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Third Quarter Financial Statement And Dividend Announcement

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  Group Group
  3QFY2017
S$'000
3QFY2016
S$'000
Increase/ (Decrease)
%
9MFY2017
S$'000
9MFY2016
S$'000
Increase/ (Decrease)
%
Revenue 24,264 38,098 (36) 89,910 106,609 (16)
Cost of sales (19,293) (27,158) (29) (68,667) (79,482) (14)
Gross profit 4,971 10,940 (55) 21,243 27,127 (22)
Other income 24 38 (37) 61 86 (29)
Other (loss)/gains - net (1,025) (123) 733 3,451 (416) NM
Expenses      
- Administrative (391) (476) (18) (1,118) (1,343) (17)
- Other operating (5,874) (6,814) (14) (18,559) (24,866) (25)
- Finance (716) (822) (13) (2,763) (2,323) 19
Share of loss of associated companies (122) (408) (70) (281) (250) 12
Share of profit/(loss) of a joint venture 18 3 500 (41) (46) (11)
(Loss)/Profit before income tax (3,115) 2,338 NM 1,993 (2,031) NM
Income tax credit/(expense) 121 (1,092) NM (1,562) (1,729) (10)
Total (loss)/profit (2,994) 1,246 NM 431 (3,760) NM
Other comprehensive (loss)/income:            
Items that may be subsequently reclassified to profit or loss:            
Currency translation differences arising from consolidation – loss (395) (54) 631 (692) (1,311) (47)
Fair value (loss)/gain on cash flow hedges (5) 108 NM 8 16 (50)
  (400) 54 NM (684) (1,295) (47)
             
Total comprehensive (loss)/income (3,394) 1,300 NM (253) (5,055) (95)
(Loss)/Profit attributable to:            
Equity holders of the Company (2,897) (199) 1356 423 (3,876) NM
Non-controlling interest (97) 1,445 NM 8 116 (93)
  (2,994) 1,246 NM 431 (3,760) NM
Total comprehensive (loss)/income attributable to:            
Equity holders of the Company (3,286) (129) 2447 (245) (5,142) (95)
Non-controlling interest (108) 1,429 NM (8) 87 NM
  (3,394) 1,300 NM (253) (5,055) (95)
Denotes: NM - not meaningful

Note to the Statement of Comprehensive Income

  Group Group
  3QFY2017
S$'000
3QFY2016
S$'000
Increase/ (Decrease)
%
9MFY2017
S$'000
9MFY2016
S$'000
Increase/ (Decrease)
%
(Loss)/Profit after income tax was stated after (charging)/crediting:
Depreciation of property, plant and equipment (7,759) (8,063) (4) (23,395) (23,324) 0
Currency exchange (loss)/gain – net (1,183) (1,622) (27) 879 (2,262) NM
Gain on disposal of property, plant and equipment 41 1,210 (97) 1,462 1,143 28
Gain on disposal of a subsidiary - - NM 322 - NM
Fair value gain/(loss) on financial assets at fair value through profit or loss 27 (26) NM 33 (144) NM
Impairment loss on trade receivables - (102) (100) (18) (5,042) (100)
Write-back of impairment loss on trade receivables 203 253 (20) 735 645 14
Interest income 25 38 (34) 62 86 (28)
Interest expense (836) (940) (11) (2,719) (2,245) 21
(Under)/over provision in prior years' current income tax (64) (33) 94 (89) 103 NM
Over/(under) provision in prior years' deferred tax - - NM 14 (60) NM
Denotes: NM - not meaningful

Balance Sheet

  Group
  As at
31/03/2017
S$'000
As at
30/06/2016
S$'000
ASSETS    
Current assets    
Cash and cash equivalents 13,713 14,258
Financial assets at fair value through profit or loss 432 399
Trade and other receivables 51,124 53,927
Tax recoverable 122 110
Inventories 1,376 1,425
Other current assets 2,414 2,203
  69,181 72,322
Assets of disposal group classified as held for sale - 1,265
  69,181 73,587
Non-current assets    
Other assets 114 114
Other receivables - -
Investment in associated companies 3,321 3,531
Investment in a joint venture 2,096 2,059
Investment in subsidiaries - -
Property, plant and equipment 380,185 393,571
Deferred income tax assets 190 134
  385,906 399,409
Total assets 455,087 472,996
     
