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QUARTERLY REPORT ON AUDITED CONSOLIDATED RESULTS
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QUARTERLY REPORT ON AUDITED CONSOLIDATED RESULTS

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  • 1. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) QUARTERLY REPORT ON AUDITED CONSOLIDATED RESULTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2003 CONDENSED CONSOLIDATED INCOME STATEMENTS Individual Period Cumulative Period Current Preceding Current Preceding Year Year Year To Year Quarter Corresponding Date Corresponding Ended Quarter Period 31/12/2003 31/12/2002 31/12/2003 31/12/2002 RM’000 RM’000 RM’000 RM’000 Revenue 114,576 70,042 289,169 219,278 Operating Expenses (85,771) (53,444) (216,919) (168,943) Other Operating Income 300 337 456 1,012 Profit From Operations 29,105 16,935 72,706 51,347 Finance Costs (1,822) (2,211) (7,605) (7,896) Investing Results 425 57 425 57 Profit Before Tax 27,708 14,781 65,526 43,508 Taxation (7,887) (4,790) (16,062) (15,058) Profit After Tax 19,821 9,991 49,464 28,450 Minority Interests (5,514) (1,199) (11,357) (6,581) Net Profit For The Period 14,307 8,792 38,107 21,869 EPS - Basic (sen) 9.21 5.83 24.53 14.51 - Diluted (sen) 9.17 5.80 24.42 14.42 Note: For comparison purpose, the taxation figure in the condensed income statement for the financial quarter ended 31 December 2002 has been adjusted to reflect the effect of adopting MASB 25 – Income Taxes on the assumption that this accounting standard was being adopted then. The Condensed Consolidated Income Statements should be read in conjunction with the Annual Financial Report for the year ended 31 December 2002. 1
  • 2. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) CONDENSED CONSOLIDATED BALANCE SHEETS As At End As At Preceding Of Current Financial Year Quarter End 31/12/2003 31/12/2002 RM’000 RM’000 Property, Plant and Equipment 475,443 445,519 Goodwill On Consolidation 1,064 1,113 Investment In Associated Companies 1,176 588 Long Term Investments 18,792 18,782 Current Assets Work-in-progress 14,168 - Trade Receivables 72,392 75,129 Other Receivables 39,261 34,125 Cash and Bank Balances 31,638 30,524 157,459 139,778 Current Liabilities Trade Payables 23,147 24,086 Other Payables 32,467 42,062 Overdraft & Short Term Borrowings 48,043 50,766 Provision for Taxation 3,183 8,422 106,840 125,336 Net Current Assets 50,619 14,442 547,094 480,444 Share Capital 157,884 149,918 Reserves 164,526 120,985 Shareholders’ Fund 322,410 270,903 Minority Interests 90,877 79,520 Long Term Borrowings 89,256 101,696 Deferred Taxation 44,551 28,325 547,094 480,444 NTA per share (RM) 2.04 1.80 The Condensed Consolidated Balance Sheets should be read in conjunction with the Annual Financial Report for the year ended 31 December 2002. 2
  • 3. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) CONDENSED CONSOLIDATED CASH FLOW STATEMENTS For the year For the year ended ended 31/12/2003 31/12/2002 RM’000 RM’000 Net profit before tax 65,526 43,508 Adjustment for non-cash and non-operating items:- Non-cash items 34,764 26,086 Non-operating items 6,798 7,552 Operating profit before changes in working capital 107,088 77,146 Changes in working capital:- Net change in current assets (6,471) 46,124 Net change in current liabilities (10,534) (3,907) Cash generated from operations 90,083 119,363 Income tax paid (5,238) (654) Cash flows from operating activities 84,845 118,709 Cash flows from investing activities Interest received 382 287 Purchase of other investment (10) - Additions to property, plant and equipment (74,207) (134,026) Proceeds from disposal of property, plant and equipment - 419 Cash flows from financing activities Interest paid (7,605) (7,896) Dividends paid (3,353) (3,189) Net proceeds from issuance of shares 16,753 32,132 Proceeds from CP/MTN 70,000 - Net proceeds / (repayment) of borrowings (87,264) 13,233 Net decrease in cash and cash equivalents (459) 19,669 Cash and cash equivalents at beginning of year 28,270 8,601 Cash and cash equivalents at end of period 27,811 28,270 Cash and cash equivalents comprise of: Cash and bank balances 31,638 30,524 Bank overdraft (3,827) (2,254) 27,811 28,270 The Condensed Consolidated Cash Flow Statement should be read in conjunction with the Annual Financial Report for the year ended 31 December 2002. 3
