Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
For the first nine months ended 31 March 2017 ("9M1617"), the Group recorded a loss after income tax of US$1.311 million. This was against a profit after income tax of US$4.058 million earned during the previous corresponding nine months ended 31 March 2016 ("9M1516"). The loss was mainly attributable to lower revenue generated and significant reduction in our charter margin.
US$12.162 million Revenue was generated in 9M1617, a 32% reduction as compared to the US$17.962 million revenue generated during the previous corresponding financial period 9M1516. The lower revenue was mainly due to lower vessel utilization rate achieved. Vessels achieved an average utilization rate of 68% in 9M1617 versus an average utilization rate of 77% in 9M1516. The lower revenue was also due to lower charter rates negotiated.
9M1617 cost of sales expense was 10% lower as compared to 9M1516. The lower costs of sale was mainly due to lower catering expenses incurred. CHO provided catering services to a client last year. No such service was provided this financial year.
Gross profit margins before direct depreciation were 68% in 9M1617 and 76% in 9M1516. The decline was mainly due to the continued downwards pressure on charter rates during the year. Direct depreciation for 9M1617 was slightly lower than 9M1516 by 2%.
Administrative expenses decreased 13% to US$3.231 million for 9M1617 from US$3.731 million. The decline was mainly driven by cost rationalization exercise taken and lesser manpower related costs incurred during the current period. Corporate headcount has reduced from a high of 45 to 34 as of 31 Mar 17.
Increase in finance costs due to the interest expenses incurred on the bank loan drawn down in Feb 2016.
Share of results of associated companies decreased US$0.849 million from a profit of US$41,000 in 9M1516 to a loss of US$0.808 million in 9M1517. The decrease was due to lower vessel utilization rate achieved. The associated vessels achieved an average utilization rate of 49% in 9M1617, significantly lower than the 71% achieved in 9M1516. The dry docking of one vessel since Feb 17 contributed to the lower 9MFY1617 utilization rate. The charter rates of associated companies also suffered severe downward revision.
The Group's incurred a net loss of US$0.295 million in 3Q1617, US$1.342 million lower than 3Q1516. This was mainly due to lower revenue and charter margin achieved.
CHO generated a revenue of US$3.484 million in 3Q1617, which was 49% lower than 3Q1516 revenue of US$6.891 million. This was mainly attributable to lower charter rates negotiated and lower utilization rate achieved for CHO owned vessels. Utlization for CHO owned vessels was 66% in 3Q1617, 19% lower than 3Q1516 utilization rate of 85%. The lower utilization rate was due to due to the offhire of 2 vessels towards the end of last quarter. One of the offhired vessels managed to secure a new contract commencing work in mid Mar 17.
3Q1617 Cost of sales was 39% lower as compared to 3Q1516. US$1.646 million. The lower costs of sale was mainly driven due to lower catering expense incurred, the cold stacking of a vessel and lower commission expense.
The lower market charter rates have resulted in a lower gross profit margin before direct depreciation achieved. Gross profit margins before direct depreciation were 71% in3Q1617 and 76% in 3Q1516.
Share of associated companies' losses increased from US$12,000 in 3Q1516 to US$447,000 for 3Q1617 due to lower charter rates negotiated and lower vessel utilization rate achieved. 3Q1617 vessel utilization rate was 30% as compared to 84% achieved in 3Q1516. Two vessels were charter hire free after the completion of their contract in Sep 2016 and Oct 216 respectively. One vessel was offhired towards the end Jan 2017 for dry docking which is expected to complete by mid May 2017. 2 other vessels were on spot assignments.
The Group net assets value ("NAV") stood at US$159.988 million and net asset value per share was 22.7 US cents as at 31 March 2017, not materially different from the end of immediately preceding financial year. The current ratio for the Group as at 31 Mar 2017 was 1.98 compared to 1.41 as at 30 Jun 2016.The higher current ratio was mainly due to the partial repayment of loans and borrowings in Jul 16 and and US$10.529 million increase in trade and other receivable.
The increase in trade and other receivables was mainly attributable to i) the US$4.4M loan granted to ulitmate holding company, Falcon Energy Group during the year ii) funding contribution payment of US$2.4m to a third party as part of the sales consideration per the share sale and purchase agreement dated 20 Jan 17. iii) US$1.9 million net increase in trade receivable due to delay in payment from a client and longer payment term granted to new client and iv) US$1.7 million increase in receivable from associates (US$1 million) and related parties (US$0.7 million).
Cash and cash equivalents as at 31 Mar 17 decreased 84% as compared to 30 Jun 16. The decrease in cash and cash equivalents was mainly due to the extension of loan to Falcon Energy Group and funding contribution payment made to a 3rd party. Excluding the one-off payments, CHO Group would have generated a positive operating cash flow of about US$0.6 million during the financial year.
Trade and other payables reduced in line with lesser expenditure incurred. Provision was related to the withholding tax payable on the new charter contract.
The reduction in loan and borrowings was due to the partial loan repayment in Jul 16.
The offshore support industry remains challenging. While oil prices have slowly recovered due in large measure to OPEC's historic agreement to cut production commencing in Jan. 2017, offshore activity remains extremely weak with 2017 capital budgets expected to fall from 2016 levels, hence further reducing the level of offshore activity and offshore support vessels requirements in 2017. Charter rates have continued to demonstrate downwards pressure. The group will continue to trim operating and overhead costs and focus on maintaining and gaining fleet utilization in 2017.
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.