TEHO International's foray into the property market last year dragged the offshore and marine group into the red for the full-year ended June 30 as it incurred substantial marketing expenses for the property segment and an impairment charge on foreseeable losses in its development projects in Singapore.
Its full-year results released on Friday night showed a net loss of S$7.62 million for the full year to June 30, compared to a profit of S$3.39 million in FY2014.
The substantial expenses on marketing, advertising and promotional activities were related to its joint venture in Cambodia to develop the residential project The Bay in Phnom Penh. Professional fees for businesses in Cambodia and expenses to explore business opportunities under the property development segment were also incurred.
The group made an impairment charge on goodwill for development projects in Singapore by TIEC Holdings, a real estate developer that it acquired in March 2014. This was prompted by a slight decline in market value of the unsold units from a year ago.
"While this has negatively impacted the group's overall profits for the year, this strategic investment in FY2015 continues the group's long-term strategy to expand its existing business and propel TEHO into its next wave of growth," said Teho International CEO Lim See Hoe.
Group revenue for the financial year ended June 30 by 2.1 per cent to S$61.7 million.
Notwithstanding the global rout in crude oil prices, revenue contribution from the group's Marine, Offshore Oil & Gas segment remained stable at S$55.6 million in fiscal 2015 compared to S$55.3 million in fiscal 2014.
Revenue contribution from the property development segment increased by 18.6 per cent to S$6.0 million in fiscal 2015. Estate agency business ECG Property Services - which Teho acquired in November 2014 - contributed the remaining revenue of S$3.7 million over a seven month period, while TIEC Holdings contributed revenue of S$2.3 million arising from the substantial completion of freehold project Urban Heritage in Singapore.
In accordance with revenue recognition principles, the property development segment has not recorded revenue arising from The Bay project in Cambodia in fiscal 2015.