  • 4. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2003 Share Share Reserve On Retained Total Capital Premium Consolidation Profits Shareholders’ Equity RM’000 RM’000 RM’000 RM’000 RM’000 Balance as at 1 January 2003 149,918 64,325 3,336 70,088 287,667 Prior years’ adjustments - - - (16,764) (16,764) As restated 149,918 64,325 3,336 53,324 270,903 Net profit for the year - - - 38,107 38,107 Issue of shares - ESOS 7,966 8,810 - - 16,776 Dividend paid for financial year ended 31/12/2002 - - - (3,353) (3,353) Share issue expenses - (23) - - (23) Balance as at 31 December 2003 157,884 73,112 3,336 88,078 322,410 Balance as at 1 January 2002 93,251 88,860 3,336 43,663 229,110 Prior years’ adjustments - - - (9,019) (9,019) As restated 93,251 88,860 3,336 34,644 220,091 Net profit for the year - - - 21,869 21,869 Issue of shares - Private Placement 9,323 12,027 - - 21,350 - ESOS 5,280 5,769 - - 11,049 - Bonus 42,064 (42,064) - - - Dividend paid for financial year ended 31/12/2001 - - - (3,189) (3,189) Share issue expenses - (267) - - (267) Balance as at 31 December 2002 149,918 64,325 3,336 53,324 270,903 The Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the Annual Financial Report for the year ended 4
  • 5. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) 31 December 2002. 5
  • 6. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) EXPLANATORY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2003. 1. Accounting Policies The quarterly financial statements are audited and have been prepared in accordance with MASB 26 - Interim Financial Reporting and part A of Appendix 9B of the Listing Requirements of Malaysia Securities Exchange Bhd (“MSEB”). The quarterly financial statements are to be read in conjunction with the Annual Financial Report for the year ended 31 December 2002. The same accounting policies and methods of computation are followed in the quarterly financial statements as compared with the Annual Financial Statement for the year ended 31 December 2002 except for MASB 25 – Income Taxes which has been adopted by the Group since the financial quarter ended 31 March 2003. In prior periods, the tax effects of the transactions are recognised, using the ‘liability’ method, in the period such transactions entered into the determination of net income regardless of when they are recognised for tax purposes except where it is reasonably probable that timing differences will not crystalise in the foreseeable future. Where timing differences gave rise to net deferred tax asset, the tax effects were recognised generally on actual realisation. Upon adoption of MASB 25, the Group changed its accounting policy to recognise all taxable temporary differences and to recognise deferred tax assets to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognized if the temporary differences arise from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. This accounting change has been accounted for retrospectively and the effects on prior years have been taken up as prior years’ adjustments in the financial statements. The following accounts in prior year in the Condensed Consolidated Balance Sheets and Statement of Changes in Equity have been restated to reflect the effects of the accounting change: Retained Minority Deferred Profits Interest Taxation (RM’000) (RM’000) (RM’000) As at 31/12/2002, as previously reported 70,088 86,704 4,377 Less: Prior years’ adjustments in relation to full provision of deferred taxation (16,764) (7,184) 23,948 As at 31/12/2002, as restated 53,324 79,520 28,325 2. Qualification Of Preceding Annual Financial Statements There was no qualification of the Group audited report for the year ended 31 December 2002. 3. Seasonality Or Cyclicality Of Operations The Group’s business operations are generally affected by a lower activity level after the annual post festive seasons in the first quarter with an anticipated increase in aircraft utilisation during the second half of the financial year. 5
