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Financials

Third Quarter Financial Statement And Dividend Announcement For The Nine Months Ended 30 September 2018

Financials Archive

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Income statement

Profit and Loss

Statement of comprehensive income for three months ended 30 September 2018

comprehensive income

Statement of financial position

Balance Sheet

Review Of Performance

INCOME STATEMENT REVIEW

3Q18 vs 3Q17

The Group's revenue for the three months ended 30 September 2018 ("3Q18") decreased by US$35.6 million (55.9%) to US$28.1 million as compared to the corresponding three months ended 30 September 2017 ("3Q17"). 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 3Q18 decreased by US$27.4 million (44.1%) to US$34.7 million as compared to 3Q17, largely due to lower depreciation expenses on vessels.

As a result of the above, the Group recorded a gross loss of US$6.6 million in 3Q18 from a gross profit of US$1.7 million in 3Q17.

The decrease in other operating expenses in 3Q18 as compared to 3Q17 was due to exchange loss incurred in 3Q17.

The finance gain in 3Q18 as compared to finance costs in 3Q17 was mainly due to the fair value adjustments arising from the refinancing exercise recorded in 3Q18.

The share of associates and jointly controlled entities' losses in 3Q18 as compared to share of profits in 3Q17 was mainly due to operating losses from the Group's joint ventures and associates.

The Group generated loss before income tax of US$20.2 million in 3Q18 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.

9M2018 vs 9M2017

The Group's revenue for the nine months ended 30 September 2018 ("9M18") decreased by US$110.7 million (55.4%) to US$88.9 million as compared to the corresponding nine months ended 30 September 2017 ("9M17"). 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 9M18 decreased by US$76.3 million (41.8%) to US$106.3 million as compared to 9M17, largely due to lower depreciation expenses on vessels.

As a result of the above, the Group recorded a gross loss of US$17.3 million in 9M18 from a gross profit of US$17.1 million in 9M17.

Other Income in 9M18 was attributed to the exchange gain due to strengthening of United States Dollar against Singapore Dollar, which was higher than Other Income in 9M17 where it was attributed to gain arising from disposal of subsidiaries.

The decrease in administrative expenses in 9M18 as compared to 9M17 was mainly due to continuing cost cutting measures undertaken by the Group.

The other operating expenses in 9M18 was attributed to costs incurred on the refinancing exercise whereas other operating expenses in 9M17 was attributed to exchange loss on the notes payable as the Singapore Dollar strengthened against the United States Dollar during that period.

The finance gain in 9M18 as compared to finance costs in 9M17 was mainly due to the fair value adjustments arising from the refinancing exercise recorded in 9M18.

The share of losses in 9M18 as compared to share of profits in 9M17 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 9M18 stands at US$21.8 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$2.2 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$1,698.7 million as at 30 September 2018. The increase in Noncurrent Assets was mainly due to certain joint venture bank loans taken up at the Group level and hence an increase in shareholder loans to joint ventures, offset by depreciation charges on Plant and Equipment during the period.

Current Assets

The Group's Current Assets amounted to US$280.0 million as at 30 September 2018. The decrease as compared to the Group's Current Assets as at 31 December 2017 was mainly due to collections of charter hire receipts and disposal of assets held for sale, partially offsetted by increase in cash and cash equivalents.

Total Liabilities

The Group's Total Liabilities amounted to US$1,544.4 million as at 30 September 2018. The decrease in Total Liabilities was mainly due to the conversion of Notes Payable and accrued liabilities into share capital of the Company, pursuant to the Group's refinancing exercise. This is offset by drawdown of additional borrowings for modification and capital expenditure on the Group's Liftboats, Jack up rigs and offshore logistic vessels and repay certain joint venture bank loans pursuant to the Group's refinancing exercise, amounting to US$14.6 million and US$124.2 million respectively.

Total Equity

The increase in Total Equity was attributable mainly due to the conversation of Notes Payable to share capital and the results in 9M18, partially offset by the effects of adoption of SFRS(I) 9.

STATEMENT OF CASH FLOWS REVIEW

Cash Flow from Operating Activities

The Group's net cash inflow from operating activities was US$36.5 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$128.7 million. This was mainly due to increase in shareholder loans to joint ventures, and 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 from financing activities was US$101.7 million. This was mainly due to drawdown of additional borrowings for modification and capital expenditure on the Group's Liftboats, Jack up rigs and offshore logistic vessels and repay certain joint venture bank loans pursuant to the Group's refinancing exercise, amounting to US$14.6 million and US$124.2 million respectively, offset by repayment of bank loans.

Commentary

Update on the Group's Operation

In line with the Group's continued focus in the Liftboat business, the Group has also stepped up efforts to dispose its Jack up rigs, tugs and barges. The Group has gained traction in the disposal of these assets and expect to dispose more units of these assets by the end of 2018.

In view of the increased demand from customers, the Group has also taken delivery of an additional unit of Liftboat. Barring any unforeseen circumstances, the Group now expects the majority of its current fleet of 12 Liftboats to be deployed by first half 2019, with the remaining to be deployed by the end of 2019.

The Group is in preliminary discussions with potential strategic investors and continues to work with strategic investors and partners to grow its market share in the Liftboat business as well as strengthen the Group's financial position.

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. Upon the execution of the security documents in relation to the loan agreements for all the secured lenders which is expected to be completed by end of 2018, the refinancing exercise would be deemed completed. For illustrative purposes, the proforma effects of these events, assuming they were completed on 30 September 2018 on the relevant accounts in the balance sheet as at 30 September 2018 are as follows:

Refinancing Exercise


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