MTQ Corporation Limited

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Half Year Financial Statement

BackOct 30, 2002

Half Year Financial Statements on consolidated results for the six months ended 30 September 2002.
These figures have not been audited.


- -
Group
Company
- -
S$'000
%
S$'000
%
- -
- -
30/9/2002
30/9/2001
Increase/ (Decrease)
30/9/2002
30/9/2001
Increase/ (Decrease)
1.(a) Turnover
23,213
21,292
9.0
2,943
1,681
75.1
1.(b) Cost of sales (Note A)
(15,390)
(13,723)
12.1
0
0
NM
1.(c) Gross profit
7,823
7,569
3.4
2,943
1,681
75.1
1.(d) Investment income
0
0
NM
0
0
NM
1.(e) Other income including interest income
229
145
57.9
2
27
(92.6)
2.(a) Operating profit before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items
1,806
1,560
15.8
1,377
373
269.2
2.(b)(i) Interest on borrowings
(249)
(183)
36.1
0
(12)
NM
2.(b)(ii) Depreciation and amortisation
(405)
(475)
(14.7)
(218)
(344)
(36.6)
2.(b)(iii) Foreign exchange gain/(loss)
305
(87)
NM
(23)
(10)
130.0
2.(c) Exceptional items (provide separate disclosure of items)
2,799
(217)
NM
(593)
(1,404)
(57.8)
- -
- -
S$'000
%
S$'000
%
- -
- -
30/9/2002
30/9/2001
Increase/ (Decrease)
30/9/2002
30/9/2001
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
4,256
598
611.7
543
(1,397)
NM
2.(e) Income derived from associated companies (With separate disclosure of any items included therein which are exceptional because of size & incidence)
0
0
NM
0
0
NM
2.(f) Operating profit before income tax
4,256
598
611.7
543
(1,397)
NM
2.(g) Less income tax (Indicate basis of computation)
(235)
(442)
(46.8)
(301)
0
NM
2.(g)(i) Operating profit/(loss) after tax before deducting minority interests
4,021
156
2,477.6
242
(1,397)
NM
2.(g)(ii) Less minority interests
(185)
79
NM
0
0
NM
2.(h) Operating profit/(loss) after tax attributable to members of the company
3,836
235
1,532.3
242
(1,397)
NM
2.(i)(i) Extraordinary items (provide separate disclosure of items)
0
0
NM
0
0
NM
2.(i)(ii) Less minority interests
0
0
NM
0
0
NM
2.(i)(iii) Extraordinary items attributable to members of the company
0
0
NM
0
0
NM


      Note A - Depreciation of property, plant and equipment for the Group amounting to S$0.77m (2001: S$0.48m) has been included in the cost of sales.

      Note B to Item 2(g) - Income Tax is computed based on liability method.

- -
Group
Company
- -
S$'000
%
S$'000
%
- -
- -
30/9/2002
30/9/2001
Increase/ (Decrease)
30/9/2002
30/9/2001
Increase/ (Decrease)
2.(i)(iv) Transfer to/from Exchange Reserve
0
0
NM
0
0
NM
2.(i)(v) Transfer to Capital Reserve
0
0
NM
0
0
NM
2.(i)(vi) Transfer to Reserve Fund
0
0
NM
0
0
NM
2.(j) Operating profit/(loss) after tax and extraordinary items attributable to members of the company
3,836
235
1,532.3
242
(1,397)
NM

    NM: not meaningful
Group Figures
- -
Latest period
Previous corresponding period
3.(a) Operating profit/(loss) [2(g)(i) above] as a percentage of turnover [1(a) above]
17.32%
0.73%
3.(b) Operating profit [2(h) above] as a percentage of issued capital and reserves at end of the period
12.68%
0.88%
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
4.84 cents
0.30 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)
4.83 cents
0.29 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
36.33 cents
33.64 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 current first half rose generally in tandem with the increase in turnover. Competition experienced in securing a few major jobs in the oilfield operations had, however, exerted a downward pressure on the margins, thereby pushing the increase in costs (12%) slightly higher than the growth in turnover (9%).

