the two parties planned to set up a chain of premium international kindergartens under the Repton School brand name, with the collaboration agreement and trademark licensing agreement meant to take effect up to Dec 31, 2048.

 

Two Repton preschools have since been established in Singapore. Both are owned and operated by Chip Eng Seng, and will be rebranded with the group' s proprietary brand, it said on Monday.

 

" This will allow the group to harness operational efficiency and synergy between the group' s proprietary brands and to create a stronger identity," Chip Eng Seng added.

 

PROPERTY company Chip Eng Seng' s wholly-owned subsidiary, CES Gladstone (Vic), is selling a property in Australia for A$65 million (S$65.6 million) to a trust related to American real estate developer Greystar.

 

The deal is expected to be completed on March 31 next year. The buyer will first pay a deposit of A$3.25 million, equivalent to 5 per cent of the sale price, and the remaining sum upon completion.

 

Chip Eng Seng said on Friday that the proposed sale will allow the group to redeploy its capital to opportunities that can generate better returns based on current and anticipated market conditions, " taking into account the impact of the Covid-19 pandemic on the real estate sector in Melbourne" .

 

That said, the Australia market remains an " integral part" of the group' s long-term growth and diversification strategies, Chip Eng Seng added.

 

The property to be sold was acquired by CES Gladstone in 2016. Spanning 5,900 square metres, it was to have been developed into three towers comprising over 700 residential units. But currently, above-ground construction works have not yet begun, and the property will be sold with vacant possession.

 

MAINBOARD-listed Chip Eng Seng said on Wednesday night that it has reached a settlement over the termination of a proposed acquisition of childcare centre in Tarneit, Victoria, Australia.

 

Its wholly-owned subsidiary Penn Junior TW and the vendor Tarneit West Childcare attended a compulsory mediation session and arrived at a settlement on Wednesday. Under the terms of the settlement, the parties also release and discharge each other from all claims relating to the dispute.

 

The settlement will not have an impact on the net tangible assets and earnings per share of the company for the current financial year ending Dec 31.

 

In late May, Penn Junior TW commenced legal proceedings in the Supreme Court of Victoria against the vendor and the guarantors for a refund of the deposit of A$350,000. It asserted that conditions precedent relating to the Australian authorities' approval for kindergarten funding had not been fulfilled or waived by the long-stop date.

 

The vendor claimed that conditions had been satisfied and that Penn Junior TW' s failure to effect completion, notwithstanding receipt of a notice of default from the vendor, had led to the termination of the contract of sale, and that the vendor' s solicitors were thus entitled to release the deposit to the vendor.

 

CHIP Eng Seng' s wholly-owned subsidiary, CES Edutech, has fully converted a US$4.95 million convertible loan provided to Cybint International into shares, it said on Thursday.

 

The loan, disbursed in January, has been fully converted into 5,000 shares, representing 33.33 per cent of the enlarged issued and paid-up share capital of Cybint International.

 

As a result of the conversion, Cybint International is now an associated company of Chip Eng Seng.

 

Based on its latest unaudited management accounts of Cybint International as at June 30, 2020, the net asset value attributable to the conversion shares was approximately negative US$0.52 million.

 

Cybint delivers innovative education and training solutions in cyber security to organisations and educational institutions, with the aim of training users to develop skills against emerging cyber security threats, Chip Eng said has said previously.