Financials
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Financials Archive
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Condensed interim financial statements For the six months ended 30 September 2024
Condensed interim consolidated statement of profit or loss and other comprehensive income
NM: Not Meaningful
Condensed interim statements of financial position
Review of Income Statement of the Group
First Half FY2025 ("1H FY2025") vs First Half FY2024 ("1H FY2024")
Revenue
Group revenue decreased by 3.6% to RMB463.8 million in 1H FY2025 as compared to RMB481.1 million in 1H FY2024.
The decrease is due to lower revenue from sales of tower cranes and components of RMB10.4 million from RMB339.1 million in 1H FY2024 to RMB328.7 million in 1H FY2025. Rental and service income has also decreased by RMB6.9 million to RMB135.1 million in 1H FY2025 from RMB142.0 million in 1H FY2024.
Revenue in the PRC reduced by RMB33.9 million to RMB156.5 million in 1H FY2025. The decrease in the PRC is driven by the sluggish domestic economy stemming from an ongoing property market slowdown and weak global demand for manufactured goods. The decrease is partly offset by higher revenue from Asia (outside of the PRC) of RMB18.8 million to RMB195.8 million in 1H FY2025 from RMB177.0 million in 1H FY2025.
Overall, sales in Asia (outside the PRC) and the PRC contributed to 42.2% (1H FY2024: 36.8%) and 33.7% (1H FY2024: 39.6%) respectively of the Group revenue in 1H FY2025.
Gross profit and gross profit margin
In line with decrease in revenue, gross profit decreased by 5.1% to RMB141.1 million in 1H FY2025 from RMB148.8 million in 1H FY2024.
Average gross profit margin decreased to 30.4% in 1H FY2025 from 30.9% in 1H FY2024.
Other income
Other income increased by RMB1.2 million to RMB5.4 million in 1H FY2025 as compared to RMB4.2 million in 1H FY2024. The increase is mainly due to government subsidies and rebates of RMB2.0 million which were received from the PRC authorities. The increase was partly offset by lower interest income of RMB0.7 million.
Operating expenses
Total operating expenses increased 35.3% to RMB129.2 million in 1H FY2025 as compared to RMB95.5 million in 1H FY2024.
Distribution costs increased 36.8% to RMB56.5 million in 1H FY2025 as compared to RMB41.3 million in 1H FY2024 mainly arose from freight cost. The increase is due to higher freight rate and higher oversea sales.
Administrative expenses decreased by 7.6% to RMB39.5 million in 1H FY2025 as compared to RMB42.7 million in 1H FY2024. The decrease is mainly due to lower employee costs, attributed to lower provision for bonuses and lower legal fee.
Other operating expenses increased significantly by RMB19.7 million to RMB21.9 million in 1H FY2025 as compared to RMB3.3 million in 1H FY2024. The difference was mainly due to an exchange loss of RMB5.8 million in 1H FY2025 as compared to an exchange gain of RMB5.1 million in 1H FY2024. The increase was also due to a debt written off of RMB5.5 million in 1H FY2025 owing from Yongmao Machinery (Cambodia) Co., Ltd ("YMC"), subsequent to the full disposal of its interest.
The exchange loss for 1H FY2025 arose mainly from the weakening of USD and HKD against RMB and SGD.
Finance costs increased by 24.7% to RMB10.2 million in 1H FY2025 as compared to RMB8.2 million in 1H FY2024 due to higher average borrowings.
Taxation
Income tax expense decreased to RMB6.6 million in 1H FY2025 as compared to RMB9.8 million in 1H FY2024 in line with lower profits for the financial period under review.
Other comprehensive income/(expenses)
The Group reported other comprehensive income of RMB26.9 million in 1H FY2025 as compared to RMB5.0 million in 1H FY2024. Other comprehensive income pertains to fair value gain of RMB28.7 million from financial assets, FVOCI. The gain was partly offset by loss on exchange translation of RMB1.8 million arose from translation of the net assets of our Hong Kong and Singapore subsidiaries.
Profit before taxation and Net profit attributable to equity holders of the Company
As a result of the above, the Group recorded a lower profit before taxation of RMB21.5 million in 1H FY2025 as compared to RMB57.4 million in 1H FY2024.
Net profit attributable to equity holders of the Company amounts to RMB11.0 million in 1H FY2025 decreased from RMB40.1 million in 1H FY2024.
Review of Financial Position of the Group
Non-current Assets
Non-current assets increased by RMB148.8 million to RMB989.9 million as at 30 September 2024 mainly due to higher property, plant and equipment, higher financial assets, at FVOCI and higher deferred tax assets.
The increase of RMB118.5 million in the Group's net carrying amount of property, plant and equipment was mainly attributable to the increase in rental fleets and the recognition of right-of-use assets of RMB79.5 million for the new lease of Hong Kong yard.
The increase is partly offset by net depreciation charges and disposals.