    Positive exchange movements in the Group's key operating currencies translated into a foreign exchange gain of S$0.31m as compared to foreign exchange loss of S$0.09m for prior comparative period.

    Staff costs and other operating expenses (excluding exceptional items) remained comparable to those incurred in prior comparative period.




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 in issue of 79.20m (YTD September 2001: 79.20m) 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 79.36m (YTD September 2001: 79.97m) 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
%
- -
- -
30/9/2002
30/9/2001
Increase/ (Decrease)
30/9/2002
30/9/2001
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 September 2002
    Marine
    & Oilfield
    Turbocharger
    & Fuel
    Injection
    Trading
    Foundry
    Subsea Robotics
    Eliminations
    Group
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    Revenue
    External sales
    9,342
    9,697
    -
    -
    4,174
    -
    23,213
    Inter-segment sales
    -
    -
    -
    -
    -
    -
    -
    Total sales
    9,342
    9,697
    -
    -
    4,174
    -
    23,213
    Segment results
    2,917
    582
    39
    (40)
    781
    226
    4,505
    Finance costs
    (249)
    Taxation
    (235)
    Minority interest
    (185)
    Net profit attributable to shareholders
    3,836
    Assets and Liabilities
    Segment assets
    24,070
    14,286
    5,912
    (98)
    15,495
    (4,639)
    55,026
    Tax recoverable
    129
    Total assets
    55,155
    Segment liabilities
    (3,518)
    (3,374)
    (326)
    (4)
    (4,146)
    -
    (11,368)
    Provision for taxation
    -
    Deferred taxation
    (90)
    Bank borrowings
    (12,239)
    Finance lease payables
    (111)
    Total liabilities
    (23,808)
    Other segmental information
    Capital expenditure
    559
    380
    -
    -
    4,077
    -
    5,016
    Depreciation
    459
    151
    -
    8
    539
    6
    1,163
    Other non-cash income/(expenses)
    2,890
    (76)
    -
    -
    -
    -
    2,814
    BY GEOGRAPHICAL SEGMENTS
    Singapore
    Australia
    Malaysia
    United Kingdom
    Total
    30 September 2002
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    External sales
    9,365
    9,697
    -
    4,151
    23,213
    Segment assets
    33,361
    9,630
    (98)
    12,133
    55,026
    Capital expenditure
    4,475
    380
    -
    161
    5,016
    BY INDUSTRY SEGMENTS
    30 September 2001
    Marine
    & Oilfield
    Turbocharger
    & Fuel
    Injection
    Trading
    Foundry
    SubseaRobotics
    Eliminations
    Group
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    Revenue
    External sales
    12,473
    7,333
    -
    449
    1,037
    -
    21,292
    Inter-segment sales
    519
    -
    -
    75
    -
    (594)
    -
    Total sales
    12,992
    7,333
    -
    524
    1,037
    (594)
    21,292
    Segment results
    748
    537
    804
    (430)
    (258)
    (620)
    781
    Finance costs
    (183)
    Taxation
    (442)
    Minority interest
    79
    Net profit attributable to shareholders
    235
    Assets and Liabilities
    Segment assets
    18,518
    10,818
    11,095
    226
    7,247
    (5,109)
    42,795
    Tax recoverable
    -
    Total assets
    42,795
    Segment liabilities
    (5,005)
    (1,895)
    (709)
    (56)
    (2,014)
    507
    (9,172)
    Provision for taxation
    (538)
    Deferred taxation
    -
    Bank borrowings
    (5,274)
    Finance lease payables
    (214)
    Total liabilities
    (15,198)
    Other segmental information
    Capital expenditure
    146
    120
    -
    -
    5,005
    -
    5,271
    Depreciation
    717
    116
    -
    51
    168
    (95)
    957
    Other non-cash income/(expenses)
    2
    -
    898
    91
    -
    (919)
    72
    BY GEOGRAPHICAL SEGMENTS
    Singapore
    Australia
    Malaysia
    United Kingdom
    Total
    30 September 2001
    S$'000
    S$'000
    S$'000
    S$'000
    S$'000
    External sales
    12,473
    7,333
    449
    1,037
    21,292
    Segment assets
    32,503
    6,385
    226
    3,681
    42,795
    Capital expenditure
    2,406
    120
    -
    2,745
    5,271




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

    The Group's turnover for the current first half edged up 9% above prior year's comparative first half, generating a turnover of S$23.21m.

