Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
"Q1FY2017" denotes the first financial quarter of the financial year ended 30 September 2017 ("FY2017").
"Q1FY2016" denotes the first financial quarter of the financial year ended 30 September 2016 ("FY2016").
"% Change" denotes increase/(decrease) in the relevant profit or loss item as compared with the comparative figure.
"NM" denotes not meaningful.
The Group, comprising Marco Polo Marine Ltd (the "Company") and its subsidiaries, is a reputable regional integrated marine logistic company which principally engages in shipping and shipyard businesses.
The shipping business of the Group relates to the chartering of Offshore Supply Vessels ("OSVs"), which comprise mainly Anchor Handling Tug Supply ("AHTS") vessels for deployment in the regional waters, including the Gulf of Thailand, Malaysia, Indonesia and Australia, as well as the chartering of tugboats and barges to customers, especially those which engaged in the mining, commodities, construction, infrastructure and land reclamation industries.
The shipyard business of the Group relates to ship building as well as the provision of ship maintenance, repair, outfitting and conversion services which are being carried out through its shipyard located in Batam, Indonesia. Occupying a total land area of approximately 34 hectares with a seafront of approximately 650 meters, the modern shipyard also houses three dry docks which boosted the Group's technical capabilities and service offerings to undertake projects involving mid-sized and sophisticated vessels.
Review of financial performance of the Group for Q1FY2017 compared to Q1FY2016
Our Group's revenues for Q1FY2017 and Q1FY2016 were as follow:
The Group recorded a revenue of S$11.4 million in Q1FY2017, a decrease of 33% from that of S$17.0 million in Q1FY2016.
Relative to Q1FY2016, the Ship Chartering Operations' revenue of the Group decreased by 31% to S$4.4 million in Q1FY2017. The decrease was mainly due to the lower utilization and charter rate for the Group's offshore fleet.
The Ship Building & Repair Operations of the Group also recorded a decrease in revenue of 34% in Q1FY2017 relative to Q1FY2016. The decrease was due mainly to reduced ship building projects.
The Group recorded a gross profit margin of 34% in Q1FY2017 relative to that of 30% in Q1FY2017, chiefly due to reduced project costs.
The Group's other operating income increased by S$3.86 million to S$3.9 million in Q1FY2017 from S$54,000 in Q1Y2016. The increase was mainly due to an unrealised foreign exchange gain recorded in Q1FY2017 compared to an unrealised foreign exchange loss sustained in Q1FY2016 recorded under "Other operating expenses".
In line with reduced business activities and as a result of cost containment measures, the Group's administrative expenses decreased by S$0.1 million or 4% to S$1.6 million in Q1FY2017 from S$1.7 million in Q1FY2016.
The Group's other operating expenses decreased by S$0.7 million to S$0.7 million in Q1FY2017 and from S$1.4 million in Q1FY2016, attributed largely to the unrealised foreign exchange loss recorded in Q1FY2016.
Due to increased borrowings and higher bond interest rate, the finance costs of the Group increased by S$0.9 million or 74% to S$2.0 million in in Q1FY2017 from S$1.1 million in Q1FY2016.
The share of results from jointly controlled companies reversed from a loss of S$1.2 million in Q1FY2016 to a profit of S$0.7 million in Q1FY2017. The reversal in results was mainly attributed to the positive contribution from the jointly controlled entity that principally engages in the chartering of Maintenance Work Vessel, offsetting the share of losses of BBR.
(b) Review of financial position of the Group as at 31 December 2016 compared to that as at 30 September 2016
The non-current assets of the Group increased by S$8.1 million or 2% from S$318.9 million as at 30 September 2016 to S$327.0 million as at 31 December 2016. The increase was attributed mainly to the strengthening of US$ against the presentation currency of the Group in S$ and its effects on vessels of the relevant subsidiaries of the Group which have US$ being their functional currency as well as share of improved results from investment in joint ventures.
The amounts due from customers for construction contracts increased by S$0.7 million or 1% to S$46.2 million as at 31 December 2016 from S$47.4 million as at 30 September 2016.
The increase in other receivable, deposits and prepayment from S$42.6 million or 5% to S$44.6 million as at 31 December 2016 was attributed mainly to deposits paid for equipment required for the building of vessels.
The trade payables of the Group decreased by S$1.1 million or 11% to S$9.4 million as at 31 December 2016 from S$10.5 million as at 30 September 2016. The decrease was in line with reduced business activities.
The decrease in other payables and accruals was mainly due to reduced accrued project costs for the building of vessels.
The Group's total interest-bearing borrowings increased by S$2.5 million or 1% to S$252.3 million as at 31 December 2016 from S$249.8 million as at 30 September 2016, primarily attributed to its US$ denominated loans as a result of the strengthening US$ vis-a-vis S$.
The Group reported a net cash used in operating activities of S$0.8 million for 1QFY2017 compared to net cash generated in operating activities of S$13.1 million in 1QFY2016, principally as a result of reduced project costs and payments made for and hence a decrease in trade and other payables. The cash and cash equivalent of the Group was S$8.0 million as at 31 December 2016 and S$11.8 million as at 30 September 2016.
Following from the above:
Commentary On Current Year Prospects
The current oil price levels have been hovering around and at times stayed much afloat above US$50 per barrel. Notwithstanding which, the general take is that the outlook of the oil and gas industry and hence the marine industry remain challenging.
In the midst of such a testing environment, the Group continues to diligently manage its business operations while stepping up its continuous cost containment efforts.
On 14 October 2016, the noteholders of the Company approved a restructuring of the Company's S$50 million 5.57% fixed rate notes due 2016 (the "Notes"), such that the Company has been granted by the noteholders an additional three years to redeem and pay for the Notes in consideration of the Company, while maintaining the capital debt value of the Notes at S$50 million, committed to paying an additional 1.5% interest per annum on the Notes and providing security in the form of a second ranking mortgage over the Group's shipyard land in Batam, Indonesia.
In respect of all the other secured loans of the Group, the Company is currently working very closely with the relevant banks in coming to terms on the pre-conditions to extend the tenure of such secured loans, which, if carried out, will defer a significant portion of the current borrowings of the Group to non-current liabilities (the "Loans Restructuring").
As the completion of the Loans Restructuring is still subject to negotiations, there can be no assurance of the completion of the Loans Restructuring or, if it were to be eventually completed, as to the length of time required to do so. Hence, Shareholders are advised to exercise caution when dealing in the securities of the Company. Shareholders are further advised to refrain from taking any action in relation to their securities, which may be prejudicial to their interests, and to seek appropriate advice from their brokers, bankers, lawyers and other professional advisers.
Some of the statements in this release constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. These forward-looking statements reflect our current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks and factors such as general economic and business conditions, including the uncertainties of the pace of recovery of the United States of America economy, continued concerns of the scale of the possible adverse fallouts and their implications on the global scene triggered by the current Euro zone debt crisis, inflationary pressures and currency appreciation which will affect the continued strong growth in Asia, especially East Asia; timing or delay in signing, commencement, implementation and performance of programs, or the delivery of products or services under them; relationships with customers; competition; and ability to attract personnel. Because actual results could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future and any negative impacts arising from these issues will affect the performance of the Group's businesses, undue reliance must not be placed on these statements.