financials

Unaudited 1st Half Financial Statement And Related Announcement

Financials Archive

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Statement of profit or loss and other comprehensive income for the first half ("1H1718") ended 31 December 2017

Income Statement

Statements of financial position as at 31 December 2017

Income Statement

Review of Performance
(a) 1st Half ended 31 December 2017 ("1H1718") vs 1st Half ended 31 December 2016 ("1H1617")

The Group incurred a loss after income tax of US$2.153 million in 1H1718, US$1.864 milion higher than 1H1617 net loss of US$289,000. The larger loss was mainly driven by 29.2% decline in revenue and unrealised foreign exchange loss on the revaluation of the Singapore-dollar loan against the US-dollar with the appreciation of Singapore dollar against the US dollar, which was partially offset by 20.5% and 19.3% decline in costs of sale and administrative expenses respectively.

Revenue

The 29.2% decline in revenue from US$8.678 million to US$6.142 million was mainly due to 2.4% decline in vessel utilization rate from 70.6% in 1H1617 to 68.2% in 1H1718 and significant reduction in charter rates.

Cost of Sales and Direct Depreciation

1H1718 Operating expenses decreased 20.5%, in line with the 29.2% decrease in revenue. Gross profit after depreciation margin decline from 23.4% in 1H1617 to 3.3% in 1H1718.

Administrative Expenses

Administrative expenses decreased 19.3% to US$1.698 million in 1H1718 mainly due to recharge of one-time business development costs incurred on Hydra amounting US$0.2 million to a third party and impact of costs restructuring exercise done previously.

Finance Costs

72.9% increase in finance costs was mainly due to the drawdown of Spring loan in Apr 17.

Share of Results of Associated Companies

Share of associated companies' losses widened 28.3% from a loss of US$361,000 in 1H1617 to a loss of US$463,000 in 1H1718 mainly due to lower vessel charter rates and decline in associates' vessel utilization rate from 59% to 38%. Of the 6 assciates' vessels, 1 was offhired for a mandatory overhual, 2 vessels were stacked, 1 on term charter and 2 were on spot charter.

(b) 2nd Quarter ended 31 December 2017 ("2Q1718") vs 2nd Quarter ended 31 December 2016 ("2Q1617")

The Group incurred a loss after income tax of US$1.984 million in 2Q1718, 572% higher than 2Q1617 loss after income tax of US$295,000. The larger loss incurred in 2Q1718 against 2Q1617 was mainly due to 34.2% decline in revenue, significantly larger share of associates' losses and increase in unrealised exchange loss from the revaluation of the SGD loan with the appreciation of SGD against USD.

Revenue

The 34.2% decline in revenue from US$3.586 million in 2Q1617 to US$2.360 million in 2Q1718 was mainly due to lower charter rates and 6% decline in vessel utilization rate from 64% in 2Q1617 to 58% in 2Q1718.

Cost of Sales and Direct Depreciation

Cost of sales decreased 7.5% from US$1.198 million in 2Q1617 to US$ 1.108 million in 2Q1718. The decline in costs was lesser than the decline in revenue as the vessels that were offhired were on bareboat contracts previously. 2Q1718 gross profit after direct depreciation was reduced from 13.7% in 2Q1617 to a negative of 24.7% in 2Q1718.

Administrative Expenses

There was no material variance in the administrative expenses incurred.

Finance Costs

90.4% increase in finance costs from US$58,000 to US$110,000 was due to the drawdown of Spring Loan in Apr 17.

Share of Results of Associated Companies

Share of associates' loss increased from US$7,000 to US$384,000 due to significant decline in vessel utilization rate from 58% in 2Q1617 to 31% in 2Q1718.

A Review of the Financial Position

The Group net assets value was US$119.066 million and net asset value per share was 16.89 US cents per share as at 31 December 2017. Current ratio was 2.72 as at 31 December 17.

Cash and cash equivalents increased by US$1.423 million to US$6.091 million mainly due to positive cashflow generated from operations.

Trade and other receivables decreased from US$18.148 million to US$17.934 million mainly due to repayment from associates which was offset by increase in amount due from the buyer of Hydra and a third party customer.

Income Statement

Trade and other payable increased by US$412,000 mainly due to longer payment terms negotiated with suppliers.

Commentary

While the global oil market has shown encouraging signs of stability and recovery in recent months, which will ultimately lead to an increase in offshore exploration activity, the OSV industry is still facing a situation of excess supply against a backdrop of slow pick up in demand. This resulted in intense downwards pressure on vessel utilisation rates and charter rates. Customer sentiment has improved with the increase in oil price and promising demand for oil developing. However, due to the time required for planning and permitting of new offshore projects, an increase in demand for offshore supply vessels can only be realized later in 2018 or early 2019. In the meantime, the Group will continue to develop ways to increase operational efficiency, cut costs and preserve cash, which will allow us to ride out the rest of the downturn and be ready for the rebound in the industry.

Save as disclosed herein, there are no known factors or events which may affect the Group in the next reporting period and the next 12 months.