Audited Full Year Financial Statements Announcement
For The Quarter and Year Ended 31 March 2018
Statement Of Comprehensive Income
4QFY2018 vs 4QFY2017
The Group's revenue in the quarter ended 31 March 2018 ("4QFY2018") increased by 8% to S$119.3 million, compared with revenue posted in the corresponding quarter ended 31 March 2017 ("4QFY2017") of S$110.2 million.
A breakdown of the Group's revenue by business segments is set out below:
Crane Rental revenue decreased by 6% to S$28.6 million in 4QFY2018, mainly attributable to lower crane utilisation rates in Malaysia, Thailand and Hong Kong as major contracts were nearing completion and compounded by the delay in the commencement of new projects. This weaker performance was partially offset by higher activity levels in Australia due to a recovery in spending by the mining industry together with an increase in infrastructure projects. Overall rental rate has also increased during the period.
Tower Crane Rental division posted an increase of 31% in revenue to S$27.3 million in 4QFY2018 mainly attributable to higher tonnage rented out from an enlarged fleet.
General Equipment Rental division recorded a 21% increase in revenue to S$13.5 million in 4QFY2018, mainly due to improved utilisation rate as well as projects secured from increased infrastructure spending by the public sector.
Revenue from Distribution division in 4QFY2018 recorded an increase of 4% to S$49.8 million mainly due to higher crane equipment sales in Australia and Hong Kong, partially offset by lower sales in the ASEAN region. Revenue in 4QFY2017 had included sales of excavators in Vietnam and sales of spare parts in the ASEAN region, businesses which the Group had exited in June 2017 and September 2017 respectively.
Gross profit improved 30% to S$34.6 million in 4QFY2018 on the back of improved margins from Crane Rental and General Equipment Rental divisions in Australia and stable margin from the Distribution divisions in Australia and the ASEAN region, as well as Tower Crane Rental division in China, partially eroded by lower margins from the Crane Rental division in the ASEAN region.
The Group's other operating income decreased by 58% to S$2.4 million in 4QFY2018, mainly due to lower gain on disposal of property, plant and equipment.
The Group's total operating costs decreased by 26% to S$38.1 million in 4QFY2018 primarily arising from savings in manpower costs, rental expense, transport and travelling expenses, insurance cost, freight and packaging expenses, lower provision for doubtful debt as well as lower foreign exchange losses of S$1.6 million compared with S$5.1 million in 4QFY2017. In addition, operating costs in 4QFY2017 had included impairment losses of S$3.8 million.
Finance costs decreased by 27% to S$4.8 million in 4QFY2018 primarily due to the repayment of loans, partially offset by higher interest rates.
The Group recorded a pre-tax loss of S$5.5 million in 4QFY2018 compared with S$26.0 million pre-tax loss in 4QFY2017 as a result of improved performance of all divisions in Australia and Tower Crane Rental division in China, savings in operating costs by Asean, lower foreign exchange losses and lower finance costs, partially offset by lower other operating income.
Loss attributable to shareholders decreased by 81% to S$5.6 million in 4QFY2018, as a result of lower pre-tax losses and lower income tax expense arising mainly from over-provisions made for prior years' taxes and the utilisation of prior years' tax losses and capital allowances.
FY2018 vs FY2017
The Group's revenue in the year ended 31 March 2018 ("FY2018") increased by 6% to S$484.8 million, compared with revenue posted in the corresponding year ended 31 March 2017 ("FY2017") of S$458.3 million.
A breakdown of the Group's revenue by business segments is set out below:
Crane Rental FY2018 revenue fell by 7% to S$123.0 million compared to FY2017, mainly due to lower activity levels in Singapore, Batam and Hong Kong, partially compensated by higher utilisation rates in Malaysia and Australia.
Tower Crane Rental division posted 16% increase in revenue to S$114.1 million in FY2018 primarily attributable to higher tonnage rented out from an enlarged fleet.
General Equipment Rental division recorded a 26% increase to S$56.4 million in FY2018 as a result of improved utilisation rate as well as projects secured from increased infrastructure spending by the public sector.
Revenue from Distribution division in FY2018 recorded an increase of 5% to S$191.3 million mainly due to higher equipment and parts sales in Australia and higher crane sales in Hong Kong, partially offset by lower demand for cranes in the ASEAN region. The division's revenue in FY2017 also included sales of excavators in Vietnam and the sales of spare parts in the ASEAN region, businesses which the Group had exited in June 2017 and September 2017 respectively.
While gross profit margin in FY2018 remained comparable, gross profit improved by 6% to S$134.8 million on the back of increased revenue. Higher gross profit was recorded by all divisions except for Crane Rental and Distribution divisions in the ASEAN region.
The Group's other operating income in FY2018 amounted to S$12.3 million, compared to S$30.5 million recorded in FY2017 which had included one-off items of a disbursement amounting to S$6.5 million in respect of guaranteed trade receivables and a gain of S$5.2 million on disposal of a property in Australia. In addition, there were lower gains on disposal of property, plant and equipment in FY2018 compared to FY2017.
The Group's total operating costs fell 15% in FY2018 as a result of savings in manpower, transport and insurance costs, rental and freight and packaging expenses, as well as lower impairment charges and provision for doubtful debt, partially offset by legal claim costs and higher repair and maintenance costs.
Finance costs in FY2018 of S$20.9 million were 9% lower than FY2017 primarily due to the repayment of loans, partially offset by higher interest rates.
