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Second Quarter Financial Statement Announcement

Financials Archive

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Profit & Loss

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement
2nd Quarter 2017 ("Q2 FY17") vs 2nd Quarter 2016 ("Q2 FY16")

With charter rates and utilisation continuing to be under pressure, market conditions remained challenging. In Q2 FY17, the Group registered revenue of US$42.4 million, 8% decrease from US$46.1 million in Q2 FY16. This was mainly due to lower contribution from OA and HSER segments.

OSV

OSV segment revenue increased by 4% to US$20.5 million (Q2 FY16: US$19.7 million) due to improved utilisation of 64% (Q2 FY16: 58%) mainly attributable to increased deployment of vessels under our long-term charters with a Middle East National Oil Company. Correspondingly, the OSV segment recorded a lower gross loss of US$0.08 million in Q2 FY17 compared to US$2.7 million in Q2 FY16.

OA

OA segment revenue decreased by 24% to US$12.7 million (Q2 FY16: US$16.6 million) as POSH Xanadu, Semi-Submersible Accommodation Vessel ("SSAV"), and two of the Light Construction Vessels ("LCVs") were not deployed during the current quarter. As such, the segment registered gross loss of US$4.3 million as compared to gross profit of US$2.7 million in Q2 FY16.

T&I

T&I segment revenue increased by 8% to US$4.2 million (Q2 FY16: US$3.9 million) mainly due to higher utilisation of 48% (Q2 FY16: 35%). The segment registered an improved gross profit of US$0.5 million (Q2 FY16: US$0.2 million).

HSER

HSER revenue decreased by 15% to US$5.1 million (Q2 FY16: US$6.0 million) mainly due to lower overseas and spot charters for Harbour Tugs.

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

G&A expenses decreased by US$6.4 million or 48% to US$7.0 million (Q2 FY16: US$13.4 million) mainly due to allowance for doubtful debts of US$6.5 million provided in Q2 FY16.

Finance costs increased by 53% or US$1.8 million due to higher loan balances and higher interest rates in Q2 FY17.

The Group's share of results from joint ventures ("JVs") registered a profit of US$4.6 million in Q2 FY17 compared to a loss of US$3.1 million in Q2 FY16. This was largely contributed from POSH Terasea as the JV executed and completed several major towage and positioning projects in Q2 FY17.

The Group recorded a net loss attributable to shareholders of US$9.1 million in Q2 FY17 compared to US$17.5 million in Q2 FY16.

6 Months ended 30 June 2017 ("1H FY17") vs 6 Months ended 30 June 2016 ("1H FY16")

In 1H FY17, the Group registered revenue of US$76.8 million (1H FY16: US$104.8 million), a decrease of 27% or US$28.0 million. This was mainly due to lower charter rates and utilisation across the major business segments. As such, the Group recorded gross loss of US$7.7 million in 1H FY17 compared to gross profit of US$15.9 million in 1H FY16.

OSV

OSV segment revenue decreased by 14% to US$34.9 million (1H FY16: US$40.7 million) mainly due to oversupply of offshore support vessels in the market, which led to reduced charter rates and lower utilisation of 61% (1H FY16: 63%). Consequently, the segment incurred gross loss of US$4.8 million in 1H FY17 (1H FY16: US$3.2 million).

OA

OA segment revenue decreased by 50% to US$22.7 million (1H FY16: US$45.0 million) mainly due to lower revenue contribution from POSH Xanadu (SSAV) which ended its charter in March 2017, and lower utilisation of other accommodation vessels. Consequently, the segment incurred gross loss of US$6.9 million in 1H FY17 compared to gross profit of US$15.0 million in 1H FY16.

T&I

T&I segment revenue decreased by 3% to US$8.4 million (1H FY16: US$8.6 million) mainly due to lower charter rates. However, gross profit was higher at US$1.7 million (1H FY16: US$1.2 million) due to lower operating expenses.

HSER

HSER segment registered a 3% increase in revenue to US$10.8 million (1H FY16: US$10.5 million) mainly due to higher salvage and diving revenue offset by lower charters for Harbour Tugs. The lower gross profit of US$2.2 million in 1H FY17 (1H FY16: US$2.8 million) was due to higher operating costs and depreciation expenses as new vessels were added to the division.

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

G&A expenses decreased by 52% or US$13.4 million to US$12.2 million (1H FY16: US$25.6 million) mainly due to lower allowance for doubtful debts and personnel expenses incurred in 1H FY17.

Finance costs increased by 58% or US$3.6 million to US$9.9 million (1H FY16: US$6.3 million) mainly due to higher loan balances and higher interest rates in 1H FY17.

The Group's share of joint ventures' results decreased by 88% to US$0.2 million in 1H FY17 (1H FY16: US$1.7 million) mainly due to lower vessels utilisation in other JVs, offset by better performance of POSH Terasea in Q2 FY17.

The Group's net loss attributable to shareholders was US$27.5 million in 1H FY17 as compared to US$13.1 million in 1H FY16.

Statement of Financial Position

The Group's net asset was US$658.0 million as at 30 June 2017.

Increase in receivables and other current assets were mainly due to higher turnover days in the period.

The Group has net current liabilities of US$210.5 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group generated net operating cash flow of US$11.6 million in 1H FY17 compared to US$30.6 million in 1H FY16. The lower net operating cash flow was mainly due to higher losses and interest expense offset by working capital changes.

Net cash used in investing activities of US$40.1 million in 1H FY17 (1H FY16: US$64.3 million) was mainly due to payment for vessels under construction.

The Group's net cash generated from financing activities in 1H FY17 was US$28.1 million mainly due to proceeds from bank borrowings (1H FY16: US$31.2 million).

Commentary

Oil prices remained below US$50 per barrel despite efforts by oil producing countries to curb oil production, resulting in a lack of new field development.

The oversupply situation for all vessel categories continues to exert pressure on charter rates and vessel utilisation, and this will have a negative impact on the Group's financial performance for the year.

As at 30 Jun 2017, the Group has deployed six vessels to the Middle East to perform their charter contracts with a National Oil Company and another six vessels will be deployed progressively in 2H FY17.

After the successful towage and positioning of the INPEX Ichthys Central Processing Facilities ("CPF") in Q2 FY17, our POSH Terasea JV will be executing the towage and positioning of the INPEX Ichthys FPSO and the Shell Prelude FLNG platform in Q3 FY17 and the Egina FPSO unit in Q4 FY17. After the positioning of the Shell Prelude FLNG platform is completed, our 750-pax Semi-Submersible Accommodation Vessel, POSH Arcadia will provide accommodation support for the hook-up and commissioning of the project.

While other oil producing regions had slowed down given the weak market conditions, the Middle East and West Africa remain as key regions where oil majors continue to issue tenders for vessel requirements. The Group will continue to participate actively in tenders and focus in these regions.