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Quarterly Report For The Financial Period Ended 30 September 2017

Financials Archive

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

Income Statement

Condensed Consolidated Statement of Financial Position as at 30 September 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 September 2017 increased by 5% while the group made a profit before tax of RM14.8 million for the current quarter as opposed to profit before tax of RM47.5 million in the corresponding quarter ended 30 September 2016.

The slight increase in revenue in the current quarter is mainly due to higher work orders received and performed. Despite that the group registered a lower profit before tax in the current quarter due to lower profit margins from lower charter rates and taken into account expenses such as net unrealised foreign exchange loss of RM8.2 million as well as impairment loss on receivables of RM1.4 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 September 2017 and the date of this report.


Generally, in the third quarter of 2017 business activities have improved although the financials for the whole nine months period appeared atrocious as a result of mostly one-offs impairments and unrealised forex translation losses that accounted for more than RM85 million at the subsidiary company, Perdana Petroleum Bhd. In reality, the Group is experiencing an increase in work activities for the topside maintenance services (TSM), Hook-up and Commissioning (HUC) contracts, Engineering Procurement Construction and Commissioning (EPCC) services and fleet utilisation of its 25 offshore support vessels also improved. More work orders were received as compared to that of last year. The fleet utilisation rate of the vessels have improved from 44% in the second quarter to above 75% in the third quarter bringing the average fleet utilisation to 53%. This evidently shows that after the prolonged decline in the price of crude oil for the last 2 years, oil majors are gradually increasing activities largely in the areas of maintenance and rejuvenation works.

Going into 2018, the Group will continue to draw down its revenue from its balance contract order book of slightly above RM3.0 billion that stood as at 31 October 2017. The Group will continue to operate within the core competencies of the new Maintenance Construction and Modification (MCM) contract and also the remaining HUC and EPCC contracts and OSVs charter. Based on current work orders received from the oil majors and the work planning activity programs that are on hand currently, it is therefore envisaged that 2018 should be a very busy year and we remain upbeat. The MCM, Pan HUC and EPCC is now experiencing more renewed activities as the price of crude is now hovering above USD60 per barrel.

It should also be noted that the Group is currently awaiting the results of some tenders for contracts with oil majors that are still under evaluation. Any successful win in this should see a further replenishment of the order book lasting for one to four years. The Group is currently preparing to submit more tenders by the middle of December for the PAN MCM contracts, which could also be sizable in contract values. Though it is not possible to predict the outcome of these tenders, the Group has always demonstrated its operational and technical supremacy in winning these brownfield contracts.

At PPB it should be noted that the fleet utilisation should improve significantly going into 2018 as more than 10 vessels out of a fleet of 16 will be earmarked for Dayang's offshore maintenance, hook-up commissioning and EPCC contracts, in line with the roll-out of Dayang's contracts with various oil majors.

On the corporate exercise, Dayang has distributed up to 292,229,202 PPB shares representing 37.5% equity interest by way of a dividend-in-specie to all Dayang shareholders. This will improve the public shareholding spread of PPB from 2% to 20%, being the lower public shareholding spread requirement as approved by Bursa Malaysia on 19 July 2017, for a resumption of trading of PPB shares, targeted in December 2017. This proposal should allow PPB to tap into the equity capital market to raise funds for its working capital and/or to repay its borrowings, finance its working capital and strengthen its capital structure. This should ultimately improve PPB's gearing level, reduce interest expenses and add financial flexibility to its cash flow management to carry out its operations.

Although the Board is well briefed of the Group's outlook on a much improved prospect going into 2018, the Board remains cautious and vigilant in its pursuit for more contract replenishment and also a longer term charter opportunity for its fleet of vessels. At the same time, it is important that the management be directed to focus diligently in improving the Group cashflows and the sustenance of the Group in a very challenging market environment. The Board and management will continue to exercise due care and prudence in the running and administration of the company's business amidst yet a very challenging industry.

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