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Fourth Quarter Financial Statement Announcement

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Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement
4th Quarter 2016 ("Q4 FY16") vs 4th Quarter 2015 ("Q4 FY15")

Market conditions in the offshore marine sector continued to deteriorate and this had negatively affected the results of the Group in Q4 FY16. Consequently, the Group registered lower revenue of US$36.7 million (Q4 FY15: US$71.8 million) mainly due to lower utilisation and charter rates across major business segments.

OSV

OSV segment revenue decreased by 51% to US$16.7 million (Q4 FY15: US$33.9 million) mainly due to lower charter rates and utilisation of 62% in Q4 FY16 (Q4 FY15: 67%). The day rates earned in this quarter were lower compared to Q4 FY15 as a result of discount on day rates previously contracted and reduced rates for new contracts. As such, the segment registered a gross loss of US$4.9 million in Q4 FY16 as compared with gross profit of US$4.6 million in Q4 FY15.

OA

OA segment revenue decreased by 56% to US$11.8 million (Q4 FY15: US$26.8 million) mainly due to lower utilisation and rates of OA (shallow water) vessels and lower charter rate and absence of mobilisation revenue from POSH Xanadu (a 750-pax semi-submersible accommodation vessel "SSAV") on contract extension. As such, the segment registered a gross loss of US$2.2 million as compared with gross profit of US$10.4 million in Q4 FY15.

T&I

T&I segment revenue decreased by 42% to US$3.4 million (Q4 FY15: US$6.0 million) mainly due to lower charter rates and utilisation. As such, the segment registered a gross loss of US$2.8 million as compared with gross profit of US$0.5 million in Q4 FY15.

HSER

HSER revenue decreased by 7% to US$4.7 million (Q4 FY15: US$5.1 million) mainly due to lower salvage revenue in Q4 FY16.

General & administrative ("G&A") expenses and other income

G&A expenses increased by US$0.6 million or 9% to US$6.6 million (Q4 FY15: US$6.1 million) mainly due to expansion of overseas operations in the Middle East.

Impairment of fixed assets and goodwill for Q4 FY16 were US$198.9 million and US$111.2 million respectively, compared to impairment of fixed assets of US$21.4 million and impairment of goodwill of $127.0 million in Q4 FY15.

Finance costs increased by 55% or US$1.5 million due to higher loan balances and higher interest rates in Q4 FY16.

The Group's share of results from joint ventures ("JVs") registered a loss of US$15.5 million in Q4 FY16 compared to US$12.4 million in Q4 FY15. This was mainly due to lower contributions and impairment of vessels.

The Group recorded a net loss attributable to shareholders of US$345.4 million in Q4 FY16 compared to US$149.7 million in Q4 FY15.

12 Months ended 31 December 2016 ("FY16") vs 12 Months ended 31 December 2015 ("FY15")

In FY16, the Group registered revenue of US$183.1 million (FY15: US$280.8 million), a decrease of 35% or US$97.7 million. This was mainly due to lower charter rates and utilisation across major business segments. As such, gross profit decreased by 91% to US$5.0 million (FY15: US$58.0 million).

OSV

OSV segment revenue decreased by 46% to US$74.2 million (FY15: US$136.2 million) mainly due to lower charter rates and utilisation of 65% (FY15: 69%). Consequently, the segment incurred gross loss of US$12.5 million in FY16 as compared to gross profit of US$13.1 million in FY15.

OA

OA segment revenue decreased by 23% to US$72.0 million (FY15: US$93.2 million) mainly due to lower revenue contribution from POSH Xanadu (SSAV) and lower utilisation of other accommodation vessels. Consequently, gross profit decreased by US$21.3 million or 59% to US$14.6 million (FY15: US$35.9 million).

T&I

T&I segment revenue decreased by 41% to US$16.0 million (FY15: US$27.3 million) mainly due to lower charter rates and utilisation. Consequently, the segment incurred gross loss of US$1.6 million in FY16 as compared to gross profit of US$4.6 million in FY15.

HSER

HSER segment registered a 14% decrease in revenue to US$20.9 million (FY15: US$24.1 million) mainly due to the lack of salvage jobs in FY16.

General & administrative ("G&A") expenses and other income

G&A expenses decreased by 1% or US$0.4 million to US$27.6 million (FY15: US$28.0 million) mainly due to lower personnel expenses incurred in FY16.

Impairment of fixed assets and goodwill for FY16 were US$198.9 million and US$111.2 million respectively, compared to impairment of fixed assets of US$21.4 million and impairment of goodwill of $127.0 million in FY15.

Finance costs increased by 39% or US$4.1 million to US$14.4 million (FY15: US$10.4 million) mainly due to higher loan balances and higher interest rates.

The Group's share of losses from joint ventures increased by 45% to US$13.8 million in FY16 (FY15: US$9.5 million) mainly due to lower contributions and impairment of vessels.

The Group's net loss attributable to shareholders was US$371.4 million in FY16 as compared to US$131.0 million in FY15.

Statement of Financial Position

The Group's net asset was US$688.3 million as at 31 December 2016.

Goodwill decreased by US$111.2 million due to goodwill impairment for the amount allocated to OSV segment.

Fixed assets decreased by US$93.2 million mainly due to vessels impairment, partially offset by payments 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$13.8 million and bad debt written-off of US$1.9 million.

The Group has a net current liability of US$206.8 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group generated net operating cash flow of US$38.2 million in FY16 compared to US$69.6 million in FY15.

Net cash used in investing activities of US$173.4 million in FY16 (FY15: US$50.0 million) was mainly due to payment for vessels under construction.

The Group's net cash generated from financing activities in FY16 was US$136.2 million mainly due to proceeds from bank borrowings compared to net cash used in financing activities of US$18.0 million in FY15 mainly due to dividends payment.

Commentary

The outlook for the oil and gas sector continues to remain depressed and the timing of recovery is uncertain. Whilst OPEC had reached an agreement to cut oil production in Nov 2016, supply and demand balances are still slow to return to equilibrium. Offshore oilfield development capex remains subdued.

The Group will continue to focus on managing costs and maximizing the utilization of its fleet. Two of its twelve vessels contracted with an oil major in the Middle East have commenced charter with the remaining ten vessels to be deployed progressively in 2017.