MTQ Corporation Limited

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First Quarter Financial Statement

BackJul 30, 2002

First quarter financial statements for the period ended 30 June 2002.
These figures have not been audited.


- -
Group
Company
- -
S$'000
%
S$'000
%
- -
- -
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
1.(a) Turnover
10,270
10,696
(4.0)
817
841
(2.9)
1.(b) Cost of sales
(6,412)
(7,047)
(9.0)
0
0
0.0
1.(c) Gross profit/loss
3,858
3,649
5.7
817
841
(2.9)
1.(d) Investment income
0
0
0.0
0
0
0.0
1.(e) Other income including interest income
16
45
(64.4)
4
8
(50.0)
2.(a) Operating profit before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
834
205
306.8
175
123
42.3
2.(b)(i) Interest on borrowings
(104)
(98)
6.1
0
(12)
n/m
2.(b)(ii) Depreciation and amortisation
(197)
(237)
(16.9)
(110)
(169)
(34.9)
2.(b)(iii) Foreign exchange gain/(loss)
88
12
633.3
(13)
17
n/m
2.(c) Exceptional items (provide separate disclosure of items)
2,799
(268)
n/m
433
(1,404)
n/m
- -
- -
S$'000
%
S$'000
%
- -
- -
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
2.(d) Operating profit/(loss) before income tax, minority interests and extraordinary items but after interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
3,420
(386)
n/m
485
(1,445)
n/m
2.(e) Income derived from associated companies (With separate disclosure of any items included therein which are exceptional because of size & incidence)
0
0
0.0
0
0
0.0
2.(f) Operating profit before income tax
3,420
(386)
n/m
485
(1,445)
n/m
2.(g) Less income tax (Indicate basis of computation)
(148)
(277)
(46.6)
0
0
0.0
2.(g)(i) Operating profit/(loss) after tax before deducting minority interests
3,272
(663)
n/m
485
(1,445)
n/m
2.(g)(ii) Less minority interests
4
58
(93.1)
0
0
0.0
2.(h) Operating profit/(loss) after tax attributable to members of the company
3,276
(605)
n/m
485
(1,445)
n/m
2.(i)(i) Extraordinary items (provide separate disclosure of items)
0
0
0.0
0
0
0.0
2.(i)(ii) Less minority interests
0
0
0.0
0
0
0.0
2.(i)(iii) Extraordinary items attributable to members of the company
0
0
0.0
0
0
0.0




- -
Group
Company
- -
S$'000
%
S$'000
%
- -
- -
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
2.(i)(iv) Transfer to/from Exchange Reserve
0
0
0.0
0
0
0.0
2.(i)(v) Transfer to Capital Reserve
0
0
0.0
0
0
0.0
2.(i)(vi) Transfer to Reserve Fund
0
0
0.0
0
0
0.0
2.(j) Operating profit/(loss) after tax and extraordinary items attributable to members of the company
3,276
(605)
n/m
485
(1,445)
n/m


    n/m : not meaningful

    Note A to Item 1(b):

    Depreciation of property, plant and equipment for the Group amounting to S$0.33 million (first quarter ended 30 June 2001: S$0.22 million) has been included in the cost of sales.

    Note B to Item 2 (g):

    Income Tax is computed based on liability method.



 

Group Figures
- -
Latest period
Previous corresponding period
3.(a) Operating profit/(loss) [2(g)(i) above] as a percentage of turnover [1(a) above]
31.86%
(6.20)%
3.(b) Operating profit [2(h) above] as a percentage of issued capital and reserves at end of the period
10.47%
(2.28)%
3.(c) Earnings per ordinary share for the period based on 2(h) above after deducting any provision for preference dividends:-
(i) Based on weighted average number of ordinary shares in issue
4.14 cents
(0.76) cents
(ii) On a fully diluted basis

(To disclose the basis used in arriving at the weighted average number of shares for the purposes of (c)(i) above and to provide details of any adjustments made for the purpose of (c)(ii) above)
4.13 cents
(0.76) cents
3.(d) Net tangible asset backing per ordinary share based on existing issued share capital as at the end of the period reported on
39.49 cents
33.57 cents


3.(e) To provide an analysis of expenses based on their nature within the group for


    the current and previous corresponding period

    Cost of sales incurred for the first quarter of the financial year was 9% lower than the corresponding period as a result of the sale of the Group's marine repair services division. The winding down of the foundry operations of our subsidiary, Metalock Castings Sdn Bhd, in June 2001, also pushed costs downwards.

