Sin Heng Heavy Machinery Limited

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Financials
Full Year Results Financial Statement And Related Announcement
Financials Archive

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

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Review of Performance

Income Statement

Revenue

The Group registered a total revenue of S$28.1m in 2H FY2021, which was 27.7% higher than 2H FY2020. Total revenue of S$53.7m for 12M FY2021 was 0.7% higher as compared to 12M FY2020. The increase was mainly due to higher rental revenue, which was partially offset by lower trading revenue.

Revenue from Equipment Rental business increased by 14.4% to S$13.5m in 2H FY2021 and 30.4% to S$27.8m in 12M FY2021 as compared to the corresponding period in FY2020 respectively. The increase was mainly due to more cranes rented out in FY2021 as the COVID-19 pandemic had resulted in lock-downs being imposed in Singapore and Malaysia during the corresponding period in FY2020.

Revenue from Trading business increased by 42.9% to S$14.7m in 2H FY2021 but decreased by 19.1% to S$25.9m in 12M FY2021 as compared to the corresponding periods in FY2020 respectively. The overall decrease was mainly due to different product mix sold.

Gross Profit

The Group registered a total gross profit of S$7.5m in 2H FY2021 which was 84.6% higher than 2H FY2020. Total gross profit for 12M FY2021 was S$13.4m and 104.0% higher as compared to 12M FY2020 mainly due to the significant increase in rental revenue in FY2021, and favourable gross profit margin from Trading business.

The Group registered a gross profit of S$4.0m from Equipment Rental business in 2H FY2021 which was 55.4% higher than 2H FY2020. The gross profit for 12M FY2021 was S$8.0m and 232.7% higher as compared to 12M FY2020. The increase recorded in FY2021 was mainly due to higher rental revenue as compared to FY2020, which experienced significant reduction in rental revenue during the Circuit Breaker period.

The Group registered a gross profit of S$3.5m from Trading business in 2H FY2021 which was 134.3% higher than 2H FY2020. The gross profit for 12M FY2021 was S$5.4m and 29.7% higher as compared to 12M FY2021. The increase was due to the Group was able to perform transactions with better margins.

Other Operating Income

Other operating income decreased by S$0.9m and S$2.6m in 2H FY2021 and 12M FY2021 respectively as compared to the corresponding prior periods. The decrease was mainly due to lower government support scheme income received and foreign exchange loss recorded in FY2021 as compared to net foreign exchange gain recorded in the prior periods in FY2020.

Selling Expenses

Selling expenses decreased by S$0.1m in 12M FY2021 as compared to 12M FY2020. The decrease was mainly due to lower selling expenses incurred and decrease in travelling expenses.

Administrative Expenses

Administrative expenses increased by S$0.5m and S$0.2m in 2H FY2021 and 12M FY2021 respectively as compared to the corresponding prior periods. The increase was mainly due to higher salary and related expenses.

Other Operating Expenses

Other operating expenses increased by S$0.1m and S$0.4m in 2H FY2021 and 12M FY2021 respectively as compared to the corresponding period periods in FY2020. The increase was mainly due to net foreign exchange loss recorded in the periods in FY2021 as compared to a net foreign exchange gain recorded in FY2020, offset against write-back of allowance for doubtful debts.

Finance Costs

Finance costs decreased by S$0.2m and S$0.3m in 2H FY2021 and 12M FY2021 respectively as compared to the corresponding prior periods. The decrease was mainly due to lower lease interest expense as a result of lower outstanding lease liabilities.

Income Tax Expenses

The Group recorded an income tax expense in 12M FY2021, mainly due to provision of current tax expenses for 12M FY2021 and deferred tax charged to profit or loss.

Statement Of Financial Position

Current assets

As at 31 December 2021, current assets amounted to S$60.7m or 49% of total assets. Current assets mainly comprises of cash and bank balances, trade and other receivables, inventories and other investments. Total current assets decreased by S$0.2m as compared to 31 December 2020 mainly due to decrease in trade receivables and inventories, which was partially offset by increase in cash and bank balances and financial assets measured at FVTPL.

Non-current assets

As at 31 December 2021, non-current assets amounted to S$63.4m or 51% of total assets. Non-current assets mainly comprises of property, plant and equipment and right-of-use assets. Total non-current assets decreased by S$3.1m as compared to 31 December 2020 mainly due to depreciation charged for the period offset by capitalisation of ROU asset.

Current liabilities

As at 31 December 2021, current liabilities amounted to S$4.7m or 30% of total liabilities. Current liabilities mainly comprises of trade and other payables and current portion of lease liabilities. Total current liabilities decreased by S$1.9m as compared to 31 December 2020, mainly due to repayment of lease liabilities partially offset by increase in other payables.

Non-current liabilities

As at 31 December 2021, non-current liabilities amounted to S$10.6m or 70% of total liabilities. Non-current liabilities comprises of the non-current portion of lease liabilities and deferred tax. Total non-current liabilities increased by S$2.3m as compared to 31 December 2020, mainly due to recognition of a new lease liability and increase in deferred tax liabilities, partially offset by repayment of lease liabilities.

Working Capital

As at 31 December 2021, the Group registered a positive working capital of S$56.0m as compared to that of S$54.3m as at 31 December 2020.

Equity

As at 31 December 2021, the Group's total equity stood at S$108.8m. Total equity decreased by S$3.7m as compared to 31 December 2020, mainly due to payment of dividend, partially offset against profit for the year.

Statement Of Cash Flows

The Group's net cash generated from operating activities in 12M FY2021 was S$40.3m. This comprised positive operating cash flows before changes in working capital of S$13.6m, adjusted by an increase in net working capital flow of S$27.2m and income tax paid of S$0.5m.

Net cash used in investing activities was S$14.8m in 12M FY2021. This was mainly due to the cash outlay for the purchase of property, plant and equipment and renewal of rental fleet of S$13.8m and acquisition cost of financial assets measured at FVTPL of S$1.8m, offset with the proceeds from disposal of property, plant and equipment of S$0.6m and interest received of S$0.2m.

Net cash used in financing activities was S$9.9m in 12M FY2021. This was mainly due to the dividend paid of S$5.7m, payment of lease liabilities of S$3.8m and interest expenses of S$0.2m, and purchase of treasury shares of S$0.2m.

A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the Group operated and any known factors or events that may affect the Group in the next operating period and the next 12 months

According to the latest media release by Building and Construction Authority ("BCA") on 26 January 2022, it was projected that the construction demand for 2022 in Singapore to be between S$27 billion and S$32 billion, of which public sector is expected to contribute about 60 percent of the total construction demand. While there appears to be some easing of the labour shortage and with construction demand expected to increase, the Group will continue to closely monitor its Singapore operations.

The outlook of the business environment in Malaysia remains challenging despite the Malaysia Government recently announcing its plan to re-open the borders amidst the current COVID-19 pandemic. The Group has downsized its rental fleet by disposing certain cranes and expects business activities to be slow.

The Group's Myanmar operations continues to remain uncertain since the military seized power on 1 February 2021 and the ongoing COVID-19 Pandemic.

In view of the above, the Group will continue to adopt a prudent cash management strategy while exploring other business opportunities.

Statements of Financial Position

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