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Second Quarter Financial Statement And Dividend Announcement For The Six Months Ended 30 June 2018

Financials Archive

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Income statement

Profit and Loss

 

Statement of comprehensive income for three months ended 30 June 2018

comprehensive income

 

Statement of financial position

Balance Sheet

 

Review Of Performance

INCOME STATEMENT REVIEW

2Q18 vs 2Q17

The Group's revenue for the three months ended 30 June 2018 ("2Q18") decreased by US$44.3 million (65.7%) to US$23.1 million as compared to the corresponding three months ended 30 June 2017 ("2Q17"). The decrease in revenue was mainly due to:

  1. continued delays in re-deployment of the Group's liftboats due to working capital constraints pending finalisation of the refinancing exercise on bank borrowings;
  2. drop in utilisation rate of jack-up rigs and not recognising revenue when the Group has assessed that certain customers are not able to meet existing charter obligations;
  3. lower utilisation rates of the Group's tugs and barges; and
  4. overall reduction in charter rates across the Group's fleet of vessels.

The cost of sales and servicing for 2Q18 decreased by US$26.7 million (43.9%) to US$34.0 million as compared to 2Q17, largely due to lower depreciation expenses on vessels.

As a result of the above, the Group recorded a gross loss of US$10.9 million in 2Q18 from a gross profit of US$6.7 million in 2Q17.

The increase in other income in 2Q18 as compared to 2Q17 was mainly due to the strengthening of the United States Dollar against the Singapore Dollar as at 30 June 2018 and this resulted in foreign exchange gain on the Group's Notes Payable.

The decrease in other operating expenses in 2Q18 as compared to 2Q17 was due to exchange loss incurred in 2Q17.

The finance gain in 2Q18 as compared to finance costs in 2Q17 was mainly due to the fair value adjustments arising from the refinancing exercise recorded in 2Q18.

The lower share of associates and jointly controlled entities' losses in 2Q18 as compared to 2Q17 was mainly due to lower operating losses from the Group's joint ventures and associates.

The Group generated profit before income tax of US$87.6 million in 2Q18 as a result of all the above.

Charter income derived from Singapore flagged vessels are exempted from tax under Section 13A of the Income Tax Act of Singapore. Current period income tax expense of US$0.7 million relates to the corporate tax expense and withholding tax expense incurred by vessels operating in certain overseas waters.

1H2018 vs 1H2017

The Group's revenue for the six months ended 30 June 2018 ("1H18") decreased by US$75.1 million (55.2%) to US$60.9 million as compared to the corresponding six months ended 30 June 2017 ("1H17"). The decrease in revenue was mainly due to:

  1. continued delays in re-deployment of the Group's liftboats due to working capital constraints pending finalisation of the refinancing exercise on bank borrowings;
  2. drop in utilisation rate of jack-up rigs and not recognising revenue when the Group has assessed that certain customers are not able to meet existing charter obligations;
  3. lower utilisation rates of the Group's tugs and barges; and
  4. overall reduction in charter rates across the Group's fleet of vessels.

The cost of sales and servicing for 1H18 decreased by US$48.9 million (40.6%) to US$71.6 million as compared to 1H17, largely due to lower depreciation expenses on vessels.

As a result of the above, the Group recorded a gross loss of US$10.7 million in 1H18 from a gross profit of US$15.4 million in 1H17.

Other Income in 1H18 was attributed to the exchange gain due to strengthening of United States Dollar against Singapore Dollar, which was marginally higher than Other Income in 1H17 which was due to gain arising from disposal of subsidiaries.

The decrease in administrative expenses in 1H18 as compared to 1H17 was mainly due to continuing cost cutting measures undertaken by the Group.

The other operating expenses in 1H18 was higher compared to 1H17 was largely due to additional accrued costs on the refinancing project.

The finance gain in 1H18 as compared to finance costs in 1H17 was mainly due to the fair value adjustments arising from the refinancing exercise recorded in 1H18.

The share of losses in 1H18 as compared to share of profits in 1H17 from associates and jointly controlled entities was mainly due to operating losses from the Group's joint ventures and associates.

As a result of the above, the Group's profit before income tax for 1H18 stands at US$42.0 million.

Charter income derived from Singapore flagged vessels are exempted from tax under Section 13A of the Income Tax Act of Singapore. Current period income tax expense of US$1.5 million relates to the corporate tax expense and withholding tax expense incurred by vessels operating in certain overseas waters.

STATEMENT OF FINANCIAL POSITION REVIEW

Non-current Assets

The Group's Non-current Assets amounted to US$1,599.1 million as at 30 June 2018. The decrease in Noncurrent Assets was mainly due to depreciation charges on Plant and Equipment during the period and share of losses of joint ventures and associates in 1H18.

Current Assets

The Group's Current Assets amounted to US$279.1 million as at 30 June 2018. The decrease compared to as at 31 December 2017 was primary due to collections of charter hire receipts and disposal of assets held for sale, partially offsetted by increase in cash and cash equivalents and other current assets.

Total Liabilities

The Group's Total Liabilities amounted to US$1,433.9 million as at 30 June 2018. The decrease in Total Liabilities was mainly due to the conversion of Notes Payable and accrued liabilities into share capital of the Group, pursuant to the Group's refinancing exercise.

Total Equity

The increase in Total Equity was attributable mainly due to the conversation of Notes Payable to share capital, partially offsetted by the results in 1H18.

STATEMENT OF CASH FLOWS REVIEW

Cash Flow from Operating Activities

The Group's net cash inflow from operating activities was US$30.1 million. This was mainly due to the net cash generated by the operations of the Group.

Cash Flow from Investing Activities

The Group's net cash used in investing activities was US$3.1 million. This was mainly due to deployment of funds towards the vessels and assets under construction, partially offsetted by the proceeds from sale of plant and equipment.

Cash Flow from Financing Activities

The Group's net cash used in financing activities was US$23.7 million. This was mainly due to net repayment of bank borrowings, partially offsetted by the proceeds from issuance of ordinary shares.

Commentary

The Group will continue to focus on its Liftboat business and will dispose assets which are facing low utilization in view of overcapacity in the market. Jack up rigs, tugs and barges had been identified within the Group's assets to be disposed as the management had assessed that the charter rates of these assets will continue to be depressed in the near future.

The Liftboat division of the Group continues to receive enquiries in recent months in line with the stabilization of fossil fuel prices. The Group expects its current fleet of 11 Liftboats to be fully deployed by first half of 2019, as long as there is no major deterioration of the macro economic environment. As such, the management expects the utilization rate of Liftboats to improve.

The Group plans to work with strategic investors and partners to grow market share in this business segment in which the Group has strong competitive advantage. The Group will also explore further growth opportunities in the windfarm business in the Asia Pacific region to maximise shareholders' values.

Updates on Refinancing Exercise

On 3 July 2018, the Group had entered into loan agreements with all the secured lenders pursuant to the refinancing exercise. The Company had also issued 51,801,003 TLF Consent Shares on 2 July 2018 free of charge to the secured lenders in return for their refinancing of the existing facilities. For illustrative purposes, the proforma effects of these events after reporting date, assuming they were completed on 30 June 2018 on the relevant accounts in the balance sheet as at 30 June 2018 are as follows:

 

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