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1st Quarter 2017 ("Q1 FY17") vs 1st Quarter 2016 ("Q1 FY16")
As market conditions in the offshore marine remains challenging in Q1 FY17, the Group registered revenue of US$34.3 million, 42% decrease from US$58.7 million in Q1 FY16. This was mainly due to lower utilisation and charter rates across major business segments.
OSV segment revenue decreased by 31% to US$14.4 million (Q1 FY16: US$21.0 million) mainly due to lower charter rates and utilisation of 59% (Q1 FY16: 67%). The day rates for existing and new contracts earned in the period under review were lower than Q1 FY16. Correspondingly, the OSV segment incurred a gross loss of US$4.7 million compared to gross loss of US$0.5 million in Q1 FY16.
OA segment revenue decreased by 65% to US$10.0 million (Q1 FY16: US$28.4 million) as POSH Xanadu, Semi-Submersible Accommodation Vessel ("SSAV"), completed its extended charter in March 2017 on reduced charter rate and two of the Light Construction Vessels ("LCVs") were not deployed during the current quarter. As such, the segment registered gross loss of US$2.7 million as compared to gross profit of US$12.3 million in Q1 FY16.
T&I segment revenue decreased by 11% to US$4.2 million (Q1 FY16: US$4.8 million) mainly due to lower charter rates and utilisation. The segment registered a gross profit of US$1.3 million (Q1 FY16: US$1.0 million).
HSER revenue increased by 27% to US$5.7 million (Q1 FY16: US$4.5 million) mainly due to higher revenue from both harbour services and salvage job.
General & administrative ("G&A") expenses and other income
General and administrative expenses decreased by US$7.0 million or 57% to US$5.2 million (Q1 FY16: US$12.2 million) mainly due to lower salaries and related expenses in Q1 FY17 and allowance for doubtful debts of US$4.7 million in Q1 FY16.
Finance costs increased by 63% to US$4.7 million due to higher loan balances and higher interest rates in Q1 FY17.
The Group's share of results from joint ventures ("JVs") registered a loss of US$4.4 million in Q1 FY17 as compared to a profit of US$4.9 million in Q1 FY16. This was mainly due to lower vessel utilisation of our JV, POSH Terasea, as five vessels underwent drydocking during the quarter in preparation for their respective towage and positioning projects, namely the INPEX Ichthys Central Processing Facility ("CPF"), the INPEX Ichthys Floating Production Storage and Offloading ("FPSO") unit, and the Shell Prelude Floating Liquefied Natural Gas ("FLNG") Platform.
The Group recorded a net loss attributable to shareholders of US$18.4 million in Q1 FY17 as compared to profit of US$4.5 million in Q1 FY16.
Statement of Financial Position
The Group's net asset was US$670.5 million as at 31 March 2017.
Receivables and other current assets increased to US$87.7 million mainly due to higher turnover days in Q1 FY17.
The Group has net current liabilities of US$174.0 million mainly due to bank borrowings due within one year.
Statement of Cash Flows
The Group net cash used in operations was US$3.2 million in Q1 FY17 as compared to net cash of US$20.3 million generated in Q1 FY16, The lower net operating cash flow was due to lower earnings in current period as well as working capital changes.
Net cash used in investing activities of US$8.3 million in Q1 FY17 (Q1 FY16: US$32.1 million) was mainly due to payment for vessels under constructions.
The Group generated net cash from financing activities of US$8.3 million in Q1 FY17 (Q1 FY16: US$11.5 million) mainly due to an increase in bank borrowings during the period.
OPEC and Russia's agreement on production cuts in November 2016 helped to stabilise oil prices in Q1 FY17 above US$50 per barrel but offshore oilfield development capital expenditure remains subdued.
The current vessel oversupply situation will continue to exert pressure on charter rates and vessel utilisation, and this will continue to have a negative impact on the Group's financial performance for the year.
As of Q1 FY17, the Group had four vessels which commenced charter with an oil major in the Middle East and the remaining eight vessels will be deployed progressively in the next three quarters of FY17.
In the coming quarters, our POSH Terasea JV, will execute a few major towage and positioning projects, namely the INPEX Ichthys CPF, the INPEX Ichthys FPSO, the Shell Prelude FLNG platform and the Egina FPSO unit. Upon completion of the towage and positioning of the Shell Prelude FLNG, our 750-pax Semi-Submersible Accommodation Vessel, POSH Arcadia will provide accommodation support for the hook-up and commissioning of the project.
The Group will continue to participate actively in tenders in the Middle East and Africa which remain active in current market conditions.