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Quarterly Report For The Financial Period Ended 30 June 2018

Financials Archive

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Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Second Quarter ended 30 June 2018 (Unaudited)

Income Statement

Condensed Consolidated Statement of Financial Position as at 30 June 2018 (Unaudited)

Balance Sheet

Review of Financial Performance

The Group's performance for the current 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 2018 increased by 16% while the group made a profit before tax of RM57.0 million for the current quarter as opposed to loss before tax of RM35.6 million in the corresponding quarter ended 30 June 2017.

The increase in revenue and profit before tax in the current quarter is mainly due to higher work orders received and performed under the topside maintenance contracts.

In addition, the profit before tax in the current quarter has also taken into account impairment loss on PPE of RM7.1 million and net realised/unrealised foreign exchange gain of RM25.7 million whereas impairment loss on PPE and net realised/unrealised foreign exchange losses of RM50.4 million and RM16.5 million respectively were accounted for in the corresponding quarter ended 30 June 2017 (see Note A4).

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 2018 and the date of this report.

Prospects

Business activities have picked up substantially in the second quarter given the ramp-up in work orders for the Maintenance, Construction and Modifications Contract (MCM) and Topside Maintenance Services works under the Pan Hook-up and Commissioning Contracts (Pan HUC). Consequently, vessel utilisation also witnessed a strong improvement at 70% during the second quarter, compared to a mere 27% in the first quarter. This has also reinforced our view that the worst is over after a relatively uninspiring financial performance in 2016 and 2017.

Taking cue from the work orders in hand, we are hopeful that business operations will remain busy over the coming months which bode well for our financial results. Barring any unforeseen circumstances, we are optimistic that the turnaround in our earnings will be sustainable, premised on our large order book replenishment of more than RM1 billion for the next 5 years and bringing our total order book to more than RM3.0 billion which are call out contracts to last until 2023. The relatively resilient oil price at above USD70 per barrel for crude Brent will also lend credence to our earnings recovery given the much improved operating environment for oil majors which will directly benefit our business, particularly in the areas of maintenance, construction and modifications works and also facilities improvements projects.

Over the past many months, the Group has been actively participating in various contract tenders, particularly the Pan MCM contracts which have been estimated to be worth RM3.0-4.0 billion. We are proud that we have secured a lion share of the Pan MCM jobs from multiple production sharing contractors (PSCs) which speak volume of our strong operational track records. This has further cemented our long-term growth prospects as the awarded contracts are for a five-year period until 2023.

We firmly believe that 2018 will be a real turnaround for the group in as far as operational performances are concerned, after experiencing poor results over the past two financial years. Currently, the Group is still bidding for contracts of about RM600 million, mostly for maintenance contracts within the region and also overseas. The awards of these contracts is anticipated to be within the next quarters.

As for our subsidiary Perdana Petroleum Berhad (PPB), PPB has received approval from the Corporate Debt Restructuring Committee (CDRC) of Bank Negara Malaysia for our application for assistance to mediate between the group and its creditors (bankers). PPB are in the midst of submitting a proposed debt restructuring scheme which will enable a renegotiation of its financing obligations in order to sustain its business operations.

The Board remains cautiously optimistic that the issues with PPB will be resolved soon. The Board will continue to be vigilant and prudent in the running and administration of the company's business.