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“Q3FY2018” denotes the third financial quarter of the financial year ended 30 September 2018 (“FY2018”).
“9MFY2018” denotes the 9 months financial year of FY2018.
“Q3FY2017” denotes the third financial quarter of the financial year ended 30 September 2017 (“FY2017”
“9MFY2017” denotes the 9 months financial year of FY2017.
"% Change” denotes increase/(decrease) in the relevant profit or loss item as compared with the comparative figure
"NM" denotes not meaningful.
The Group is a 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
Our Group’s revenues for 9MFY2018 (vis-à-vis 9MFY2017) and Q3FY2018 (vis-a-vis Q3FY2017) were as follow:
The Group recorded a revenue of S$5.9 million in Q3FY2018, representing a decrease of 35% from that of S$9.1 million registered in Q3FY2017, and a revenue of S$21.0 million in 9MFY2018, representing a decrease of 37% from that of S$33.3 million registered in 9MFY2017.
The revenue derived from the Ship Chartering Operations of the Group decreased by 44% to S$2.2 million in Q3FY2018 from S$3.9 million in Q3FY2017 and by 33% to S$8.3 million in 9MFY2018 from S$12.4 million in 9MFY2017. The decreases were mainly due to lower utilization and charter rates of the Group’s OSVs fleet as a result of slow recovery of the market conditions (consequence to the slowdown in the marine and offshore industry following the recent oil price crisis), albeit some improvements in the utilization of the Group’s fleet of tugboats and barges.
The Ship Building & Repair Operations of the Group recorded a decrease in revenue of 29% to S$3.7 million in Q3FY2018 from S$5.2 million in Q3FY2017 and a decrease of 39% to S$12.7 million in 9MFY2018 from S$20.9 million in 9MFY2017 due mainly to reduced ship building projects and ship repairing jobs.
The Group recorded a gross profit of S$0.3 million in Q3FY2018 compared to that of S$2.6 million in Q3FY2017, mainly as a result of reduced turnover. On a nine-month basis, though the Group maintained its overall gross profit at about S$3.9 million in 9MFY2018 and S$8.7 million 9MFY2017, the gross profit attained in 9MFY2018 was largely attributed to the decreased depreciation brought about as a result of reduced carrying values of the Group’s vessels due to impairments while the gross profit attained in 9MFY2017 was largely attributed to ship repair income attained in 9MFY2017.
The Group’s other operating income increased significantly in Q3FY2018 to S$5.6 million from a negative S$0.2 million in Q3FY2017, due mainly to higher foreign exchange gain, and in 9MFY2018 to S$181.8 million from S$1.9 million in 9MY2017, chiefly as a result of the Derecognized Debts.
The Group’s administrative expenses were S$1.6 million in Q3FY2018 compared to S$1.5 million in Q3FY2017 and S$4.7 million in 9MFY2018 compared to S$4.4 million in 9MFY2017.
The Group’s other operating expenses decreased to S$1.0 million in Q3FY2018 from S$302.5 million in Q3FY2017 and to S$6.6 million in 9MFY2018 from S$307.4 million in 9MFY2017, due primarily to a decrease in depreciation consequence to a reduction in the carrying values of the Group’s vessels as a result of substantial impairments made in FY2017.
The finance costs of the Group decreased by S$2.0 million or 100% to S$7,000 in Q3FY2018 from S$2.0 million in Q3FY2017, primarily due to the Derecognized Debts following the completion of the Debt Restructuring Exercise.
The share of losses from jointly controlled companies increased from S$1.1 million in 9MFY2017 to S$2.7 million in 9MFY2018 due primarily to the lackluster performances of the jointly controlled entities. The share of losses from jointly controlled companies was mainly attributable to the share of losses of PT BBR.
Consequence to the above, the Group drastically reversed from a pre-tax loss of S$304.3 million in Q3FY2017 to a pre-tax profit of S$2.6 million in Q3FY2018 and from a pre-tax loss of S$308.4 million in 9MFY2017 to a pre-tax profit of S$169.0 million in 9MFY2018.
(b) Review of financial position of the Group as at 30 June 2018 compared to that as at 30 September 2017
The non-current assets of the Group increased by S$2.8 million or 3% from S$99.6 million as at 30 September 2017 to S$102.4 million as at 30 June 2018. The increase was attributed mainly to the re-classification of two completed and non-delivered vessels from “Inventories” to “Properties, plant and equipment”.
The increase in trade receivables was mainly due from a shipbuilding customer as at 30 June 2018.
The amounts due from customers for construction contracts decreased by S$1.1 million or 37% to S$1.9 million as at 30 June 2018 from S$3.0 million as at 30 September 2017, due mainly to progress billing made to a contract customer.
The other receivable, deposits and prepayment decreased to S$2.7 million as at 30 June 2018 from S$3.2 million as at 30 September 2017, due mainly to reduced deposits.
The trade payables of the Group decreased marginally by S$0.2 milllion to S$10.1 million as at 30 June 2018 from S$10.3 million as at 30 September 2017, primarily due to settlement of the first installment payment of S$1.8 million in January 2018 to certain creditors of the Group pursuant to the terms of the Debt Restructuring Exercise and against a higher trade payables due to a shipbuilding project.
The decrease in other payables and accruals were mainly due to reduced accrued project costs and expenses following the completion of the Debt Restructuring Exercise.
The Group’s total interest-bearing borrowings decreased to S$54,000 as at 30 June 2018 from S$245.9 million as at 30 September 2017 consequence to the Derecognized Debts following the completion of the Debt Restructuring Exercise on 25 January 2018.
The Group recorded a net cash used in operating activities of S$4.5 million for the reporting period ended 30 June 2018, compared to a net cash flow generated from operating activities of S$0.4 million for the corresponding reporting period ended 30 June 2017, principally as a result of reduced project cost and accrued expenses. The cash and cash equivalent of the Group stood at S$16.1 million as at 30 June 2018 and at S$4.8 million as at 30 September 2017.
Following from the above:
Commentary On Current Year Prospects
Despite the recent strengthening of oil price towards US$70 per barrel, the outlook for offshore marine industry remains challenging and competitive for the next 12 months in view of the lingering vessel supply overhang and low charter rates.
Notwithstanding which, the Group continues to step up its marketing efforts to improve its performance as the oil market adjusts to the changing demand and supply conditions for the eventual recovery.
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.