Unaudited First Quarter Financial Statements Announcement
For The Quarter Ended 30 June 2017
Statement Of Comprehensive Income
The Group's revenue in the quarter ended 30 June 2017 ("1QFY2018") increased marginally by 1% to S$118.3 million compared to S$116.7 million posted in the corresponding quarter ended 30 June 2016 ("1QFY2017").
A breakdown of the Group's revenue by business segments is set out below:
Crane Rental revenue fell by 17% to S$31.3 million, mainly due to lower rental rate in Singapore and lower activity levels in Batam and completion of projects in Hong Kong, mitigated by higher crane utilisation rates in Malaysia and Australia.
Tower Crane Rental division posted an 8% increase in revenue to S$26.5 million in 1QFY2018, mainly attributable to higher tonnage rented out from an enlarged fleet. Excluding the impact of the weaker RMB, revenue would have increased 10% in 1QFY2018.
General Equipment Rental division recorded a healthy 25% increase to S$14.0 million mainly due to improved utilisation rate and longer hire period as well as commencement of new projects.
Revenue from Distribution division in 1QFY2018 also recorded an increase of 7% to S$46.5 million, mainly due to higher equipment and parts sales in Australia, partially offset by lower demand for cranes in Singapore, Hong Kong and overseas markets such as Middle East and Japan.
Gross profit for 1QFY2018 declined by 13% to S$30.4 million. Gross profit margin fell from 29.9% to 25.7%, mainly attributable to lower margins from the Crane Rental and Tower Crane Rental divisions. These were partially compensated by improved margins from the General Equipment Rental division from improved utilisation rates and cost savings following an intensive rationalisation programme which started in FY2016 and better margins from the Distribution division in Australia.
The Group's other operating income decreased 22% or S$1.1 million to S$3.7 million in 1QFY2018, mainly attributable to lower grants income received in 1QFY2018.
The Group's total operating costs decreased by 15% to S$32.7 million largely due to the foreign exchange gain recorded in 1QFY2018 as opposed to the foreign exchange loss reported in 1QFY2017. Total operating expenses, excluding foreign exchange differences, for 1QFY2018 remained comparable to 1QFY2017.
1QFY2018's finance costs of S$5.4 million was comparable to 1QFY2017 as the effect of loan repayment was offset by higher interest rates compared with the same period a year earlier.
The Group recorded a pre-tax loss of S$3.3 million primarily due to the decline in gross profit and other income, partially offset by lower operating expenses. Income tax expenses of S$1.0 million brought loss attributable to shareholders to S$5.1 million compared with a net loss of S$3.6 million in the previous corresponding quarter which had recorded net tax credits amounting to S$1.0 million primarily for tax benefits recognised in China and Australia.
(as at 30 June 2017 vs 31 March 2017)
- The decrease of S$15.0 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.
- Equipment with a net book value of S$1.2 million previously reclassified as "Assets held for sale" was subsequently disposed for a cash consideration of approximately S$1.7 million.
- Inventories decreased by approximately S$8.8 million due to disposals of inventory in Singapore and Australia and prudent inventory management.
- Trade and other receivables increased by approximately S$11.4 million largely due to timing of sales and collections, increase in tax recoverable, prepayments and amount owed by a joint venture.
- Trade and other payables increased by S$5.3 million largely due to purchase of inventories in Australia.
- Total financial liabilities decreased by S$15.4 million mainly due to net repayment.
- Net gearing as at 30 June 2017 was 0.55 times (31 March 2017: 0.57 times).
As at 30 June 2017, the Group recorded a cash and cash equivalents of S$116.7 million of which S$21.4 million was earmarked for certain banking facilities. The net increase of S$2.9 million in cash and cash equivalents during 1QFY2018 resulted mainly from proceeds from the disposal of property, plant and equipment and net cash inflow from operating activities; partially offset by the net repayment of bank loans, finance lease obligations and interest.
While the Group anticipates continued challenging trading conditions in the ASEAN countries, it expects continued healthy demand in the People's Republic of China ("China") and is cautiously optimistic of improving market and economic outlooks in Australia.
The market weakness and competitive pricing pressures in the ASEAN countries will continue to impact the Crane Rental Division. On the other hand, the Group has experienced early signs of improved market sentiments in Australia.
The Tower Crane Rental Division in China is expected to perform well on the back of a strong pipeline of committed projects in the building, infrastructure, transport and power generation sectors.
The increase in infrastructure spending in Australia is expected to lift revenues from the General Equipment Rental Division.
Whilst the Distribution Division will benefit from improved demand in Australia, continued weakness in the heavy equipment market is expected in the ASEAN countries.
Notwithstanding the above, the Group will continue its fleet rationalisation activities. The Group will also continue to take advantage of its strong China presence to explore opportunities in China's One Belt One Road initiative.