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Third Quarter Financial Statement Announcement

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Profit & Loss

NM denotes “Not Meaningful”.

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement
3rd Quarter 2017 ("Q3 FY18") vs 3rd Quarter 2016 ("Q3 FY17")

The Group registered a 52% increase in revenue to US$79.7 million as compared to US$52.5 million in Q3 FY17. This was mainly due to higher contribution from the OA segment on improved vessel utilisation.

OSV

OSV segment revenue increased by 16% to US$24.4 million (Q3 FY17: US$21.0 million) due to improved utilisation of 75% (Q3 FY17: 72%), mainly attributable to the full contribution of 12 vessels (Q3 FY17: 6 vessels) deployed under long term charters to a Middle East National Oil Company. However, lower day rates and utilisation and higher vessel operating expenses from the remaining vessels in the fleet resulted in higher gross loss of US$1.0 million in Q3 FY18 (Q3 FY17: US$0.3 million).

OA

OA segment revenue increased by 100% to US$46.2 million (Q3 FY17: US$23.0 million) as the Group’s 750 pax Semi-Submersible Accommodation Vessels (“SSAVs”), POSH Arcadia and POSH Xanadu were fully employed during Q3 FY18. In addition to the improved performance of the SSAVs, the other OA vessels also reported higher utilisation and charter rates. The segment registered gross profit of US$14.0 million compared to gross loss of US$4.8 million in Q3 FY17.

T&I

T&I segment registered 58% increase in revenue to US$3.9 million (Q3 FY17: US$2.5 million) due to higher vessel utilisation of 67% (Q3 FY17: 38%). The segment recorded gross profit of US$29,000 as compared to a loss of US$0.9 million in Q3 FY17.

HSER

HSER revenue decreased by 13% to US$5.3 million (Q3 FY17: US$6.1 million), mainly due to lower revenue from salvage and diving jobs.

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

G&A expenses decreased by US$0.1 million or 1% to US$8.6 million (Q3 FY17: US$8.7 million) mainly due to lower allowance for doubtful debts of US$0.9 million, partially offset by higher legal costs of US$0.8 million.

Finance costs increased by 19% or US$1.2 million due to higher loan balances and interest rates.

The Group’s share of results from joint ventures (“JVs”) registered a loss of US$0.8 million in Q3 FY18 compared to a profit of US$16.0 million in Q3 FY17. This was largely attributed to net loss from POSH Terasea in Q3 FY18 compared to profit in Q3 FY17 when several major towage and positioning projects were completed.

The Group recorded a lower net loss attributable to shareholders of US$5.3 million in Q3 FY18 compared to US$5.8 million in Q3 FY17.

9 Months ended 30 September 2018 ("9M FY18") vs 9 Months ended 30 September 2017 ("9M FY17")

In 9M FY18, the Group registered revenue of US$233.4 million (9M FY17: US$129.7 million), an increase of 80% or US$103.7 million. This was mainly due to improved vessel utilisation across all business segments. As such, the Group recorded gross profit of US$37.8 million in 9M FY18 compared to gross loss of US$12.1 million in 9M FY17.

OSV

OSV segment revenue increased by 29% to US$72.2 million (9M FY17: US$56.2 million), mainly due to higher vessel utilisation of 73% (9M FY17: 59%). Accordingly, the segment recorded lower gross loss of US$0.5 million (9M FY17: US$4.9 million).

OA

OA segment revenue increased by 184% to US$130.4 million (9M FY17: US$45.9 million), mainly due to revenue contribution from POSH Arcadia, from the Shell Prelude project and POSH Xanadu which started work in early March 2018 for the Chevron Big Foot TLP project, and higher utilisation from the rest of the OA vessels. Consequently, the segment registered a gross profit of US$35.0 million in 9M FY18 compared to gross loss of US$11.5 million in 9M FY17.

T&I

T&I segment revenue increased by 26% to US$13.5 million (9M FY17: US$10.8 million), mainly due to higher vessel utilisation of 65% (9M FY17: 39%). The segment therefore registered higher gross profit at US$1.3 million (9M FY17: US$0.8 million).

HSER

HSER segment registered a 2% increase in revenue to US$17.3 million (9M FY17: US$16.9 million), mainly due to higher revenue from heavy lift vessels and more time charter jobs. The lower gross profit of US$2.0 million in 9M FY18 (9M FY17: US$3.6 million) was mainly due to higher operating expenses in 9M FY18.

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

G&A expenses increased by 24% or US$5.0 million to US$25.9 million (9M FY17: US$20.9 million), mainly due to reversal of prior year bonus provision in 9M FY17, increased legal costs as well as higher allowance for doubtful debts in 9M FY18.

Finance costs increased by 33% or US$5.4 million to US$21.6 million (9M FY17: US$16.2 million), mainly due to higher loan balances and interest rates in 9M FY18.

The Group’s share of results from joint ventures (“JVs”) registered a loss of US$1.3 million in 9M FY18 compared to a profit of US$13.8 million in 9M FY17, mainly due to net loss from POSH Terasea as compared to profit in 9M FY17 when several major towage & positioning projects were completed.

The Group's net loss attributable to shareholders decreased to US$18.3 million in 9M FY18 compared to US$35.4 million in 9M FY17.

Statement of Financial Position

The Group's net asset was US$451.0 million as at 30 September 2018.

The Group has net current liabilities of US$182.5 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group reported a lower net cash generated from operating activities of US$20.0 million for 9M FY18 against US$22.4 million for 9M FY17. This was mainly due to higher interest expenses and income taxes and higher funding for working capital.

The Group’s net cash used in investing activities was US$18.0 million in 9M FY18 compared to US$65.5 million in 9M FY17. This was mainly due to lower acquisition of fixed assets and increase in proceeds from disposal of fixed assets.

The Group’s net cash used in financing activities in 9M FY18 was US$1.5 million compared to US$43.7 million net cash generated in 9M FY17. This was mainly due to substantial lower drawdown from revolving credit facilities in 9M FY18.

Commentary

SSAV Posh Xanadu completed her Chevron Bigfoot campaign on 15th October 2018, achieving 100% uptime. She is now undergoing regular maintenance and modifications in preparation for her next charter in Brazil, commencing in first quarter of 2019.

Charter rates for the OA shallow water segment has firmed up over the last few months, and it is expected that this trend will continue in the foreseeable future.

On the other hand, despite more activity, charter rates and utilisation rates for OSVs remained under pressure due to persistent oversupply in this sector. Consequently, the Group expects the carrying value of its OSV fleet to be further impaired by year end, although not to the same extent as in previous years. The impairment amount has yet to be determined, but it is expected to materially impact the results of Q4 2018 and FY2018.