The Group's pre-tax loss in FY2018 was S$12.7 million compared to S$30.5 million pre-tax loss posted in FY2017 as a result of improved performance of all divisions in Australia and Tower Crane Rental division in China, savings in operating costs by Asean, lower finance costs and higher share of profit from associates and joint ventures, partially offset by lower other operating income.
Loss attributable to shareholders in FY2018 was S$15.9 million compared with net attributable loss of S$38.0 million in FY2017, resulting from lower pre-tax losses and lower income tax expense attributable to over-provisions made for prior years' taxes and utilisation of prior years' unutilised tax losses and capital allowances.
(as at 31 March 2018 vs 31 March 2017)
- The decrease of S$57.5 million in the Group's net carrying amount of property, plant and equipment was mainly attributable to the disposals of property, plant and equipment, depreciation charges, partially offset by the additions of property, plant and equipment and transfers from inventories.
- Equipment with a net book value of S$1.2 million previously reclassified to "Assets held for sale" was subsequently disposed for a cash consideration of approximately S$1.7 million. Transport vehicles of approximately $2.9 million were reclassified to property, plant and equipment as management has withdrawn the plan to sell these transport vehicles. In March 2018, the Company has decided to dispose its entire equity interest in two subsidiaries. The assets and liabilities of the two subsidiaries were then classified as "Assets held for sale" and "Liabilities directly associated with the assets held for sale" respectively.
- Inventories decreased by S$3.9 million due to prudent inventory purchases as well as the disposal of subsidiaries partially offset by additions of inventories in Australia.
- Trade and other receivables increased by S$7.4 million largely due to higher tax recoverable, advances to suppliers, related companies' receivables and amount owing by a joint venture partially offset by lower sundry debtors.
- Total financial liabilities decreased by S$68.2 million mainly due to net debt repayment.
- Net gearing as at 31 March 2018 was 0.56 times (31 March 2017: 0.57 times).
As at 31 March 2018, the Group recorded cash and cash equivalents of S$72.4 million of which S$5.3 million was earmarked for certain banking facilities. The net decrease of S$24.4 million in cash and cash equivalents during FY2018 resulted mainly from net repayment of bank loans and finance lease obligations, interest payment and purchases of property, plant and equipment and intangible assets, partially offset by the proceeds from disposal of property, plant and equipment and net cash inflow from operating activities.
Overall, whilst the business climate for the crane rental market and other sectors in which the Group operates in the People's Republic of China and Australia is positive, there may be weaknesses arising from challenging market conditions in certain parts of the ASEAN region and new environmental regulations in China.
For the Crane Rental Division, while market sentiments are improving in Australia, market weakness and competitive pricing pressures are expected to continue in certain parts of the ASEAN region.
As for the Tower Crane Rental Division in China, there is a pipeline of committed projects in the building, infrastructure, transport and power generation sectors.
Further, infrastructure spending in Australia is increasing, which the General Equipment Rental Division hopes to take advantage of.
As for the Distribution Division, demand in Australia is improving, though continued weakness in the heavy equipment market is expected to continue in the ASEAN region.
Other Matters On 18 May 2018, Oversea-Chinese Banking Corporation Limited ("OCBC Bank"), for and on behalf of THSC Investments Pte. Ltd. (the "Offeror"), announced (the "Offer Unconditional Announcement"), inter alia, that the voluntary conditional cash offer (the "Offer") by OCBC Bank, for and on behalf of the Offeror, for all the issued and paidup ordinary shares (the "Shares") in the capital of the Company, other than those Shares already held by the Company as treasury shares and those Shares already held, directly or indirectly, by the Offeror as at the date of the Offer, had become unconditional as to acceptances and had become unconditional in all respects on the date of the Offer Unconditional Announcement. The closing date for the Offer was extended by the Offeror from 5.30 p.m. on 21 May 2018 to 5.30 p.m. on 4 June 2018 and the Offeror does not intend to extend the Offer beyond 5.30 p.m. on 4 June 2018.
Further, the Offeror has stated that it will in due course be exercising its rights of compulsory acquisition under Section 215(1) of the Companies Act, Chapter 50 of Singapore (the "Companies Act") to compulsorily acquire the Shares of the shareholders of the Company who have not accepted the Offer pursuant to Section 215(1) of the Companies Act at a price equal to S$0.55 for each Share. The Offeror intends to privatise the Company and to delist the Company from the Singapore Exchange Securities Trading Limited ("SGX-ST").
On 21 May 2018, the Company announced, inter alia, that the percentage of the total number of issued Shares (excluding treasury shares) which are held in public hands had fallen below 10 per cent. and accordingly, the Company no longer meets the free float requirement prescribed by Rule 723 of the Listing Manual of the SGX-ST (the "Loss of Free Float Announcement"). As the Offeror, as a result of acceptances of the Offer or otherwise, holds more than 90 per cent. of the total number of issued Shares (excluding treasury shares), in accordance with Rule 1303(1) of the Listing Manual of the SGX-ST, the SGX-ST will suspend the trading of the Shares at the close of the Offer. The Offeror has stated in the Offer Unconditional Announcement that it does not intend to undertake or support any action for any trading suspension by the SGX-ST to be lifted.
Please refer to the Offer Unconditional Announcement and the Loss of Free Float Announcement, copies of which are available on the website of the SGX-ST at http://www.sgx.com, for further information.