  • 7. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) 4. Unusual Item Affecting Assets, Liabilities, Equity, Net Income Or Cash Flow There were no unusual items affecting assets, liabilities, equity, net income or cash flow during the financial quarter under review and financial year to date other than the effects arising from the adoption of MASB 25 as mentioned above. 5. Change Of Estimates Used There was no material change in estimates for the financial quarter under review and financial year to date. 6. Issuance, Cancellation, Repurchases, Resale And Repayments Of Debts And Equity Securities Saved as disclosed in note 20 below, there was no issuance or repayment of debts and equity securities, shares buy-back, share cancellations, shares held as treasury shares and resale of treasury shares for the current quarter and financial year to date. 7. Dividend The Board has recommended a first and final dividend of 3% or 3.0 sen per ordinary share of RM1.00 each less 28% income tax in respect of the financial period ended 31 December 2003. (31 December 2002: 3% or 3.0 sen per ordinary share of RM1.00 each less 28% income tax). The proposed dividend will be subject to shareholders’ approval and will be paid at a date to be determined later. The approved first and final dividend of 3% or 3 sen per ordinary share of RM1.00 each less 28% income tax to the shareholders of Transmile Group Berhad in respect of the financial year ended 31 December 2002 was paid on 9 September 2003. 8. Segmental Reporting No segmental reporting was presented as the Group is principally engaged in the aviation services industry and operates principally in Malaysia. 9. Property, Plant And Equipment The property, plant and equipment were valued at cost less depreciation and any impairment losses. There was no revaluation of property, plant and equipment for the period ended 31 December 2003. 10. Material Subsequent Event There was no material event subsequent to the end of the financial quarter under review that has not been reflected in the financial statements. 11. Changes In The Composition Of The Group There were no changes in the composition of the Group during the financial period under review. 6
  • 8. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) 12. Contingent Liabilities/Assets The Company has given unsecured corporate guarantees totaling RM217 million to certain financial institutions for overdraft and other credit facilities granted to certain of its subsidiary companies. Accordingly, the Company is contingently liable to such financial institutions to the extent of the amount of credit facilities utilised. There were no contingent assets as at 31 December 2003. 13. Review Of Performance Of The Group And Its Principal Subsidiaries The Group managed to report a continuing improved financial performance by recording a higher revenue of RM289.2 million and net profit of RM38.1 million compared to the previous corresponding period’s revenue of RM219.3 million and net profit of RM21.9 million respectively. Revenue has increased 32% mainly attributable to new businesses secured, capacity expansion and also improvement in aircraft yield. Net profit has increased 74% due to a combination of the above factors and also an over provision of tax in prior years amounting to RM1.6m, as shown in note 17 below. 14. Explanatory Comments On Any Material Change In The Profit Before Taxation (Current Quarter Compared With The Preceding Quarter) The Group recorded pre-tax profit of RM27.7 million in the current quarter as compared to RM12.6 million in the preceding quarter. The increase in profit was mainly attributed to the increase in year-end business activities, as shown by the increase in turnover. The Group reported revenue of RM114.6m in the current quarter compared to RM62.0m in the preceding quarter. 15. Prospects Of The Group In view of the anticipated positive economic outlook in the region, the Group will focus to expand its regional network, capacity, facilities and services including its aircraft maintenance and engineering division. The management is of the view that such market expansion activities will continue to improve its revenue base and increase its aircraft utilisation and hence operating margin. Management is confident with the anticipated regional demand for its services in view of the continuing strength of the intra-Asia and domestic freight market. Barring unforeseen circumstances and based on the above scenario, the Group expects to continue to report a positive financial result for the current year. 16. Variance From Profit Forecast Not applicable. 7
