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Financials

Fourth Quarter Financial Statement And Dividend Announcement For The Year Ended 31 December 2020

Financials Archive

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Income statement

Profit and Loss

 

Statement of comprehensive income for three months ended 31 December 2020

comprehensive income

 

Statement of financial position

Balance Sheet

 

Review Of Performance

INCOME STATEMENT REVIEW

4Q20 vs 4Q19

The Group's revenue for the three months ended 31 December 2020 ("4Q20") decreased by US$6.0 million (52.3%) to US$5.5 million as compared to the corresponding three months ended 31 December 2019 ("4Q19"). The decrease in revenue was mainly due to decrease in utilisation rates of liftboats as a result of:

  1. COVID-19 pandemic has affected over 150 countries, resulting in partial or full lockdowns in many such affected countries. This has resulted in the disruption in various international and domestic supply chains and has created a significant strain on demand across various industries including the oil and gas industry. Demand for the Group's assets was severely impacted by this and this has contributed to the decrease in utilisation and charter rates across the Group's fleet;
  2. unavailabiity of financing as the lenders remain adverse to lend to the oil and gas industry and that the Group is undergoing corporate restructuring; and
  3. the refocus of the Group's business to vessel management with an asset-light structure by divesting its vessels and rigs in an orderly fashion, in consultations and discussions with the secured lenders leading up to the period.

The cost of sales and servicing for 4Q20 decreased by US$1.6 million (11.4%) to US$12.4 million as compared to 4Q19, mainly due to lower depreciation expense; and lower operating costs due to lower activities from the Group's liftboats.

As a result of the above, the Group recorded a gross loss of US$6.9 million in 4Q20 compared with a gross loss of US$2.5 million in 4Q19.

The increase in other income for 4Q20 was mainly due to the government grants and gain on disposal of plant and equipment during the quarter.

The increase in administrative expenses in 4Q20 as compared to 4Q19 was mainly due to the absence of one-off overprovision of staff costs that was made in 4Q19 and higher professional fees in 4Q20 in relation to assets disposal and corporate restructuring.

The COVID-19 pandemic and the plunge in oil prices have severely impacted the demand of the Group's liftboats, contributing to decrease in utilisation and charter rates of the Group's liftboats, which affect the contracts due for renewal post period-end. Furthermore, arising from the consultations and discussions that the Group has had with its secured lenders leading up to the period, the secured lenders have indicated their preference for the Group to refocus its business to vessel management with an asset-light structure by divesting its vessels in an orderly fashion. Consequently, the Group has updated its impairment assessment in 4Q20 and recognised net impairment loss of US$33.8 million in 4Q20. The breakdown of the net impairment losses are as follows:

Review

Finance income has increased in 4Q20 mainly due to income from finance lease of offshore support vessels.

Finance costs have decreased in 4Q20 mainly due to absence of amortisation of the fair value recognised on the Debt Securities and term loans as the amortisation was fully accelerated in 4Q19.

The share of profits of associates and jointly controlled entities in 4Q20 was contributed by operating profit generated by the Group's joint venture, which operates in the windfarm industry in China.

The Group generated loss before income tax of US$52.5 million in 4Q20 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 credit of US$82,000 relates to the corporate tax expense and withholding tax expense incurred by vessels operating in certain overseas waters.

Results from discontinued operations was a profit in 4Q20 mainly due to gain on disposal of discontinued assets during the quarter of US$6.3 million and gross profit of US$2.8 million.

FY20 vs FY19

The Group's revenue for the financial year ended 31 December 2020 ("FY20") decreased by US$31.3 million (55.9%) to US$24.7 million as compared to the corresponding financial year ended 31 December 2019 ("FY19"). The decrease in revenue was mainly due to decrease in utilisation rates of liftboats as a result of:

  1. the COVID-19 pandemic that has affected over 150 countries, resulting in partial or full lockdowns in many such affected countries. This has resulted in the disruption in various international and domestic supply chains and has created a significant strain on demand across various industries including the oil and gas industry. Demand for the Group's assets was severely impacted by this and this has contributed to the decrease in utilisation and charter rates across the Group's fleet;
  2. unavailabiity of financing as the lenders remain adverse to lend to the oil and gas industry and that the Group is undergoing corporate restructuring; and
  3. the refocus of the Group's business to vessel management with an asset-light structure by divesting its vessels and rigs in an orderly fashion, in consultations and discussions with the secured lenders leading up to the financial year end.

The cost of sales and servicing for FY20 decreased by US$13.2 million (23.2%) to US$43.6 million as compared to FY19, mainly due to lower operating costs due to lower activities from the Group's fleet.

As a result of the above, the Group recorded a gross loss of US$18.9 million in FY20 compared with gross loss of US$0.8 million in FY19.