    Revenue contributions from the two business units generally fetched lower margins than the continuing operations of the Group. Thus, the decline in cost was proportionately sharper than the decline in revenue.

    Corresponding with the reduction in cost of sales, a significant saving was also noticed in the staff costs and other operating expenses (excluding exceptional items), which fell from S$3.71 million in the same quarter last year to S$3.15 million for the quarter under review following the sale of marine repair services division.


Note C to Item 3 (c) (i):

The earnings per share based on existing share capital is calculated on the profit set out in 2 (h) above and the weighted average number of ordinary shares of 79.2 million (30 June 2001: 79.2 million) in issue during the period under review.

Note D to Item 3 (c) (ii):

The earnings per share on a fully diluted basis is calculated on the profit set out in 2 (h) above and the weighted average number of ordinary shares of 79.3 million (30 June 2001: 80.0 million) in issue during the period under review (adjusted for the effects of dilutive potential ordinary shares being the share options granted to employees).

- -
Group
Company
Item 4 is not applicable to interim results
S$'000
%
S$'000
%
- -
- -
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
Latest 1st Quarter 2003
Previous 1st Quarter 2002
Increase/ (Decrease)
4.(a) Sales reported for first half year
4.(b) Operating profit [2(g)(i) above] reported for first half year
4.(c) Sales reported for second half year
4.(d) Operating profit [2(g)(i) above] reported for second half year






5.(a) Amount of any adjustment for under or overprovision of tax in respect of prior years

    Under provision of the Group's prior year's current taxation amounted to S$29,400.



5.(b) Amount of any pre-acquisition profits

    Nil



5.(c) Amount of profits on any sale of investments and/or properties

-Item 5c Table

    Sale of investments/properties
    $Profit/(Loss)
    Profit on sale of leasehold property
    $1,117,654.00

5.(d) Any other comments relating to Paragraph 5

    Nil




6. Segmental Results


     

    BY INDUSTRY SEGMENTS
    30 June 2002
    Marine
    & Oilfield
    Turbocharger
    Trading
    Foundry
    Subsea
    Robotics
    Eliminations
    Group
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    Revenue and expenses
    External sales
    4,730
    4,520
    0
    0
    1,020
    0
    10,270
    Inter-segment sales
    0
    0
    0
    0
    0
    0
    0
    Total sales
    4,730
    4,520
    0
    0
    1,020
    0
    10,270
    Segment results
    2,962
    393
    47
    (30)
    42
    110
    3,524
    Finance costs
    (104)
    Taxation
    (148)
    Minority interests
    4
    Net profit attributable to shareholders
    3,276
    Assets and liabilities
    Segment assets
    22,307
    11,538
    10,525
    (81)
    13,104
    (4,924)
    52,469
    Tax recoverable
    279
    Total assets
    52,748
    Segment liabilities
    (4,548)
    (2,394)
    (327)
    (12)
    (4,797)
    0
    (12,078)
    Deferred taxation
    (481)
    Bank borrowings
    (7,882)
    Finance lease payables
    (137)
    Total liabilities
    (20,578)
    Other segmental information
    Capital expenditure
    26
    99
    0
    0
    2,614
    0
    2,739
    Depreciation
    246
    78
    0
    4
    198
    4
    530
    Impairment loss
    0
    50
    0
    0
    0
    0
    50
    Other non-cash expenses
    2,799
    0
    0
    0
    0
    0
    2,799
    BY GEOGRAPHICAL SEGMENTS
    30 June 2002
    Singapore
    Australia
    Malaysia
    United Kingdom
    Total
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    External sales
    4,730
    4,520
    0
    1,020
    10,270
    Segment assets
    43,003
    6,646
    (81)
    2,901
    52,469
    Capital expenditure
    2,510
    99
    0
    130
    2,739
    BY INDUSTRY SEGMENTS
    30 June 2001
    Marine
    & Oilfield
    Turbocharger
    Trading
    Foundry
    Subsea
    Robotics
    Eliminations
    Group
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    Revenue and expenses
    External sales
    6,029
    4,061
    6
    291
    309
    0
    10,696
    Inter-segment sales
    306
    0
    0
    51
    0
    (357)
    0
    Total sales
    6,335
    4,061
    6
    342
    309
    (357)
    10,696
    Segment results
    (14)
    375
    635
    (354)
    (204)
    (726)
    (288)
    Finance costs
    (98)
    Taxation
    (277)
    Minority interests
    58
    Net loss attributable to shareholders
    (605)
    Assets and liabilities
    Segment assets
    16,818
    11,927
    11,390
    1,287
    6,905
    (5,257)
    43,070
    Tax recoverable
    243
    Total assets
    43,313
    Segment liabilities
    (3,317)
    (2,017)
    (1,172)
    (649)
    (1,975)
    127
    (9,003)
    Deferred taxation
    (726)
    Bank borrowings
    (5,852)
    Finance lease payables
    (167)
    Total liabilities
    (15,748)
    Other segmental information
    Capital expenditure
    70
    86
    0
    0
    2,751
    0
    2,907
    Depreciation
    346
    63
    0
    36
    59
    (47)
    457
    Impairment loss
    0
    0
    0
    0
    0
    0
    0
    Other non-cash expenses
    3
    0
    (8)
    0
    0
    (13)
    (18)
    BY GEOGRAPHICAL SEGMENTS
    30 June 2001
    Singapore
    Australia
    Malaysia
    United Kingdom
    Total
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    External sales
    6,035
    4,061
    291
    309
    10,696
    Segment assets
    33,394
    7,034
    1,287
    1,355
    43,070
    Capital expenditure
    1,008
    86
    0
    1,813
    2,907