    The growth was led mainly by contributions from the subsea robotics division with its enlarged fleet of 6 remotely operated vehicles ("ROVs"). The Group also enjoyed maiden revenue from the newly acquired fuel injection business in Australia, which further improved the turnover. The overall improvement in turnover was, however, moderated by lower revenue from marine repair services division following its disposal in May 2002.

    Correspondingly, the Group's performance for the current first half was a marked improvement over the comparative period. Group operating profit before tax, minority interests and exceptional items was S$1.46m, way surpassing the S$0.82m achieved over the comparative half year, and already accomplishing 76% of the S$1.91m operating profit registered for the entire financial year ended 31 March 2002.

    The current first half saw the subsea robotics division benefiting from the deployment of four new additions to its existing fleet, being two new Super Mohawks ROVs and two heavy work-class Phoenix ROVs. The industry outlook in its key market places, notably the North Sea, West Africa and SE Asia, is also encouraging.

    The turbocharger division continued to deliver good margins through its firm market leadership in Australia's independent turbocharger service industry. The performance of the Australian unit was further boosted with the acquisition of a fuel injection business in August 2002.

    The oilfield division also enjoyed buoyant sales albeit the competition encountered in securing a few major jobs and thus, the concomitant pressure on job margins.

    The absence of losses suffered by the discontinued marine repairs services and foundry business also played a principal role in hastening the improvement.

    Apart from operational fronts, the exceptional gain of S$3.48m arising from successful completion of divesting the Group's marine repair services business and a property at Gul Drive in May 2002 also had a favourable impact on the current half year's overall performance. This was offset by a provision of S$0.68m for diminution in value of an 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

    The Company had, in the announcement of its first quarter results for current financial year, highlighted that turnover in the second quarter is expected to be lower with the absence of revenue contributions from marine repair services which the Group enjoyed in April and May 2002.

    The Group had performed better than expected, registering a revenue of S$12.94m for the second quarter, well above the S$10.27m generated during first quarter. This was principally driven by the increased subsea robotics activities, supported by an enlarged ROV fleet. The successful acquisition of the fuel injection business in August 2002, coupled with buoyant sales in the turbocharger and oilfield segment, also contributed positively to the increase in turnover.

    Except for the aforementioned and non-recurring gains arising from the sale of marine repair services business in the first quarter, the overall operating performance is reasonably close to the forecast statement made previously.




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 September 2002, the Company's wholly-owned subsidiary, MTQ Engine Systems (Aust) Pty Ltd ("MTQES"), had entered into a conditional agreement with Turbo Torque Pty Ltd ("Turbo Torque") for purchase of its business as an on-going concern together with its business assets. Turbo Torque is engaged in similar activities as MTQES in the sales and servicing of turbochargers.

    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 September 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

    Looking ahead into the second half, the turbocharger division will enjoy a full half year contribution from the newly acquired fuel injection business. The successful acquisition of a new turbocharger service facility from Turbo Torque Pty Ltd on 24 October 2002 will also enhance the earnings of the division in the second half.

    The subsea robotics division will see its North Sea operations entering into the lull winter months towards the end of the third quarter. Notwithstanding this, the division will enjoy the full support of its entire operational fleet of 6 vehicles in the second half year, particularly the heavy work-class Phoenix ROVs which are generally able to secure improved job margins than the Mohawk range of ROVs.

    Performance of the oilfield division is likely be remain healthy despite the holiday seasons. The division is also likely to benefit from measures taken to further enhance productivity.

    Following the sale of the marine repair business, losses suffered by the business in the early months of the current half year will not recur in the second half year.

    Barring unforeseen circumstances, particularly any worsening of the current political uncertainties brought about by recent world events and any severe adverse currency fluctuation in the key operating currencies of the Group's respective divisions, the operating performance of the Group is likely to improve further in the second half.

    However, having adopted quarterly reporting, third quarter results are expected to be substantially higher than that of the fourth quarter due to seasonal factors.




