SINGAPORE - Design Studio Group said it had been granted a waiver on a $3 million bank loan, despite not meeting the requirement of maintaining a minimum tangible net worth of $80 million, provided that it refrains from paying out dividends if it records a full-year loss after tax.
The loan, which is due on March 6, 2019, has been extended till June 6, 2019. Interest on the loan is 1.5 per cent per annum over the Singapore Interbank Offered rate, the company said in response to the Singapore Exchange's (SGX) queries about its FY2018 results.
SGX also asked the interior fit-out and panelling products provider for a break-down of a $19.1 million loss arising from one-off items for fiscal 2018.
The company, in accounting for a one-off loss of $7 million in manufacturing operations, said that these operations are mainly joinery manufacturing services to internal projects. As a result of a fall in residential projects which had a larger construction scope than commercial and hospitality projects, internal revenue decreased by $24.7 million to $17.4 million from $42.1 million.
Lower manufacturing activity resulted in higher losses due to higher unrecoverable fixed costs such as factory overheads and labour. The company said it is addressing excess capacity through consolidation of its manufacturing operations.
It reported a $3 million one-off loss due to pulling its manufacturing operations out of Malaysia. Some $0.5 million in costs was due to staff redundancy, impairment on inventories accounted for $0.9 million, impairment of fixed assets accounted for $0.3 million, provision of lease commitment accounted for $0.6 million, and the reversal of deferred tax assets incurred $0.7 million. Consolidation of its operations is due to be completed in the second quarter of 2019.
A one-off loss of $1.1 million was attributed to the closure of underused showrooms in Malaysia and China for the fourth quarter. The cost included provision for the showrooms' remaining leases, disposal of assets and staff redundancy cost. The showrooms were underused as they were tailored for retail customers and did not meet the company's sales targets. The Malaysia showroom is about 5,000 sq ft and the China showroom is about 32,000 sq ft.
Design Studio said a Dubai residential project - due for completion in March 2017 - was delayed by two years as the main contractor's work completion was delayed due to, among other things, a fire incident. The delays in handing over the site led to increased expenses and cost overruns, resulting in a $6.1 million loss.
In accounting for a one-off loss of $1.9 million due to defects and commercial settlement for completed projects, the company said that it was attributed to corrective works for completed residential projects.
The company said the cost was based on a combination of actual costs incurred, a provision based on estimatedcorrective costs or commercial settlement reached with the client. Some $1.8 million related to contracts with non-related parties, while $0.1 million was attributed to a hospitality project with a related party in the international business unit.