Tat Hong Posts Pre-tax Profit of S$2.9 million for 3QFY2017
The Group posted a profit before tax of S$2.9 million and net profit after tax and minority interests of S$0.2 million for 3QFY2017 compared with a pre-tax loss of S$6.9 million and a net loss of S$6.7 million in 3QFY2016.
On the Group’s performance in 3QFY2017, Mr Roland Ng San Tiong, Tat Hong’s Managing Director and Group CEO, said, “It is heartening to note that the majority of our businesses posted topline growth in the third quarter. Our tower crane rental business continued to perform well and has secured a good pipeline of potential projects for the future as infrastructural development in Chin continues unabated. However, weak demand for crane rental services, particularly in Australia and Singapore, posed a drag on the Group’s performance, resulting in a marginal 3% decline in revenue to S$121.5 million.”
The Group saw a higher share of profits from its associates and joint ventures of S$1.4 million compared with S$0 .3 million a year ago due to better performance by an associate company.
The Group’s total operating costs fell 7% to S$40.7 million in 3QFY2017 from S$43.6 million incurred in 3QFY2016 due primarily to a reduction in manpower, travelling and maintenance expenses, as well as lower foreign exchange losses.
Tower Crane Rental
The Tower Crane Rental Division continued to perform well and posted a revenue increase of 14% in 3QFY2017 to S$27.4 million. Excluding the effect of the weaker RMB against the Singapore dollar, revenue received in the local currency increased by a robust 21%. The division continued to record high utilisation rates in excess of 80% from the deployment of its tower cranes to new projects in the infrastructure, power generation, transportation and commercial building sectors.
General Equipment Rental
The commencement of new projects in the infrastructure and renewable energy sectors in Australia in the third quarter resulted in better utilisation of the division’s equipment. Despite lower rental rates, revenue posted by the General Equipment Rental Division increased 5% in 3QFY2017 to S$11.6 million compared with S$11.1 million posted in the previous corresponding quarter.
Distribution
Revenue contribution from the Distribution Division for the quarter under review improved 21% to S$52.2 million compared with S$43.3 million recorded a year ago as a result of better equipment sales to Malaysia and other overseas markets such as Japan and Europe partially offset by lower sales in Singapore. Equipment and spare parts sales in Australia remained comparable to that achieved in the same quarter a year ago.
Net gearing as at 31 December 2016 was 0.66 times (31 March 2016: 0.71 times).
In addition, property, plant and equipment with net book value of S$9.1 million was reclassified to “Assets held for sale” as at 31 December 2016 as the Group had
committed to a plan to sell the assets. Impairment loss of S$0.6 million had been recognised on a unit of barge.
Cash flow
The Group recorded a healthy cash and cash equivalents of S$96.8 million (excluding bank deposits of S$23.0 million earmarked for certain banking facilities), resulting from net cash flow generated from operating activities and disposal of property, plant and equipment. However these were offset by the increase in cash balances earmarked for banking facilities, net repayment of trust receipts, bank loans and finance lease obligations, interest payments, and purchase of property, plant and equipment and intangible assets. As a result, cash and cash equivalents declined marginally by S$0.9 million in 3QFY2017 from 30 September 2016.
Net cash from operating activities +S$25,426,000
Net cash from investing activities +S$26,459,000
Net cash used in financing activities -S$(52,822,000) repayment of loans
On the rights issue which was successfully completed on 10 February 2017, Mr Ng said: “On behalf of the Board of Directors, I would like to thank all our shareholders for their strong support of our recently concluded rights issue which saw a high subscription level of 155%. The total net proceeds raised of approximately S$41.0 million has put the Group in a stronger financial position and conferred to us greater financial flexibility which is crucial at this point in time given the many uncertainties in the global and regional markets.”
Source: 3Q'17 Press Release