chairman's Message

Extracted from Annual Report 2020

On behalf of the Board of Directors, it is my pleasure to present the Annual Report of CH Offshore Ltd. ("CHO", the "Company" and together with its subsidiaries, the "Group") for the financial year ended 31 December 2020 ("FY2020").

2020 has tested the world beyond measure with the outbreak of the Covid-19 pandemic causing unprecedented disruption to worldwide economies, livelihoods and healthcare systems. Countries have implemented various forms of nationwide lockdowns, tighter border controls and quarantine measures to try to control the spread. However, as the pandemic intensified, many businesses have had to suspend their operations and re-evaluate their business models. Fortunately, the series of budgets in Singapore in 2020 has provided significant monetary support to companies and residents to tide them through this difficult period.

With the near complete halting of air travel, limited land travel and suspension of many business operations, global oil demand took a significant hit in 2020. This sharp drop in oil demand and the search for storage capacity resulted in the price of US crude oil (WTI) turning negative for the first time in history in circa April 2020 though this negative spike in oil prices was short-lived as oil prices bounced back quickly. In 2020, WTI Crude oil traded between -US$37.63/bbl to US$63.27/bbl ending the year at US$52.20/bbl while Brent Crude Oil traded between US$19.33/bbl to US$68.91/bbl ending the year at US$51.80/bbl. Exploration activity has also been reduced and markets that were picking up in late 2019 and early 2020 became lacklustre through the year.

Although we remain hopeful of the sector's recovery in 2021 given the rollout of vaccination programmes across various countries, with the slow pace and uneven distribution of vaccinations globally, the recovery process is likely to be slow and prolonged. A full return to pre-Covid times could still be a few years away.

Impact of Covid-19

During this challenging Covid-19 period, we prioritised the health and safety of all our employees as well as the implementation of our business continuity plans. We implemented Safe Management Measures in line with government regulations and enforced safe distancing measures at the workplace. On 7 April 2020, the Singapore Government announced the Circuit Breaker and although the Group was deemed to provide an essential service and therefore continued to operate on premise, many employees worked from home. Malaysian employees who were impacted by Malaysian's Movement Control Order and unable to return to Singapore were also able to work from home. With the gradual safe opening of the different phases in Singapore, the Company implemented team rotations to further safeguard the health and safety of our employees. Onboard our vessels, we ensured that our crew members had sufficient medical-grade personal protection equipment and observed safe distancing measures especially during mealtimes. However, with strict global border controls, the Company faced difficulties in organising regular crew changes due to flight cancellations and border closures. We continue to work closely with government regulators such as the Economic Development Board and Marine and Port Authority of Singapore to reduce the risk of exposing our crew members to onshore personnel and vice versa by undergoing rostered routine testing regularly. With the multitude of business suspensions and disruptions, both globally and locally, we have also taken countermeasures to broaden our suppliers and customer base to source for equipment and provisions within Singapore or locally where our vessels are based. With fewer market enquiries and delayed award (and in some cases cancellation) of charters that were in the pipeline, our financials have been impacted negatively.

Financial review

We continue to practice prudent cash management, which is critical to navigating through the challenging times ahead. Group revenue for FY2020 fell to US$18.9 million reflecting a 10% drop from FY2019. This was attributed to a decrease in utilisation rate from FY2019 to FY2020. With the significant impact of Covid-19 on the global sector, affecting our charterers and therefore charter rates, the Group incurred a loss after tax of US$19.4 million in FY2020, 38% higher than the net loss of US$14.1 million for the corresponding period in 2019. The higher losses in FY2020 were mainly due to lower utilisation of vessels, higher impairment losses, losses from the disposal of vessels and provision of accounts receivables.

The Group's shareholders' equity decreased from US$76.1 million as at 31 December 2019 to US$56.8 million as at 31 December 2020 mainly due to the losses incurred in FY2020. As a result of the settlement of the brokers' commission arbitration and vessels' dry-docking costs though partially offset by the cash generated from the sale of vessels and proceeds from a bank loan, the Group's cash and cash equivalents decreased from US$8.3 million as at 31 December 2019 to US$3.2 million as at 31 December 2020.

Mitigating strategies and outlook

The outlook for global oil demand remains extremely challenging for the foreseeable future but we are hopeful of its recovery and we continue to play to our strengths as our core fleet of Anchor Handling Tugs is uniquely positioned to withstand the ups and downturns in the industry. Our vessels have maintained an excellent reliability track record as they are well-built by renowned shipyards according to high quality specifications. Our core vessels are equipped with high quality equipment, large tank capacities and deck space and have optimal horse-power suitable to meet various clients' requirements. Our management team together with our team of highly experienced employees have a proven track record when it comes to delivering and securing third-party ship management agreements. We stand resilient by playing to our strengths with hopes for a rebound in the near future as we intend to develop our business model and business strategies further in 2021. We look to our future with confidence as we are prepared for what lies ahead.


The events of 2020 have without a doubt, left a stark reminder that the world we live in is fragile and uncertain. To this, I am proud that the Board, together with our Risk Management Committee, continues to maintain oversight and provide guidance on CHO's strategic sustainability direction and to ensure best business practices and Environmental, Social and Governance ("ESG") matters are being addressed.

As we strive to continually minimise negative social and environmental impacts of our operations, we remain guided by our core values of our sustainability strategy. Our PRIME core values (Passion, Respect, Integrity and Honesty, Monetary Discipline and Excellence) together with our "Do No Harm" corporate policies are in place to serve as a constant reminder to operate the CHO way. The CHO way ensures that we do no harm to ourselves, to those involved and are affected by our operations, to the assets involved and are affected by our operations; to the environment in which we work and to our relations with clients, subcontractors, customers, stakeholders and to those affected by our operations.

To balance commercial viability with sustainability for future generations, we incorporate key ESG principals when setting out our business strategies and operations. Controlling our operating expenses is critical in this challenging and volatile offshore oil and gas market and by prioritising sustainability across our business operations, we are able to face challenges head-on and rise to the occasion. As a Group, we are in full compliance with the 1974 International Convention for the Safety of Life at Sea (SOLAS 1974).


Finally, on behalf of the Board, I am extremely grateful to our management and staff for their utmost dedication and diligence for working tirelessly to overcome the unprecedented challenges from the ongoing Covid-19 pandemic. I would also like to thank our shareholders, stakeholders, investors, business partners and associates and bankers, for standing steadfast with us through these years. We truly appreciate your continued confidence, trust and unrelenting support as we navigate through this new normal. In closing, my deepest appreciation also goes out to my fellow Board of Directors for their valuable contributions and wise counsel overseeing the Group amid this trying period.

Mr Thia Peng Heok George
Board Chairman, Independent Director