LIABILITIES    
Current liabilities    
Trade and other payables 42,618 48,812
Current income tax liabilities 846 1,455
Borrowings 33,772 30,642
Derivative financial instruments 10 12
  77,246 80,921
     
Liabilities directly associated with disposal    
group classified as held for sale - 5,492
  77,246 86,413
Non-current liabilities    
Borrowings 93,755 105,339
Derivative financial instruments 4 10
Deferred income tax liabilities 26,584 26,376
  120,343 131,725
Total liabilities 197,589 218,138
NET ASSETS 257,498 254,858
     
EQUITY    
Capital and reserves attributable to equity holders of the Company    
Share capital 87,340 87,340
Other reserves (4,614) (3,645)
Retained earnings 173,637 173,377
  256,363 257,072
Non-controlling interest 1,135 (2,214)
Total equity 257,498 254,858

Review on Group's Financial Results

3 Months ended 31 March 2017 (3QFY2017) vs 3 Months ended 31 March 2016 (3QFY2016)

Revenue 3QFY2017
S$'000
3QFY2016
S$'000
Increase/ (Decrease)
%
9MFY2017
S$'000
9MFY2016
S$'000
Increase/ (Decrease)
%
Heavy Lift and Haulage 22,403 32,473 (31) 75,363 95,130 (21)
Marine Transportation 667 885 (25) 2,642 2,954 (11)
Engineering Services 1,083 4,385 (75) 10,149 7,382 37
Trading 111 355 (69) 1,756 1,143 54
  24,264 38,098 (36) 89,910 106,609 (16)

Revenue was S$24.3 million in 3QFY2017, a decrease of S$13.8 million or 36% from S$38.1 million in 3QFY2016. The decrease was mainly attributed to the decrease in contributions from Heavy Lift and Haulage and Engineering Services segments.

Heavy Lift and Haulage segment revenue decreased by S$10.1 million or 31% from S$32.5 million to S$22.4 million, mainly due to fewer projects executed in Singapore, India and the Middle East.

Marine Transportation segment revenue decreased by S$0.2 million or 25% from S$0.9 million to S$0.7 million, mainly due to fewer chartering jobs undertaken in the current quarter.

Engineering Services segment revenue decreased by S$3.3 million or 75% from S$4.4 million to S$1.1 million, mainly due to decrease in work executed for a project, which was near completion, in the Middle East.

Trading segment revenue decreased by S$0.3 million or 69% from S$0.4 million to S$0.1 million, as there was only sale of spare parts in 3QFY2017.

Gross Profit was S$5.0 million in 3QFY2017, a decrease of S$5.9 million or 55% from S$10.9 million in 3QFY2016. Gross Profit Margin was lower at 20% in 3QFY2017 as compared to 29% in 3QFY2016, mainly due to lower margins from Heavy Lift and Haulage and Engineering Services in the current quarter.

Other Loss -net was S$1.0 million in 3QFY2017, an increase of S$0.9 million or 733% from S$0.1 million in 3QFY2016. This was mainly attributable to operational exchange loss of S$1.3 million offset by a marginal gain on disposal of plant and equipment of S$0.04 million in 3QFY2017, as compared to operational exchange loss of S$1.7 million offset by a gain on disposal of plant and equipment of S$1.2 million in 3QFY2016.

Administrative Expenses were S$0.4 million in 3QFY2017, a decrease of S$0.1 million or 18% from S$0.5 million in 3QFY2016, mainly due to lower professional fees incurred.

Other Operating Expenses were S$5.9 million in 3QFY2017, a decrease of S$0.9 million or 14% from S$6.8 million in 3QFY2016, mainly due to reduction in manpower costs and other operating expenses.

