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Financials

Third Quarter Results Financial Statement And Related Announcement

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Unaudited Third Quarter Financial Statements Announcement For The Period Ended 31 December 2012

Income Statement

Statement Of Comprehensive Income

Balance Sheet

Operations Review

The Group's revenue in the third quarter ("Q3FY2013") and the nine months of the financial year ("9MFY2013") were 5% and 19% higher than their respective previous corresponding periods as shown in the table below:

Revenue generated by the Distribution division in Q3FY2013 amounted to S$90.6 million which was 7% lower than the previous corresponding period. This was due to:

1. Lower sales from the Group's Australia unit due to weaker demand from the mining, infrastructure and construction sectors.
2. The lack of sales to Papua New Guinea.
3. Lower excavator sales in Vietnam as lower commodity prices impacted the mining sector.

The above was partially offset by increased sales from the Group's Singapore unit to Japan and an increase in excavator sales in Indonesia mainly to the logging industry.

Revenue generated by the Crane Rental division in Q3FY2013 increased 27% to S$73.6 million compared with Q3FY2012 as a result of broad-based improvement in performance from the Group's key markets as follows:

1. Singapore: Higher revenue from continued participation in the construction of chemical and LNG plants on Jurong Island, MRT projects and foundation jobs for housing projects as well as rental of cranes from Singapore to overseas markets, primarily Papua New Guinea.
2. Malaysia: Revenue boosted by activities in jetty construction, yard fabrication, MRT, oil and gas and LNG projects.
3. Hong Kong: Improved earnings from continued participation in projects such as Wan Chai By-pass, XRL West Kowloon Terminal Station South Phase and the Hong Kong-Macau-Zhuhai Bridge.
4. Australia: Increase in revenue as a result of participation in LNG and port expansion projects.
5. Thailand: Revenue growth from participation in MRT, factory, hospital and housing projects.

Revenue generated by the General Equipment Rental division in Q3FY2013 of S$22.5 million was 12% lower than Q3FY2012 due to weaker demand from the mining sector in Queensland and subdued activities in New South Wales which were partially compensated by better performance in Western Australia.

Revenue generated by the Tower Crane division in Q3FY2013 increased by approximately 24% to S$19.4 million compared with Q3FY2012, contributed by a larger fleet size coupled with improved utilisation rates as a result of participation in infrastructure, large commercial and power plant/station projects.

The higher revenue in Q3FY2013 contributed to the Group's gross profit of S$74.0 million, an improvement of 10% compared with Q3FY2012. Gross profit margin increased from 34.4% in Q3FY2012 to 35.9% in Q3FY2013.

The Group's other income in Q3FY2013 increased significantly by approximately 113% to S$5.2 million due mainly to higher gain from the disposal of fixed assets.

The Group's operating expenses increased by approximately 7% in Q3FY2013 to S$49.8 million compared with Q3FY2012. This was mainly due to:-

1. An increase of S$970,000 or 13% in distribution expenses due mainly to increased allowance for doubtful debts of approximately S$740,000 primarily for accounts receivables in Australia, Singapore, Malaysia and Indonesia.
2. Rental commission on increased rental revenue. 

An increase of approximately S$2.9 million or 11% in other operating expenses contributed by:

1. An increase of approximately S$2.0 million in staff cost due mainly to increased headcount in the Group's operations in China, Indonesia, Australia, Hong Kong and Malaysia.
2. An increase of S$1.5 million in depreciation charges and insurance premiums on expanded crane fleet.
3. An increase of approximately S$1.3 million in the cost of upkeep of machinery, vehicles, building and vessels due to higher level of rental activities.

The above was partially offset by a net foreign exchange gain of approximately S$1.7 million in the current quarter compared with a net loss of approximately S$121,000 in Q3FY2012 due primarily to the weaker JPY against SGD and AUD. 

The Group's share of associates' profits in Q3FY2013 increased by approximately S$0.4 million, or 191%, to S$0.6 million as compared with Q3FY2012.

The Group's share of joint-ventures' profits in Q3FY2013 was S$0.5 million compared with a loss of S$0.2 million in Q3FY2012. The contributions came primarily from the Group's joint ventures in Papua New Guinea and Australia.

The Group's net profit after tax and minority interests in Q3FY2013 improved 37% to S$17.8 million from S$13.0 million recorded in the same quarter last year. 

Balance Sheet Analysis (as at 31 December 2012 vs 31 March 2012)

• Investment in property, plant and equipment increased by approximately S$111.8 million as at 31 December 2012 due to the expansion of the crane fleet, purchase of property and capitalisation of building cost.
• Inventories decreased by approximately S$37.4 million as at 31 December 2012 due mainly judicious inventory purchases during the period.
• Trade and other receivables increased by approximately S$56.7 million as at 31 December 2012 as a result of increased revenues and the timing of sales.
• Cash and cash equivalents decreased by approximately S$17.5 million due to payment of interim dividend, trade bills and bank loans.
• Total financial liabilities increased by approximately S$24.6 million as at 31 December 2012 mainly from funding purchases for the rental fleet, building construction and acquisition of land to cater for business growth.
• Net gearing as at 31 December 2012 was 0.72 times.

Commentary

The Group expects its Crane Rental division to maintain its momentum for the fourth quarter of FY2013 as the outlook for the key Southeast Asia markets and Hong Kong remains encouraging. The operations in Australia will continue to benefit from committed and new project starts, in the oil and gas sector.

The Equipment Distribution division expects to maintain a satisfactory performance. Whilst the performance of the Singapore operations is expected to remain stable, overall performance could be affected by weaker demand in Australia due to reduced public spending by the government and subdued activities outside of the resources sector.

The General Equipment Rental division's performance in the fourth quarter could be impacted by the overall subdued activities in Australia outside of the resources sector, inclement weather in some states and flooding in Queensland.

The Tower Crane Rental division in China expects to maintain its growth momentum as it continues to participate in more localized and sizeable infrastructure projects.

Barring any unforeseen circumstances or significant deterioration of the global economy, the Group is confident of improving its performance in FY2013, compared with FY2012.