Boustead released their FY 2010 results on May 27, 2010, and followed this up with an audiocast of the results along with a presentation and question and answer session. The results were in line with what I had expected and also what the CEO Mr. FF Wong had mentioned early on during 1Q 2010, that FY 2010’s performance will not surpass that of FY 2009 and make it an eighth consecutive year of record revenues and net profit. This is part of business reality – companies do experience dips in revenues and profits as a result of economic activity which directly and indirectly affects their core business. However, if the company and run and managed well, it should emerge stronger after a global crisis and may even take the opportunity to consolidate its resources. Boustead would seem like a good candidate for this, though thus far no progress has emerged on their M&A talks. This analysis will be somewhat in depth and broken up into 3 parts – it will tackle Income Statement, Balance Sheet and Cash Flow issues (as well as dividend), move on to divisional analysis and margins; and finally I will post up a transcript of the audiocast and discuss Boustead’s future plans including M&A and organic growth for FY 2011. Profit and Loss Analysis (all numbers are based on FY 2010, not 4Q 2010) Revenue for FY 2010 dipped 15% from S$516.6 million to S$438.4 million, and this was relatively modest considering the sharp downturn. Part of the reason for the dip was also due to the “lumpy” project nature of Boustead’s businesses, which means revenue may be recognized at different stages if a project depending on % of completion. Mr. FF Wong did caution that using quarterly numbers would not be representative of the Group’s performance, which was why I left out using 4Q 2010 for all my analysis and computations. Read more...