Deferred tax assets arose mainly from provisions and elimination of unrealised profits in intragroup sales and the various provisions made.
Financial assets, at FVOCI increased with fair value gain of RMB28.7 million as at 30 September 2024.
Current Assets
Current assets increased by RMB17.8 million to RMB1,240.0 million as at 30 September 2024 mainly due to higher trade and other receivables, partly offset by lower inventories and lower cash and cash equivalents (see Note on Cash Flow Statement below).
Trade and other receivables increased by RMB84.2 million to RMB676.0 million as at 30 September 2024. Higher trade receivables is due to slower repayment in the PRC and higher sales of cranes in Hong Kong which are not due.
Inventories decreased by RMB43.6 million to RMB365.1 million as at 30 September 2024 as compared to RMB408.7 million as at 31 March 2024. This lower inventory mainly due to the fulfilment of deliveries in the period under review.
Non-current Liabilities
Non-current liabilities increased to RMB183.2 million as at 30 September 2024 from RMB74.8 million as at 31 March 2024. The increase was due to higher bank borrowings of RMB30 million and recognizing of leased liabilities of RMB74.8 million in relates to the new rental of yard in Hong Kong for a period of 10 years.
Deferred tax provision was mainly made for withholding tax levied on dividends of undistributed earnings of PRC subsidiaries, accelerated tax depreciation on inter-company sales of tower cranes used as rental fleet.
Current Liabilities
Current liabilities increased by RMB28.9 million to RMB1,031.0 million as at 30 September 2024 as compared to RMB1,002.2 million as at 31 March 2024 mainly due to higher trade and other payable and higher interest bearing loan from a corporate shareholder of a subsidiary.
Total Equity
As at 30 September 2024, the Group's total equity amounted to RMB1,015.7 million. The increase was mainly due to total comprehensive income of RMB41.7 million for 1H FY2025, partly offset by dividends paid in 1H FY2025.
Review of Cash Flow Statement
1H FY2025 vs 1H FY2024
The Group reported a net decrease in cash and cash equivalents amounting to RMB33.1 million in 1H FY2025 mainly due to:
- Net cash used in operating activities of RMB47.0 million resulted from an increase in operating receivables and inventories, net operating profit before working capital changes, interest and taxes paid, partly offset by increase in operating payables.
- Net cash used in investing activities of RMB3.2 million from acquisition of property, plant and equipment, partly offset by interest received; and
- Net cash generated from financing activities of RMB17.2 million mainly from net proceed from principal portion of hire purchase, loan from a corporate shareholder of a subsidiary, cash injection by non-controlling interest and repayment from a related party, partly offset by net repayment of bank borrowings and leased liabilities, dividend paid, interest paid, and higher restricted bank balances.
Commentary
China's gross domestic product expanded by 4.6% in the third quarter and 4.8% for the first nine months of the year, as reported by the National Bureau of Statistics. Key challenges include a weakening property sector, a shrinking workforce due to demographic shifts, and rising government debt. The real estate market, heavily reliant on high levels of debt, remains a significant drag on the economy, with many property developers facing financial distress. At the same time, consumer confidence remains low, limiting domestic demand and slowing the transition from investment-driven growth to consumptionbased growth.
The International Monetary Fund stated that the forecast for Asia and the Pacific in 2024 has improved. It is anticipated that the region's economic slowdown will be less pronounced than previously expected, as inflationary pressures continue to ease although China's property market correction and geoeconomic fragmentation remain key risks. Global disinflation and the potential for lower central bank interest rates have made a soft landing more likely, hence risks to the near-term outlook are now broadly balanced.
Global trade faced a shortage of ocean containers during the first half of 2024, peaking in July, which contributed to a significant rise in freight rates. This surge in shipping costs has been driven by several factors, including geopolitical tensions in the Middle East, adverse weather in Asia, supply chain disruptions, and rising fuel prices. However, with new vessels entering the market and demand cooling due to economic pressures and overcapacity, freight rates are expected to decline in the coming months. This shift could lead to increased competition among shipping lines, potentially sparking price wars and providing some relief for businesses from high shipping costs.
The Group expects the operating environment to be challenging and the reasons as stated above. The Group remains vigilant and committed to exercising cost discipline and will take necessary remedial actions, where possible.
As announced by the Company on 8 September 2023, 13 March 2024, 22 March 2024, 3 April 2024, 2 May 2024, and 1 August 2024, there have been no material developments concerning the tower crane accident in Hong Kong involving the Company's 60%-owned subsidiary, Yongmao Machinery (H.K.) Company Limited ("YMHK"), YMHK's wholly-owned subsidiary, Eastime Engineering Limited ("EEL"), and EEL's project manager. This includes the cases related to the Relevant Summonses issued by the Labour Department ("LD Summonses") and the Building Department ("BD Summonses"). The Company will provide further updates if there are any material developments.