7.(a) Review of the performance of the company and its principal subsidiaries

    The Group's revenue for the current quarter slid 4% from prior year's comparative quarter, achieving a revenue of S$10.27 million. The decline in revenue is mainly attributable to lower revenue contributed from the marine repair services business which was disposed of in May 2002. The impact of this decline in revenue, however, has been substantially mitigated by improved revenue streamed in from the Group's three main operating divisions: services from subsea robotics, oilfield and turbocharger.

    Despite the lower revenue, the Group managed to secure its first quarter operating profit before tax, minority interests and exceptional items of S$0.62 million against the comparative quarter's loss of S$0.10 million. This also compares favourably to the Group's full year profit before tax, minority interests and exceptional items of S$1.91 million for the financial year ended 31 March 2002.

    The absence of losses incurred by the marine repair services and foundry business, coupled with the launching of that new fleet of subsea robotics vehicles, puts the Group well on a healthy growth track.

    During the quarter, maiden contribution was generated from MTQ Subsea's deployment of two new Super Mohawks ROVs (remotely operated vehicles). The subsidiary had also successfully completed the building of its heavy work-class Phoenix ROVs to an operationally ready state to further tap the subsea robotics business.

    The oilfield division also delivered stronger results for the quarter amidst improved market spending on oil and gas activities.

    Meanwhile, the turbocharger division continued to perform satisfactorily, securing higher sales of small frame turbocharger, while simultaneously seeking to tap the lucrative large frame turbocharger market.

    The exceptional gain of S$2.80 million arose from a S$3.48 million gain on sale of the Group's marine repair services business and a property at Gul Drive which was offset against a provision of S$0.68 million for the diminution in value of a long term investment.




7.(b) Where a forecast, or a prospect statement, has been previously disclosed to shareholders,

    the issuer must explain any variance between the forecast or prospect statement and the
    actual results

    No significant variance noted.




7.(c) A statement by the Directors of the Company whether any item or event of a material or

    unusual nature, which would have affected materially the results of operations of the Group
    and Company, has occurred between the date to which the report refers and the date on
    which the report is issued. If none, to give a negative statement.

    Subsequent to 30 June 2002, the Company's wholly-owned subsidiary, Dynamic Turbocharger Services (Australia) Pty Ltd ("Dynamic"), had entered into a conditional agreement with R.M. Diesel Pty Ltd ("RMD") for purchase of its business as an on-going concern together with its business assets.

    RMD supplies quality diesel fuel injection spare parts in Australia. The Directors believe that RMD's business activities are complementary to Dynamic's current operations in the sales and servicing of turbochargers, and have intended to integrate its fuel injection activities into Dynamic's existing nationwide network in Australia. As both operations share a common customer base, Dynamic will be able to provide customers with a "one-stop" service center with the acquisition and improve the level of customer service.

    Apart from the above, in the opinion of the Directors, no item, transaction or event of a material or unusual nature has arisen in the interval between 30 June 2002 and the date of this announcement that would affect the results of the Company and the Group.




8. A commentary at the date of this announcement of the competitive conditions of the

    industry in which the group operates and any known factors or events that may affect
    the group in the next reporting period

    The Group is expecting lower turnover in the second quarter of the year with the absence of revenue from the marine repair services division which the Group enjoyed in April and May 2002. Pre-tax profit will also be significantly lower as exceptional gains from the sale of the division will not recur.

