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Operation Review

Extracted from Annual Report 2019

Financial Highlights

The Group's revenue for the FY2019 decreased by 23.9% to US$90.3 million. The decrease in revenue was mainly due to:

  1. decrease in utilisation and charter rates for the Group's jack-up rigs;
  2. a decrease in utilisation rates of liftboats resulting from continued delays in re-deployment of the Group's assets. The delays were in turn caused by working capital constraints arising mainly from limited available financing options since lenders remain adverse to lending to our sector; and
  3. the systemic problem such as credit crunch faced by shipyards, equipment suppliers and service providers used by the Group. The tighter credit terms imposed by these vendors coupled with the inability of the Group to drawdown the required funds from its secured lenders in a timely manner has severely affected the Group's ability to operate, maintain and deploy its assets.

The cost of sales and servicing for FY2019 decreased by 13.8% to US$92.3 million as compared to FY2018, mainly due to lower depreciation expenses on plant and equipment and lower operating costs due to lower activities from the Group's jack-up rigs.

As a result of the above, the Group recorded a gross loss of US$1.9 million in FY19 compared with gross profit of US$11.7 million in FY18.

Business Segments

Revenue according to business segments for FY2019 consist of revenue from liftboats, jack-up rigs and offshore support logistics service vessels which amounted to approximately US$55.5 million or 61.5%, US$26.0 million or 28.7% and US$8.3 million or 9.2% respectively. The decrease in revenue from jack-up rigs for FY2019 as compared to FY2018 amounted to US$14.5 million or 35.8%. As a result, the revenue mix for liftboats, jack-up rigs and offshore support logistics services segments for FY2019 was 61.5%, 28.7% and 9.2% (FY2018: 57.9%, 34.1% and 7.5%) respectively.

Geographical Segments

Our revenue contributions based on geographical segments for FY2019 were adequately diversified, reducing geographical market risk. In FY2019, revenue contributed by Singapore, India, Brunei, Thailand, Malaysia, Middle East, and Nigeria amounted to approximately US$8.6 million or 9.5%, US$7.5 million or 8.3%, US$6.9 million or 7.6%, US$18.4 million or 20.4%, US$6.4 million or 7.1%, US$21.8 million and 24.1% and US$6.5 million or 7.2%, respectively, of total revenue.

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