  • 9. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) 17. Taxation The tax expense consists of the following: Current Quarter Current Year To Date RM’000 RM’000 Current taxation 40 1,623 Under / (Over) provision in prior years 536 (1,624) Deferred taxation 7,474 16,226 Share in taxation of associated company (163) (163) 7,887 16,062 18. Sale Of Unquoted Investments And/Or Properties There were no sales of unquoted investments and/or properties for the current quarter and financial year to date. 19. Purchase Or Disposal Of Quoted Securities There were no purchases or disposals of quoted securities for the current quarter and financial year to date. 20. Status Of Corporate Proposals (i) Proposed Private Placement The Securities Commission has vide its letter dated 2 December 2003 approved the Proposed Private Placement. The Company has also on 19 December 2003 obtained the approval-in- principle from the MSEB for the listing of new shares in TGB pursuant to the Proposed Private Placement (ii) RM150 Million Commercial Papers/Medium Term Notes Programme (CP/MTN) The Group’s 70% equity owned subsidiary, Transmile Air Services Sdn Bhd (“TAS”), has on 29 August 2003 issued the following CP/MTN : Tenure RM’000 Commercial Paper 3 months 10,000 Medium Term Notes 1 year 5,000 Medium Term Notes 3 years 25,000 Medium Term Notes 5 years 30,000 Total 70,000 The Commercial Paper was rollover for the same tenure on 28 November 2003. Please refer to the announcement made by the Company to the MSEB on 25 July 2003 for full details of the CP/MTN Programme and the conditions of the Securities Commission’s approval. 8
  • 10. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) (iii) Employees’ Share Option Scheme (“ESOS”) As for ESOS, total share options granted to eligible employees and executive directors from 1 September 2003 to 31 December 2003 are as follows: - No. of shares (’000) Balance as at 01.09.2003 3,102 Additions - Lapsed (19) Exercised (1,270) Balance as at 31.12.2003 1,813 From 1 January 2004 to 18 February 2004, a total of 308,000 ESOS options have been exercised. 21. Group Borrowings And Debt Securities The Group’s borrowings classified according to short and long-term categories are as follows:- RM’000 (i) Short-term Borrowings – Unsecured - Bank overdraft 3,827 - Trade loan 3,758 - Revolving Loans 2,500 - Hire-purchase creditors – current portion 1,545 - Portion of long-term borrowings payable within 12 21,413 months - CP/MTN 15,000 48,043 (ii) Long-term Borrowings – Unsecured - Hire-purchase creditors – non current 1,442 - Term Loan 32,814 - MTN 55,000 89,256 22. Off Balance Sheet Financial Instrument The Group enters into foreign currency forward contracts to control and manage financial risks arising from its operations. The use of the financial instruments is to manage its exposures to fluctuations in foreign exchange rates. This financial instrument is not recognised in the financial statements on inception. 23. Changes In Material Litigation There was no material litigation pending as at the date of this quarterly report. 9
  • 11. TRANSMILE GROUP BERHAD (Company No. 373741-W) (Incorporated in Malaysia) 24. Earnings Per Share (EPS) Current Preceding Year Year To Corresponding Date Period RM’000 RM’000 Net profit attributable to ordinary shareholders 38,107 21,869 a) Basic EPS 2003 2002 Shares’000 Shares’000 Weighted average number of ordinary shares 155,376 150,699 Basic EPS (sen) 24.53 14.51 b) Fully diluted 2003 2002 Shares’000 Shares’000 Weighted average number of ordinary shares 155,376 150,699 ESOS: Number of unissued shares 1,813 3,895 Number of shares that would have been issued at fair value (1,168) (2,954) Adjusted weighted average number of shares 156,021 151,640 Fully diluted EPS (sen) 24.42 14.42 The fully diluted earnings per share is calculated on the assumption that all the unexercised options granted to executive directors and eligible employees of the Group are being fully exercised. 10