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Quarterly Report For The Financial Period Ended 30 June 2017

Financials Archive

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Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Second Quarter ended 30 June 2017 (Unaudited)

Income Statement

Condensed Consolidated Statement of Financial Position as at 30 June 2017 (Unaudited)

Balance Sheet

Review of performance of the Company and its principal subsidiaries

The Group's performance for the quarter under review versus the corresponding quarter of the previous financial year is tabled below:

Review of Performance

Comparatively, the Group's revenue for the current quarter ended 30 June 2017 decreased by 1% while the group made a loss before tax of RM35.6 million for the current quarter as opposed to profit before tax of RM12.8 million in the corresponding quarter ended 30 June 2016.

The slight decrease in revenue and the higher loss before tax incurred in the current quarter is mainly due to lower charter rates. In addition, the loss before tax in the current quarter has taken into account of impairment loss on property, plant and equipment of RM50.4 million and net realised/unrealised foreign exchange loss of RM16.5 million.

In the opinion of the Directors, the results for the current quarter have not been affected by any transactions or events of a material nature which have arisen between 30 June 2017 and the date of this report.

Prospects

Business activities in the Topside Structural Maintenance (TSM) services, Hook-up and Commissioning (HUC) services, Engineering Procurement Construction and Commissioning (EPCC) services and Offshore Support Vessels (OSV) improved in the second quarter with the gradual increase in work orders from oil companies. The utilisation rate for the fleet of vessels improved from 24% in the first quarter to 62% in the second quarter bringing the average fleet utilisation to 44%. However, the increased activities and the profits generated from the maintenance contracts and the higher vessel utilisation in the second quarter was negated somewhat by the reduction in the charter rates of a few vessels and the Group continues to be dragged by impairment and unrealised translation loss in foreign exchange in Perdana Petroleum Bhd (PPB).

Nevertheless, the Group and its Board of Directors are committed to navigate through this stormy waters and to ensure the Group's continued sustainability and to ride through this prolonged down cycle in the oil and gas market. The Group is cautiously confident of turning around its loss making OSV subsidiaries with the impending relisting of PPB, scheduled before the end of September 2017.

Going forward, the Group will continue to leverage on its balance order book of RM2.3 billion especially within the core competencies of TSM/HUC/EPCC contracts and OSVs charter for the remaining of this year and until 2019. The TSM, HUC and EPCC should see more renewed activities over the next few years by oil majors and the Group should likely benefit from this. The Group is currently awaiting the results of some tenders for jobs amounting to RM4.0 billion. Any successful win in this should see a replenishment of order book for a further five years. Though we cannot predict the outcome of these tenders, the Group has always demonstrated operational track record and has a clear market leadership in the Brownfield services segment.

Amidst all the challenges and a difficult oil and gas industry, the Board remains vigilant and will continue to exercise due care and prudence in the running and administration of the company's business.

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