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Third Quarter Financial Statement Announcement

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Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement
3rd Quarter 2016 ("Q3 FY16") vs 3rd Quarter 2015 ("Q3 FY15")

Market conditions in the offshore marine sector continued to deteriorate and had negatively affected the results of the Group in Q3 FY16. Consequently, the Group registered lower revenue of US$41.6 million (Q3 FY15: US$80.4 million). The lower revenue was mainly due to lower utilisation and charter rates across the major business segments.

OSV

OSV segment revenue decreased by 56% to US$16.9 million (Q3 FY15: US$38.0 million) mainly due to lower charter rates and utilisation of 59% in Q3 FY16 (Q3 FY15: 74%). The day rates earned in this quarter were lower compared to Q3 FY15 as a result of discount on day rates previously contracted and reduced rates for new contracts. Correspondingly, the segment registered a gross loss of US$4.4 million in Q3 FY16 as compared with profit of US$5.3 million in Q3 FY15.

OA

OA segment revenue decreased by 44% to US$15.2 million (Q3 FY15: US$26.9 million) mainly due to lower charter rate for POSH Xanadu (a 750-pax semi-submersible accommodation vessel "SSAV") on contract extension, lower utilisation, and the early termination of two contracts as a result of non-payment of charter. Correspondingly, gross profit decreased by US$9.1 million to US$1.8 million in Q3 FY16 (Q3 FY15: US$10.9 million).

T&I

T&I segment revenue decreased by 46% to US$3.9 million (Q3 FY15: US$7.2 million) mainly due to lower charter rates and utilisation arising from reduction in capital expenditure by oil companies. Correspondingly, gross profit decreased to US$15,000 (Q3 FY15: US$0.8 million).

HSER

HSER revenue decreased by 31% to US$5.7 million (Q3 FY15: US$8.2 million) mainly due to lower salvage revenue in Q3 FY16.

General & Administrative expenses and Other Income

Other operating expense in Q3 FY16 of US$0.4 million (Q3 FY15: other income of US$3.6 million) was mainly due to loss on vessels disposal compared to gain in prior year.

Finance costs increased by 55% or US$1.4 million due to increase in loan balances and higher interest rates in Q3 FY16.

The Group's share of results from joint ventures ("JVs") registered a loss of US$57,000 in Q3 FY16 compared to a profit of US$0.9 million in Q3 FY15. This was mainly due to lower contribution from POSH Terasea.

The Group recorded a net loss attributable to shareholders of US$12.9 million in Q3 FY16 compared to a net profit of US$12.6 million in Q3 FY15.

9 Months ended 30 September 2016 ("9M FY16") vs 9 Months ended 30 September 2015 ("9M FY15")

In 9M FY16, the Group registered revenue of US$146.4 million (9M FY15: US$209.0 million), a decrease of 30% or US$62.6 million. This was mainly due to lower charter rates and utilisation across major business segments due to unfavourable market conditions. Correspondingly, gross profit decreased by 65% to US$14.4 million (9M FY15: US$40.8 million).

OSV

OSV segment revenue decreased by 44% to US$57.6 million (9M FY15: US$102.3 million) mainly due to lower charter rates and utilisation of 63% (9M FY15: 70%). Consequently, the segment incurred gross loss of US$7.6 million in 9M FY16 as compared to gross profit of US$8.5 million in 9M FY15.

OA

OA segment revenue decreased by 9% to US$60.2 million (9M FY15: US$66.4 million) mainly due to lower revenue contribution by POSH Xanadu (SSAV) and lower utilisation of other accommodation vessels. Consequently, gross profit decreased by US$8.7 million or 34% to US$16.8 million (9M FY15: US$25.6 million).

T&I

T&I segment revenue decreased by 41% to US$12.5 million (9M FY15: US$21.3 million) mainly due to lower charter rates and utilisation. Correspondingly, gross profit decreased to US$1.2 million (9M FY15: US$4.1 million).

HSER

HSER segment registered a 15% decrease in revenue to US$16.1 million (9M FY15: US$19.0 million) mainly due to the absence of salvage jobs in 9M FY16.

General & Administrative expenses and Other Income

Other income in 9M FY16 decreased to US$2.6 million (9M FY15: US$8.9 million) mainly due to lower gain on disposals of vessels, interest income and exchange gains.

General and administrative expenses increased by 34% or US$8.2 million to US$32.2 million (9M FY15: US$24.0 million), mainly due to higher allowance for doubtful debts of US$9.2 million.

Finance costs increased by 34% or US$2.6 million to US$10.3 million (9M FY15: US$7.7 million) mainly due to higher loan balances.

The Group's share of results from joint ventures decreased by 41% to US$1.7 million in 9M FY16 (9M FY15: US$2.9 million) mainly due to lower contribution from one of the joint ventures as a result of allowance for doubtful debts.

The Group's net loss attributable to shareholders was US$26.0 million in 9M FY16 as compared to a profit of US$18.7 million in 9M FY15.

Statement of Financial Position

The Group's net asset was US$1,026.2 million as at 30 September 2016.

Fixed assets increased by US$56.7 million mainly due to payment for vessels under construction. Decrease in receivables and other current assets were mainly due to lower billings and additional allowance for doubtful debts of US$11.2 million.

The Group has a net current liability of US$133.6 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group generated net operating cash flow of US$39.1 million in 9M FY16 compared to US$30.7 million in 9M FY15.

Net cash used in investing activities of US$93.2 million in 9M FY16 (9M FY15: US$10.6 million) was mainly due to payment for vessels under construction.

The Group's net cash generated from financing activities in 9M FY16 was US$53.9 million mainly due to bank borrowings compared to net cash used in financing activities of US$19.2 million in 9M FY15 mainly due to dividends payment.

Commentary On Current Year Prospects

Capital expenditure by oil majors has remained low with oilfield operators choosing not to invest or to postpone them. This lack of new investments will continue to exert downward pressure on vessel utilisation and charter rates. The operating environment remains challenging and this will affect the Group's performance for the foreseeable future.

With the depressed market condition, the Group expects the carrying value of the goodwill arising from the acquisition of PSA Marine's offshore business in 2007 and carrying value of the Group's fleet of vessels will be impaired. While the impairment amount is to be finally determined by year end, it is expected that these impairments will have a material adverse impact on the Group's financial results for 4th Quarter FY2016 and 12 months ending 31 December 2016.