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MTQ Corporation Limited
CEO’s Statement /
ENGINE SYSTEMS
The Engine Systems business in Australia
recorded sales growth of 10% for the year,
with overall growth recorded across all
sectors and in all key markets. Improvements
to the newly-acquired branches in Brisbane
and Darwin also spurred on overall growth.
However, the total numbers mask the
fact that, while mining sectors saw good
growth prospects, our fuel injection
and turbocharger business faced a very
challenging consumer environment. This ‘two’
track economy serves as both an opportunity
as well as a threat as our business exposure
to the resources sector still remains low
relative to other sectors. Proft before
taxation fell by 46%, compared to prior year
profts which were boosted by a net gain on
sale of a fxed asset. Excluding this, proft
before taxation actually fell by 23%. Cost
control is key towards achieving a decent
return on total investment to date and our
challenge is to continue to grow revenues in
excess of controllable costs. An important
aspect of our strategy in Australia is to
try to develop stronger relationships and
nation-wide service opportunities with key
OEMs. We started an important relationship
in branding Bosch products in our facilities in
2010 and this relationship saw sales growth
of 30% in the current year. We continue to
look for opportunities to work with other
OEMs to tap onto our established network
so that we can drive more volume and allow
the OEMs to achieve a lower distribution
cost and beter service capability in all key
markets in Australia.
INVESTMENTS
In recent years, we have looked to deploy
surplus funds into equity investments.
While we continue to look for opportunities,
our focus in this area moving ahead will
be in businesses related to MTQ’s core
competencies. A signifcant part of our
existing investments is in Neptune Marine
Services Limited (“Neptune”), a leading
provider of engineered solutions to the
oil and gas and marine industries. Based
in Perth, MTQ currently holds a 17% stake
in Neptune whose core activities are
diving, inspection, repair and maintenance
(“IRM”), geomatics and ROV services. Total
investment in Neptune to date amounts
to A$14.0 million. This still remains an
investment and as shareholders, we
primarily look to the board and management
to improve performance and deliver
shareholder value to all shareholders. We
will also look to assisting in their growth
eforts outside of Australia, particularly in
our key markets of South East Asia and the
Middle East.
MANAGEMENT
PEOPLE
For service businesses, people are the
key asset. We have been fortunate that
within all our existing and new businesses
in MTQ, there is a core group of technical
professionals who has served us for many
years and continues to form the backbone
of our organisation. We are pleased that
the Premier acquisition has brought in an
additional group of technically strong and
experienced personnel to add to the overall
expertise.
In Singapore, we faced signifcant challenges
in atracting Singaporeans to our industry,
particularly in the areas of machining
Loyang and the new facility we have built in
Bahrain. Post the Macondo incident in the
Gulf of Mexico, we have seen greater focus
on equipment certifcation. During the year,
we worked extensively on two major OEM
equipment recertifcations amounting to a
total project size of S$14.7 million for one
of the largest drilling contractors in the
world. The rigs involved are currently being
deployed in South East Asia and Australia.
Our Bahrain facility has managed to secure
work with equipment OEMs and drilling
contractors operating in the region, tapping
on both existing and new customers. Overall
sales and utilisation levels of our facility still
remain low, but we see strong prospects of
good growth moving ahead.
Within the overall oilfeld business, we have
continued to reinvest into the business
in the form of capital equipment and
improvements. In the course of this year,
we have invested in new welding and testing
capabilities for a total expenditure of S$1.0
million. We will continue to do this in the
new year with more investments in welding
and machining. We remain commited
to progressively upgrading our facilities
and making sure they continue to be able
to service the needs of our oil and gas
customers.