9. Dividend

(a) Present Period
Name of Dividend
Interim
Dividend Type
Cash
Dividend Rate 4 % per ordinary share less tax
Par value of shares
S$0.25
Tax Rate
22%
(b) Any dividend declared for the previous corresponding period? None
(c) Total Annual Dividend
-
-
Latest Year (S$'000)
Previous Year (S$'000)
  
Ordinary
618
0
  
Preference
0
0
  
Total:
618
0
  


(d) Date payable

      The interim dividend will be paid at a date to be announced later.



(e) Books closure date

      Notice will be given at a later date on the closure of the Share Transfers Books and Register of Members to determine shareholders' entitlements to the interim dividend.



(f) Any other comments relating to Paragraph 9

        NIL




10.(a) Balance sheet


       

      Group
      Group
      Company
      Company
      30.9.02
      30.6.02
      30.9.02
      30.6.02
      $'000
      $'000
      $'000
      $'000
      Share capital
      19,800
      19,800
      19,800
      19,800
      Share premium account
      1,944
      1,944
      1,944
      1,944
      Reserves
      8,520
      9,534
      12,351
      14,138
      Share capital & reserves
      30,264
      31,278
      34,095
      35,882
      Minority interests
      1,083
      892
      -
      -
      Capital employed
      31,347
      32,170
      34,095
      35,882
      Represented by:
      Non-current assets
      Goodwill
      1,488
      -
      -
      -
      Fixed assets
      22,592
      21,288
      2,521
      2,318
      Quoted investment
      2,618
      2,704
      -
      -
      Subsidiary companies
      -
      -
      22,738
      23,762
      Staff loans receivable
      197
      287
      36
      92
      26,895
      24,279
      25,295
      26,172
      Current assets
      Cash at bank and in hand
      11,137
      13,076
      9,336
      10,372
      Other current assets
      17,123
      15,393
      773
      1,050
      28,260
      28,469
      10,109
      11,422
      Current liabilitites
      Bank loans & overdraft
      (8,465)
      (3,947)
      -
      -
      Finance lease payables
      (85)
      (80)
      -
      -
      Other current liabilities
      (11,368)
      (12,078)
      (984)
      (987)
      (19,918)
      (16,105)
      (984)
      (987)
      Net current assets
      8,342
      12,364
      9,125
      10,435
      Non-current liabilities
      Bank loans
      (3,774)
      (3,935)
      -
      -
      Deferred taxation
      (90)
      (481)
      (325)
      (725)
      Finance lease payables
      (26)
      (57)
      -
      -
      Non-current liabilities
      (3,890)
      (4,473)
      (325)
      (725)
      Net assets
      31,347
      32,170
      34,095
      35,882



10.(b) Cash flow statement


       