The decrease in other income for FY20 was mainly due to the absence of gain on disposal of associate of US$2.2 million in FY19.

The increase in administrative expenses in FY20 as compared to FY19 was mainly due to the absence of one-off overprovision of staff costs that was made in 4Q19 and higher professional fees as a result of corporate restructuring and divestment of assets.

The COVID-19 pandemic and the plunge in oil prices have severely impacted the demand of the Group's vessels and rigs, contributing to decrease in utilisation and charter rates of the Group's liftboats, which affect the contracts due for renewal post period-end. Furthermore, arising from the consultations and discussions that the Group has had with its secured lenders leading up to the period, the secured lenders have indicated their preference for the Group to refocus its business to vessel management with an asset-light structure by divesting its vessels in an orderly fashion. Consequently, the Group has updated its impairment assessment and recognised net impairment losses of US$448.0 million for FY20. The breakdown of the net impairment losses are as follows:

Review

Finance income has increased in FY20 mainly due to income from finance lease of offshore support vessels.

Finance costs have decreased in FY20 mainly due to absence of amortisation of of the fair value recognised on the Debt Securities and term loans as the amortisation was fully accelerated in 4Q19.

The share of profits of associates and jointly controlled entities in FY20 was contributed by operating profit generated by the Group's joint venture, which operates in the windfarm industry in China.

The Group generated loss before income tax of US$487.8 million in FY20 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$0.4 million relates to the corporate tax expense and withholding tax expense incurred by vessels operating in certain overseas waters.

Results from discontinued operations was loss of US$17.5 million in FY20 as compared to loss of US$333.9 in FY19. This was mainly due to decrease in ECL loss for financial guarantees to joint ventures of US$19.3 million; and the absence of impairment of discontinued assets of US$263.6 million and loss on disposal of plant and equipment of US$9.5 million that was recognised in FY19.

STATEMENT OF FINANCIAL POSITION REVIEW

Non-current Assets

The Group's Non-current Assets amounted to US$100.1 million as at 31 December 2020. The decrease in Non-current Assets was mainly due to impairment losses made on loans to joint ventures and plant and equipment, disposal of plant and equipment; and reclassification of plant and equipment to assets held for sale during the year which amounted to US$105.3 million.

Current Assets

The Group's Current Assets amounted to US$205.6 million as at 31 December 2020. The increase was mainly due to increase in cash and cash equivalents of US$14.4 million and the reclassification of plant and equipment to assets held for sale during the period which amounted to US$105.3 million. This is offset by the increase in impairment of other current assets of US$38.7 million during the year and the decrease in trade receivables of US$50.0 million.

Total Liabilities

The Group's Total Liabilities amounted to US$1,686.3 million as at 31 December 2020. The decrease in Total Liabilities was mainly due to repayment of bank loans and other payables; offset by upward revaluation of Singapore Dollar denominated bank loans and Debt Securities as the US Dollar has depreciated against the Singapore Dollar during this period; and the drawdown of loan of US$36.7 million during the year.

Total Equity

The decrease in Total Equity was attributable mainly due to the loss generated for the year, offset by issuance of new ordinary shares.

Going concern

The ability of the Group to maintain as a going concern is highly dependent upon:

  1. the successful restructuring of the Group's business and capital structure into one which is asset-light, with a focus on provision of vessel management and operating services; and
  2. the continuing support of the Group's lenders, including its secured lenders, noteholders and perpetual securityholders, to support and vote for a potential restructuring plan which would include or involve a debt to equity conversion of the loans outstanding to the lenders after the orderly disposal of the Group's assets.

STATEMENT OF CASH FLOWS REVIEW

Cash Flow from Operating Activities

The Group's net cash used in operating activities was US$566,000. This was mainly due to the net cash used in the operations of the Group.

Cash Flow from Investing Activities

The Group's net cash generated from investing activities was US$61.2 million. This was mainly due to proceeds from sale of asset held for sale and plant and equipment; the recovery of loans from joint ventures; offset by deployment of funds towards the vessels and assets under construction.

Cash Flow from Financing Activities

The Group's net cash used in financing activities was US$44.1 million. This was mainly due to the repayment of bank loans and payment of interest, offset by drawdown of loan of US$36.7 million during the period.

Commentary

National lockdowns and international travel restrictions from the COVID 19 outbreak are expected to remain in the near future and will continue to cause difficulties to the operations of the Group.

In addition, the Oil & Gas industry is further impacted by the increasing focus of the world to move away from fossil fuel (fearing global warming) into renewable energy and the reluctance of banks to finance projects related to the fossil fuel.

The Company will continue its effort to divest its vessels and rigs and refocus its business on project and vessel management. It will concentrate on leveraging on its expertise and experience in offshore wind farm to focus on renewable businesses. The Company will also continue to work hard on securing a new strategic investor.


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