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First Quarter Financial Statement And Dividend Announcement For The Three Months Ended 31 March 2017

Financials Archive

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Income statement

Profit and Loss

Statement of comprehensive income for three months ended 31 March 2016

comprehensive income

Statement of financial position

Balance Sheet

Review Of Performance

INCOME STATEMENT REVIEW

1Q17 vs 1Q16

The Group's revenue for the three months ended 31 March 2017 ("1Q17") decreased by US$13.5 million (16.4%) to US$68.6 million as compared to the corresponding three months ended 31 March 2016 ("1Q16").

The decrease in revenue was mainly due to:

  1. reduction in charter rates;
  2. drop in utilisation rate of the Group's multi-purpose self-propelled jack-up rigs and Jack-up Rigs (collectively called "Service Rigs") due to two units of Service Rigs undergoing Class Survey and repairs; and
  3. further depression in utilisation rate of the Group's Offshore Support Vessels resulted in minimal contribution to the Group.

The cost of sales and servicing for 1Q17 decreased by US$1.6 million (2.6%) to US$59.8 million as compared to 1Q16.

As a result of the above, the Group's gross profit for 1Q17 decreased by US$11.9 million (57.7%) to US$8.7 million as compared to 1Q16.

The decrease in other income in 1Q17 as compared to 1Q16 was mainly due to the absence of the gain on disposal of asset held for sale in 1Q16.

The other operating expenses in 1Q17 includes unrealised foreign exchange losses which amounted to approximately US$13.3 million mainly due to the strengthening of the Singapore Dollar against the United States Dollar as at 31 March 2017 and this resulted in foreign exchange losses on the Group's Notes Payable.

The decrease in finance costs in 1Q17 as compared to 1Q16 was mainly due to the decrease in bank borrowings as at 1Q17 as compared to 1Q16.

The lower share of associates and jointly controlled entities' results in 1Q17 as compared to 1Q16 was mainly due to lower contributions from the Group's Joint Ventures and Associates.

The Group incurred a loss before income tax of US$11.8 million 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$1.0 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$2,437.6 million as at 31 March 2017. The decrease in Noncurrent Assets was mainly due to depreciation charges on Plant and Equipment during the period. The decrease is offset by the increase in Joint Ventures and Associates, which was mainly due to the share of results of joint ventures and associates, net of tax during the period ended 31 March 2017.

Current Assets

The Group's Current Assets amounted to US$549.7 million as at 31 March 2017. The increase was mainly due to the increase in Trade Receivables. The increase was offset by the decrease in Cash and Cash Equivalents, which was mainly due to the deployment of funds towards the refurbishment and modification of the Group's Service Rigs.

Total Liabilities

The Group's Total Liabilities amounted to US$1,684.8 million as at 31 March 2017. The decrease in Total Liabilities was due mainly to repayment of loans due to banks offset by the increase in the Group's Notes Payable arising from the strenghtening of the Singapore Dollar against the United States Dollar as at 31 March 2017. Included in Other Payables were the advance payments, performance deposits received, deferred revenue and accrued expenses.

Total Equity

The decrease in Total Equity was attributable mainly due to the losses derived in the period.

STATEMENT OF CASH FLOWS REVIEW

Cash Flow from Operating Activities

The Group's net cash inflow from operating activities was US$26.0 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$14.1 million. This was mainly due to the deployment of funds towards the refurbishment and modifications of the Group's Service Rigs, and an additional investment in an associate.

Cash Flow from Financing Activities

The Group's net cash used in financing activities was US$31.2 million. This was mainly due to repayment of bank borrowings during the period.

Commentary

The operating environment in the marine and offshore oil and gas industry remains very challenging. The fossil fuel prices have again shown weaknesses in the recent weeks. In addition, despite clients' new requirement for the Group's asset and services, the rates remain depressed.

While not expecting the charter rates for its fleet of Service Rigs and Offshore Support Vessels to recover quickly, the management is working hard to improve the utilisation rate of its fleet in the second half of the year.

In the process of attempting to put more assets into work through modification and upgrading or through new Service Rigs, the Group will endeavour to match the capital expenditure to its cashflow. While plan of disposal of certain assets faces difficulties due to challenges faced by potential buyers in securing debt financing, the Group is working with potential partners on co-ownership of some of its assets to better deploy the assets and to strengthen the Group's balance sheet.

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