      Half year ended
      Half year ended
      30.9.02
      30.9.01
      S$'000
      S$'000
      Cash flows from operating activities:
      Profit/(loss) before taxation
      4,256
      598
      Add/ (less):
      Amortisation of goodwill
      12
      -
      Depreciation of property, plant and equipment
      1,163
      957
      Gain on sale of property, plant and equipment
      (27)
      (83)
      Profit on sale of business assets of a subsidiary company
      (3,484)
      -
      Investment and interest income
      (23)
      (44)
      Interest expense
      249
      183
      Provision for diminuition in value of investments
      685
      -
      Gain on sale of quoted investments
      -
      (2)
      Goodwill written off for acquisition of additional interest in a subsidiary company
      -
      13
      Operating income before reinvestment in working capital
      2,831
      1,622
      (Increase)/decrease in receivable
      (1,119)
      2,807
      Decrease in inventories and work-in-progress
      439
      286
      Increase/(decrease) in payable
      391
      (2,488)
      Currency re-alignment
      (81)
      (2)
      Cash generated from/(used in) operations
      2,461
      2,225
      Investment and interest income received
      23
      44
      Interest expense paid
      (249)
      (183)
      Income taxes paid
      (457)
      (256)
      Net cash provided by/(used in) operating activities
      1,778
      1,830
      Cash flows from investing activities:
      Purchase of property, plant and equipment
      (4,934)
      (5,271)
      Proceeds from sale of property, plant and equipment
      461
      4,919
      Investment in new business
      (2,639)
      -
      Investment in an associated company
      (2,614)
      -
      Proceeds from sale of business assets of a subsidiary company, net
      7,798
      5,970
      Staff loans receivable, net
      (35)
      (128)
      Proceeds from sale of quoted investments
      -
      43
      Additional investment in unquoted investment
      -
      (168)
      Subscription for shares in a subsidiary company by minority shareholders
      -
      715
      Net cash provided by investing activities
      (1,963)
      6,080
      Cash flows from financing activities:
      Dividend paid
      (1,544)
      (747)
      Repayment of finance leases
      (52)
      (73)
      Proceeds from bank overdraft, secured
      506
      -
      Proceeds from term loans, secured
      3,833
      468
      Proceeds from long-term loans, secured
      2,500
      640
      Repayment of long-term loans
      (1,802)
      (359)
      Proceeds from finance leases
      -
      35
      Repayment of bank overdraft, secured
      -
      (202)
      Net cash provided by financing activities
      3,441
      (238)
      Net change in cash and cash equivalents
      3,256
      7,672
      Cash and cash equivalents at beginning of financial period
      7,881
      534
      Cash and cash equivalents at end of financial period
      11,137
      8,206



10.(c) Statement of changes in equity


       

      Group
      Share
      Capital
      Share
      Premium
      Foreign Currency Translation Reserve
      Retained Earnings
      Share
      Capital & Reserves
      S$'000
      S$'000
      S$'000
      S$'000
      S$'000
      Balance as at 31 March 2001
      19,800
      1,944
      531
      4,888
      27,163
      Exchange difference on translation of overseas subsidiary companies
      (12)
      (12)
      Net profit attributable to shareholders
      235
      235
      Dividends paid in respect of previous financial
      (747)
      (747)
      year, less tax
      Balance as at 30 September 2001
      19,800
      1,944
      519
      4,376
      26,639
      Exchange difference on translation of overseas subsidiary companies
      49
      49
      Net profit attributable to shareholders
      1,246
      1,246
      Balance as at 31 March 2002
      19,800
      1,944
      568
      5,622
      27,934
      Exchange difference on translation of overseas subsidiary companies
      38
      38
      Net profit attributable to shareholders
      3,836
      3,836
      Dividends paid in respect of previous financial
      (1,544)
      (1,544)
      year, less tax
      Balance as at 30 September 2002
      19,800
      1,944
      606
      7,914
      30,264
      Company
      Share Capital
      Share Premium
      Retained Earnings
      Share Capital & Reserves
      S$'000
      S$'000
      S$'000
      S$'000
      Balance as at 31 March 2001
      19,800
      1,944
      15,675
      37,419
      Net loss attributable to shareholders
      (1,397)
      (1,397)
      Dividends paid in respect of previous financial
      (747)
      (747)
      year, less tax
      Balance as at 30 September 2001
      19,800
      1,944
      13,531
      35,275
      Net profit attributable to shareholders
      122
      122
      Balance as at 31 March 2002
      19,800
      1,944
      13,653
      35,397
      Net profit attributable to shareholders
      242
      242
      Dividends paid in respect of previous financial
      (1,544)
      (1,544)
      year, less tax
      Balance as at 30 September 2002
      19,800
      1,944
      12,351
      34,095



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 service 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 30/09/2002
      As at 30/06/2002
      Secured
      Unsecured
      Secured
      Unsecured
      S$'000
      8,465
      S$'000
      0
      S$'000
      3,947
      S$'000
      0
      (b) Amount repayable after one year
      As at 30/09/2002
      As at 30/06/2002
      Secured
      Unsecured
      Secured
      Unsecured
      S$'000
      3,774
      S$'000
      0
      S$'000
      3,935
      S$'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.

      The presentation and classification of certain items in the financial statements have been changed to comply with the requirements of SAS and to provide proper comparisons with the current year's presentation.






BY ORDER OF THE BOARD

Fong Choon Seng
Company Secretary
30/10/2002