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Second Chance Sees Lower Revenue

second chance logo Second Chance Properties Limited (SGX: 528) saw its revenue for the full year of 2013 (FY2013) to S$53.9 million from S$64.6 million in the previous year, a 16.5% drop.

The company highlighted that it had changed its financial year-end to 31- August from 30-June, FY2012 comprised of 14 months from 1st July 2011 to 31st August 2012. In comparison, the current financial year (FY2013) comprises of 12 months from 1st September 2012 to 31st August 2013. Therefore, comparing financial information provided for FY2013 and FY2012 would not be a fair comparison.

Second Chance’s humble beginnings date back to 1975 when it was first engaged in the tailoring of men’s garment. Today, the company has four business divisions – Apparel, Gold, Properties and Securities. All the divisions saw drop in revenue for FY2013 except Securities. The company cited that one of the reasons for the decrease in revenue in all the business segments except the securities business was due to the change in the financial year-end.

The net profit after tax was at $57.13 million in FY 2013, a ballooning of 87.5%. The vast improvement was due to the gain on fair valuation of properties of 309.3%. Stripping off this gain, the profit from operations dropped 29.4% to S$16.9 million. The earnings per share (EPS) came up to 9.0 Singapore cents as compared to 5.8 Singapore cents last year.

As of 30th August 2013, the total debt stands at S$51.3 million and the company is in a net debt position of S$45.1 million. The company had mentioned in its frequently asked questions, as seen from its FY2012 annual report, that it maintains a net debt position to “increase the returns on our property investments.” The net asset value for FY2013 was at S$0.39.

In FY2013, the company generated S$11.9 million in cash flow from operations as compared to S$8.5 million generated last year.

The dividend for FY 2013 is 3.4 Singapore cents per ordinary share, of which 1.7 cents was paid earlier as interim dividend. The company gave dividend guidance for FY2014. It said, “In line with the Group’s policy of distributing high dividends, the directors intend, barring any unforeseen circumstances to distribute a tax exempt (one tier) dividend of not less than 3.5 cents per ordinary share for FY 2014.”

The shares last changed hands at S$0.46 on Wednesday and the company is trading at 5 times its earnings. The dividend yield stands at 7.4% and the price-to-book ratio is at 1.2.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.