    Going forward, contributions from the oilfield division are likely to remain satisfactory as increased oil exploration activities are expected.

    With the addition of two heavy work-class Phoenix ROVs towards the end of the first quarter, the Group's subsea robotics segment will enjoy the benefits of a fully operational fleet of 6 ROVs for the rest of the year.

    Performance of the Group's turbocharger operations in Australia will also be enhanced with the integration of the newly acquired fuel injection business of R.M. Diesel Pty Ltd with effect from 1 August 2002.

    Barring unforeseen circumstances, the overall operating performance of the Group is expected to be comparable in the forthcoming quarter.




9. Dividend

(a) Any dividend declared for the present financial period?
-		 None -
(b) Any dividend declared for the previous corresponding period? None
(c) Total Annual Dividend
-
-
Latest Year (30/6/2002)
Previous Year (31/3/2002)
  
Ordinary
0
1,544,400
  
Preference
0
0
  
Total:
0
1,544,400
  


(d) Date payable

      Not applicable



(e) Books closure date

      Not applicable



(f) Any other comments relating to Paragraph 9

      Nil




10.(a) Balance sheet


       

      Group
      Group
      Company
      Company
      30/06/2002
      S$'000
      31/03/2002
      S$'000
      30/06/2002
      S$'000
      31/03/2002
      S$'000
      Share capital
      19,800
      19,800
      19,800
      19,800
      Share premium account
      1,944
      1,944
      1,944
      1,944
      Reserves
      9,534
      6,190
      14,138
      13,653
      Share capital and reserves
      31,278
      27,934
      35,882
      35,397
      Minority interests
      892
      894
      0
      0
      Capital employed
      32,170
      28,828
      35,882
      35,397
      Represented by:
      Non-current assets
      Fixed assets
      21,288
      21,773
      2,318
      4,307
      Associated company
      2,704
      0
      0
      0
      Subsidiary companies
      0
      0
      23,762
      27,584
      Investments
      0
      685
      0
      685
      Staff loans receivable
      287
      290
      92
      98
      24,279
      22,748
      26,172
      32,674
      Current assets
      Cash at bank and in hand
      13,076
      7,881
      10,372
      3,448
      Other current assets
      15,393
      17,014
      1,050
      987
      28,469
      24,895
      11,422
      4,435
      Current liabilities
      Bank loans and overdraft
      (3,947)
      (3,593)
      0
      0
      Other current liabilities
      (12,158)
      (11,100)
      (987)
      (987)
      (16,105)
      (14,693)
      (987)
      (987)
      Net current assets
      12,364
      10,202
      10,435
      3,448
      Non-current liabilities
      Bank loans
      (3,935)
      (3,562)
      0
      0
      Deferred taxation
      (481)
      (494)
      (725)
      (725)
      Finance lease payables
      (57)
      (66)
      0
      0
      (4,473)
      (4,122)
      (725)
      (725)
      Net assets
      32,170
      28,828
      35,882
      35,397



10.(b) Cash flow statement


       

      First quarter ended
      First quarter ended
      30.6.02
      30.6.01
      S$'000
      S$'000
      Cash flows from operating activities:
      Profit/(loss) before taxation
      3,420
      (386)
      Add/ (less):
      Impairment of property, plant and equipment
      50
      -
      Provision for diminution in value of investment
      685
      -
      Profit on sale of business assets of a subsidiary company
      (3,484)
      -
      Depreciation of property, plant and equipment
      530
      457
      Investment and interest income
      (8)
      (17)
      Interest expense
      104
      98
      Loss on sale of property, plant and equipment
      -
      7
      Goodwill written off for acquisition of additional interest in a subsidiary company
      -
      13
      Profit on sale of quoted investments
      -
      (2)
      Operating income before reinvestment in working capital
      1,297
      170
      Decrease in receivable
      700
      1,817
      (Increase)/decrease in inventories and work-in-progress
      (591)
      264
      Increase/(decrease) in payable
      1,177
      (2,657)
      Currency re-alignment
      58
      104
      Cash generated from/(used in) operations
      2,641
      (302)
      Investment and interest income received
      8
      17
      Interest expense paid
      (104)
      (98)
      Income taxes paid
      (119)
      (159)
      Net cash provided by/(used in) operating activities
      2,426
      (542)
      Cash flows from investing activities:
      Investment in associated company
      (2,704)
      -
      Purchase of property, plant and equipment
      (2,739)
      (2,907)
      Staff loans receivable
      (135)
      (92)
      Proceeds from sale of business assets of a subsidiary company, net (see explanatory note 10.(d))
      7,798
      5,970
      Proceeds from sale of property, plant and equipment
      -
      4,401
      Proceeds from sale of quoted investment
      -
      42
      Additional investment in unquoted investment
      -
      (168)
      Subscription for shares in a subsidiary company by minority shareholders
      -
      715
      Net cash provided by investing activities
      2,220
      7,961
      Cash flows from financing activities:
      Repayment of bank overdraft, secured
      (369)
      -
      Repayment of finance leases
      (23)
      (89)
      Proceeds from bank loans
      2,559
      1,250
      Repayment of bank loans
      (1,618)
      (1,114)
      Proceeds from bank overdrafts, secured
      -
      705
      Net cash provided by financing activities
      549
      752
      Net change in cash and cash equivalents
      5,195
      8,171
      Cash and cash equivalents at beginning of financial period
      7,881
      534
      Cash and cash equivalents at end of financial period
      13,076
      8,705



