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First Quarter Financial Statement And Dividend Announcement For The Three Months Ended 31 March 2018

Financials Archive

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Income statement

Profit and Loss

Statement of comprehensive income for three months ended 31 March 2018

comprehensive income

Statement of financial position

Balance Sheet

Review Of Performance

INCOME STATEMENT REVIEW

1Q18 vs 1Q17

The Group's revenue for the three months ended 31 March 2018 ("1Q18") decreased by US$30.8 million (45.0%) to US$37.8 million as compared to the corresponding three months ended 31 March 2017 ("1Q17"). 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 the customers who 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 1Q18 decreased by US$22.3 million (37.2%) to US$37.6 million as compared to 1Q17. The decrease was substantially due to lower depreciation expenses.

As a result of the above, the Group's gross profit for 1Q18 had decreased by US$8.6 million (97.9%) to US$0.2 million as compared to 1Q17.

The Group's other income decreased in 1Q18 as compared to 1Q17 due to cessation of corporate guarantee fees income from joint ventures.

Higher other operating expenses in 1Q18 as compared to 1Q17 was largely due to additional accrued costs on the finance restructuring project.

The Group's finance costs maintained at US$8.0 million in 1Q18 as compared to 1Q17, as lower interest expenses on the Notes payable was offsetted by higher interest expenses on the bank borrrowings.

The lower share of associates and jointly controlled entities' results in 1Q18 as compared to 1Q17 was mainly due to lower contributions from the Group's joint ventures and associates.

The Group incurred a loss before income tax of US$46.4 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$0.8 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$1,618.3 million as at 31 March 2018. The decrease in Non-current Assets was mainly due to depreciation charges on Plant and Equipment during the period and share of losses of joint ventures and associates in 1Q18.

Current Assets

The Group's Current Assets amounted to US$271.3 million as at 31 March 2018. The decrease was mainly due to the collection of trade receivables and disposal of assets held for sale in the financial quarter.

Total Liabilities

The Group's Total Liabilities amounted to US$1,638.8 million as at 31 March 2018. The increase in Total Liabilities was mainly due to 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 2018 and higher accrued operating expenses relating to the refinancing exercise, partially offsetted by repayment of loans.

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$13.1 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$0.7 million. This was mainly due to the deployment of funds towards the assets under construction and an additional investment in a joint venture, partially offsetted by proceeds from sale of plant and equipment.

Cash Flow from Financing Activities

The Group's net cash used in financing activities was US$18.4 million. This was mainly due to repayment of bank borrowings during the period.

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 charter rates of these assets are very depressed despite high capital expenditure required to deploy them.

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 12 Liftboats to be fully deployed by end of of this financial year, as long as there is no major deterioration of the macro economic environment. Even though the utilization rate of Liftboats will improve and the Group does not expect charter rates to decline in view of the stabilisation of fossil fuel prices, the Group expects to enjoy material improvements in both topline and bottomline towards the end of current financial year. This is because some of the charters are already contracted earlier at lower charter rates and not all the Liftboats will have full year contributions in the same period.

The Group believes the financial fundamentals will be strengthened upon the completion of re-financing exercise and will continue to focus and enhance its liftboats' capability and capacity. In addition, 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

As at 9 May 2018, the Company has issued additional 1,131,212,445 ordinary shares pursuant to the implementation of the refinancing exercise and the subscription agreement dated 5 April 2018. The Group had also issued new bonds under the Refinacing Exercise to the noteholders in April 2018. Further, the Group is in the process of completing the Refinancing Exercise on secured borrowings. For illustrative purposes, the proforma effects of the debt refinancing exercise and the share placement, assuming they were completed on 31 March 2018 on the relevant accounts in the balance sheet as at 31 March 2018 are as follows:

The net asset value per ordinary share, net gearing and current ratio of the Company will improve progressively as and when note holders elect to convert the notes into shares of the Company.

In addition, with the impending completion on the finance restructuring on the bank borrowings, the net finance costs of the Group is expected to decrease in the subsequent financial quarters.

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