Sin Heng Heavy Machinery Limited

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Joint Message by Chairman & Managing Director
Extracted from Annual Report 2015

Dear Shareholders,

For the financial year ended 30 June 2015 ("FY2015"), the Group faced headwinds in our macro environment, such as the weakening of the global economy, volatile currency movements as well as the slump in prices of oil and other commodities, which limited our growth and opportunities. Despite these challenges, we are proud to achieve yet another set of credible results for FY2015.

STANDING FIRM AGAINST CHALLENGES

The Group posted a revenue of S$177.8 million for FY2015, which was a 16.6% drop from the year before. This decrease was due to lower trading revenue as a result of the weaker demand for higher capacity cranes. Equipment rental revenue, on the other hand, remained fairly stable amidst the competitive rental environment as compared to the previous year.

Despite the drop in revenue, the Group only recorded a marginal 1.7% decline in gross profit as compared to the year before, ending with S$31.7 million for FY2015. This can be credited to the improvement in gross profit from the trading business to S$16.2 million, which mitigated the 10.2% decline in the gross profit from the equipment rental business to S$15.5 million.

Together with the higher other operating income from better sales of parts, gain on disposal of property, plant and equipment as well as gain on divestment of an associate, these reduced the impact of the Group's higher operating expenses. As a result, the Group achieved a net profit after tax of S$12.0 million for FY2015.

The Group balance sheet position continues to remain robust amidst these challenging times.

Total equity attributable to the shareholders of the Company increased from S$127.4 million at the end of FY2014 to S$130.9 million at the end of FY2015. This increase was mainly driven by the net profit generated in FY2015 after payment of dividends to shareholders.

REINFORCING OUR FOUNDATIONS

During FY2015, the Group incorporated SH Equipment (HK) Limited, a new wholly-owned subsidiary in Hong Kong, to explore new business opportunities in Hong Kong and Greater China. This move will further enhance our foothold in Asia.

MOVING AHEAD

As the global economy continues to be shrouded in uncertainties, we expect the path ahead to remain challenging for some time. Notwithstanding that, we are staying vigilant and cautiously optimistic as we expect the overall sentiment in the Asian market to gradually improve, supported by sustained economic growth in the developing and emerging markets.

We remain focused as we work enthusiastically towards laying strong foundations for the future. We will continue to explore new geographical markets and complementary products that will allow us to deliver superior lifting solutions to our valued customers.

REWARDING OUR SHAREHOLDERS

On behalf of the Board, we would like to share the success we have achieved for FY2015 via a proposed final dividend of 0.55 Singapore cents per ordinary share.

With the interim dividend of 0.45 Singapore cents per share paid out earlier in the year, this works out to a total dividend of 1.0 Singapore cent per share for FY2015. This represents a total dividend yield of 6.3% based on the closing price of 16.0 Singapore cents per share as at 30 June 2015.

A WORD OF THANKS

We would like to express our sincere appreciation to Mr Yasuhiro Kakihara, who had resigned as a Non-Executive and Non-Independent Director. His contributions to the Group have been invaluable. We would also like to warmly welcome Mr Hideyuki Morita, who has joined the Board as a Non-Executive and Non-Independent Director and as a member of the Audit & Risk Committee, Nominating Committee and Remuneration Committee.

The Group's continued strong performance in spite of the challenging economic climate is a testament to the people who have put in so much efforts. Our achievements could not have been possible without the confidence and support of members of the Board, our principals, customers, business associates, and most importantly, our dedicated staff for believing in us.

Last but not the least, we would like to thank all our shareholders. Your continued support is crucial to the strong performance and future success of the Group.


Mr Tan Ah Lye

Non-Executive Chairman

Mr Tan Cheng Soon Don

Managing Director
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