10.(c) Statement of changes in equity

      Group
      Share
      Capital
      Share Premium
      Foreign
      Currency Translation Reserve
      Retained Earnings
      Share
      Capital and
      Reserves
      S$'000
      S$'000
      S$'000
      S$'000
      S$'000
      Balance as at 1 April 2002
      19,800
      1,944
      568
      5,622
      27,934
      Net profit attributable to shareholders for the period
      -
      -
      -
      3,276
      3,276
      Exchange difference on translation of overseas subsidiary companies
      -
      -
      68
      -
      68
      Balance as at 30 June 2002
      19,800
      1,944
      636
      8,898
      31,278
      Balance as at 1 April 2001
      19,800
      1,944
      531
      4,888
      27,163
      Net loss attributable to shareholders for the period
      -
      -
      -
      (605)
      (605)
      Exchange difference on translation of overseas subsidiary companies
      -
      -
      28
      -
      28
      Balance as at 30 June 2001
      19,800
      1,944
      559
      4,283
      26,586
      Company
      Share
      Capital
      Share Premium
      Retained
      Earnings
      Share
      Capital and Reserves
      S$'000
      S$'000
      S$'000
      S$'000
      Balance as at 1 April 2002
      19,800
      1,944
      13,653
      35,397
      Net profit attributable to shareholders for the period
      -
      -
      485
      485
      Balance as at 30 June 2002
      19,800
      1,944
      14,138
      35,882
      Balance as at 1 April 2001
      19,800
      1,944
      15,675
      37,419
      Net loss attributable to shareholders for the period
      -
      -
      (1,445)
      (1,445)
      Balance as at 30 June 2001
      19,800
      1,944
      14,230
      35,974

10.(d) Explanatory notes that are material to an understanding of the information provided in

      10.(a), (b) and (c) above

      Proceeds from sale of business assets of a subsidiary company in the consolidated statement of cashflow relate to proceeds arising from the sale of the marine repair services business of the Group's wholly-owned subsidiary, MTQ Engineering Pte Ltd as well as the sale of the Company's property which houses the operations.




11. Details of any changes in the company's issued share capital

      There have been no changes in the Company's issued share capital.




12. The group's borrowings and debt securities as at the end of the financial period reported

      on, and comparative figures as at the end of the most recently announced financial
      statements

      (a) Amount repayable in one year or less, or on demand
      As at 30/06/2002
      As at 31/03/02
      Secured
      Unsecured
      Secured
      Unsecured
      S$'000
      3,947
      S$'000
      0
      S$'000
      3,593
      S$'000
      0



       

      (b) Amount repayable after one year
      As at 30/06/2002
      As at 31/03/2002
      Secured
      Unsecured
      Secured
      Unsecured
      S$'000
      3,935
      S$'000
      0
      S$'000
      3,562
      S$'000
      0



(c) Any other comments relating to Paragraph 12

      Nil




13. A statement that the same accounting polices and methods of computation are followed

      in the financial statements as compared with the most recent audited annual financial
      statements. Where there have been any changes or departure from the accounting policies
      and methods of computation, including those required by an accounting standard, this
      should be disclosed together with the reasons for the change and the effect of the change

      The Company has adopted the same accounting policies and methods of computation for the current financial period as those for the financial year ended 31 March 2002.






BY ORDER OF THE BOARD

Fong Choon Seng
Company Secretary
30/07/2002