Finance Expenses were S$0.7 million in 3QFY2017, a decrease of S$0.1 million or 13% from S$0.8 million in 3QFY2016, mainly due to lower interest expense in 3QFY2017 as a result of repayments of bank borrowings.

Profit/(Loss) before Income Tax 3QFY2017
S$'000
3QFY2016
S$'000
Increase/ (Decrease)
%
9MFY2017
S$'000
9MFY2016
S$'000
Increase/ (Decrease)
%
Heavy Lift and Haulage (1,104) 3,795 NM 5,362 7,243 (26)
Marine Transportation (1,217) (238) 411 (2,243) (3,426) (35)
Engineering (725) (991) (27) (1,312) (5,586) (77)
Trading (69) (228) (70) 186 (262) NM
  (3,115) 2,338 NM 1,993 (2,031) NM

Loss before Income Tax was S$3.1 million in 3QFY2017 as compared to Profit before Income Tax of S$2.3 million in 3QFY2016.

Heavy Lift and Haulage segment registered a loss before income tax of S$1.1 million in 3QFY2017 as compared to a profit before income tax of S$3.8 million in 3QFY2016. This was mainly due to the lower turnover and gross profit margin.

Loss before income tax from Marine Transportation segment increased by S$1.0 million or 411%, from S$0.2 million in 3QFY2016 to S$1.2 million in 3QFY2017. This was mainly due to a gain on disposal of plant and equipment of S$0.8 million in 3QFY2016 whereas no gain on disposal of plant and equipment was recorded in 3QFY2017.

Loss before income tax from Engineering Services segment decreased by S$0.3 million or 27%, from S$1.0 million in 3QFY2016 to S$0.7 million in 3QFY2017. This was mainly due to cost savings achieved from the disposal of a subsidiary in 1QFY2017. However, the segment was impacted by the loss incurred by a project in Middle East.

Loss before income tax from Trading segment decreased by S$0.1 million or 70%, from $0.2 million in 3QFY2016 to S$0.1 million in 3QFY2017. This was mainly due to reduction of exchange loss and other operating expenses.

Review of Statements of Financial Position and Cash Flows

Cash and cash equivalents per consolidated statement of cash flow increased by S$0.1 million from S$11.1 million as at 30 June 2016 to S$11.2 million as at 31 March 2017 mainly due to net cash inflow from operating activities of S$20.2 million. This was offset by the net cash outflows from investing activities and financing activities of S$4.5 million and S$15.6 million respectively.

As at 31 March 2017, the Group was in net current liabilities position of S$8.1 million. Included in the current borrowings of S$33.8 million was a trust receipt of S$4.4 million for the purchase of one crane. This trust receipt would be converted into hire purchase in 4QFY2017 and S$3.2 million would be classified as non-current liabilities. The Group has sufficient undrawn financing facilities committed from large reputable financial institutions to meet its commitments as well as to repay debts as and when they fall due for the next twelve months from 31 March 2017.

Trade and other payables decreased by S$6.2 million from S$48.8 million as at 30 June 2016 to S$42.6 million as at 31 March 2017 mainly due to payments to creditors for purchases and services; and payment to the main contractor for the redevelopment of its premises at 15 Pandan Crescent.

Current income tax liabilities decreased by S$0.6 million from S$1.4 million as at 30 June 2016 to S$0.8 million as at 31 March 2017 mainly due to income tax payments made during the current period.

Total borrowings decreased by S$8.5 million from S$136.0 million as at 30 June 2016 to S$127.5 million as at 31 March 2017 mainly due to repayments made during the current period.

Commentary On Current Year Prospects

The operating environment continues to be challenging and competitive amid the slowdown in demand in the key markets we operate in. The Group expects that the on-going public sector infrastructure development in Singapore will provide support for more business opportunities.

The Group remains committed to effectively manage operating costs and business risks to stay competitive. It will continue to explore strategic collaborations and leverage on its capabilities and track record as a onestop integrated heavy lift specialist and service provider to target complex and high value projects to grow the business.