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Third 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")

The Group registered a 27% increase in revenue to US$52.8 million as compared to US$41.6 million in Q3 FY16. This was mainly due to higher contribution from OSV and OA segments.

OSV

OSV segment revenue increased by 25% to US$21.1 million (Q3 FY16: US$16.9 million) due to improved utilisation of 72% (Q3 FY16: 59%) mainly attributable to increased deployment of vessels under our long-term charters with a Middle East National Oil Company and vessels chartered out for the Shell Prelude project. While utilisation for Q3 FY17 has improved, the contribution margin was lower due to lower average charter rate which resulted in gross loss of US$0.2 million (Q3 FY16: US$4.4 million).

OA

OA segment revenue increased by 53% to US$23.2 million (Q3 FY16: US$15.2 million) as POSH Arcadia, a Semi-Submersible Accommodation Vessel ("SSAV") started her charter on the Shell Prelude project mid of Aug 2017. However, the segment recorded a gross loss of US$4.6 million in Q3 FY17 compared to gross profit of US$1.8 million in Q3 FY16 as it incurred higher operating expenses in preparing POSH Arcadia for the project while POSH Xanadu ("SSAV") and two of the Light Construction Vessels ("LCVs") remained idle during the quarter.

T&I

With utilisation remaining flat and low charter rates, T&I segment revenue decreased by 37% to US$2.4 million (Q3 FY16: US$3.9 million). With lower gross revenue, the segment registered a gross loss of US$0.9 million in current quarter against a breakeven in Q3 FY16.

HSER

HSER revenue increased by 7% to US$6.1 million (Q3 FY16: US$5.7 million) mainly due to increased jobs from Heavy Lift offset by lower overseas and spot charters for Harbour Tugs. Gross profit improved by 21% to US$1.3 million (Q3 FY16: US$1.1 million).

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

G&A expenses increased by US$2.1 million or 32% to US$8.7 million (Q3 FY16: US$6.6 million) mainly due to allowance for doubtful debts of US$1.8 million made in Q3 FY17.

Finance costs increased by 57% or US$2.3 million due to higher loan balance and higher interest rates in Q3 FY17. The higher loan balance was mainly due to financing for the construction of OSV vessels for the long-term charters in the Middle East.

The Group's share of results from joint ventures ("JVs") registered a profit of US$11.8 million in Q3 FY17 compared to a loss of US$0.06 million in Q3 FY16. This was largely contributed from POSH Terasea as the JV executed and completed several major towage and positioning projects in Q3 FY17.

The Group recorded a lower net loss attributable to shareholders of US$9.8 million in Q3 FY17 compared to US$12.9 million in Q3 FY16.

9 Months ended 30 September 2017 ("9M FY17") vs 9 Months ended 30 September 2016 ("9M FY16")

In 9M FY17, the Group registered revenue of US$129.5 million (9M FY16: US$146.4 million), a decrease of 12% or US$16.9 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$12.1 million in 9M FY17 compared to gross profit of US$14.4 million in 9M FY16.

OSV

With oversupply of offshore support vessels, the deep-water market remains competitive and this led the reduced charter rates and utilisation across all vessels in the OSV segment. In 9M FY17, the segment registered revenue of US$55.9 million (9M FY16: US$57.6 million). However, the segment recorded lower gross loss of US$5.0 million in 9M FY17 (9M FY16: US$7.6 million) due to lower operating expenses.

OA

OA segment revenue decreased by 24% to US$45.9 million (9M FY16: US$60.2 million) mainly due to lower revenue contribution from POSH Xanadu ("SSAV") which ended its charter in March 2017 off-set by contribution from POSH Arcadia ("SSAV"), and lower utilisation of other accommodation vessels. Consequently, the segment incurred gross loss of US$11.5 million in 9M FY17 compared to gross profit of US$16.8 million in 9M FY16.

T&I

T&I segment revenue decreased by 13% to US$10.9 million (9M FY16: US$12.5 million) mainly due to lower charter rates. Consequently, gross profit was lower at US$0.9 million (9M FY16: US$1.2 million).

HSER

HSER segment registered a 4% increase in revenue to US$16.9 million (9M FY16: US$16.1 million) mainly due to higher revenue from Heavy lift, salvage and diving revenue offset by lower charters for Harbour Tugs. The lower gross profit of US$3.6 million in 9M FY17 (9M FY16: US$3.9 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 35% or US$11.3 million to US$20.9 million (9M FY16: US$32.2 million) mainly due to lower allowance for doubtful debts and personnel expenses incurred in 9M FY17.

Finance costs increased by 57% or US$5.9 million to US$16.2 million (9M FY16: US$10.3 million) mainly due to higher interest rates and higher loan balance in 9M FY17. The higher loan balance was mainly due to financing for the construction of OSV vessels for the long-term charters in the Middle East.

The Group's share of joint ventures' results increased by 614% to US$12.0 million in 9M FY17 (9M FY16: US$1.7 million) mainly contributed from POSH Terasea in Q3 FY17 with the completion of several major towage and positioning projects.

The Group's net loss attributable to shareholders was US$37.2 million in 9M FY17 as compared to US$26.0 million in 9M FY16.

Statement of Financial Position

The Group's net asset was US$648.6 million as at 30 September 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$196.9 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group generated net operating cash flow of US$22.4 million in 9M FY17 compared to US$39.1 million in 9M 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$65.4 million in 9M FY17 (9M FY16: US$93.2 million) was mainly due to payment for vessels under construction.

The Group's net cash generated from financing activities in 9M FY17 was US$43.7 million mainly due to proceeds from bank borrowings (9M FY16: US$53.9 million).

Commentary

Offshore oilfield development capital expenditure remains subdued and demand for all categories of offshore vessels remain weak. This will continue to exert significant pressure on charter rates and vessel utilisation and will have a negative impact on the Group's financial performance in the next few quarters.

Under these circumstances, the Group will reassess the carrying value of its fleet and goodwill and further impairments are expected. While the amount is yet to be determined, this will have a material adverse impact on the Group's financial results in Q4 FY17 and the 12 months ending 31 December 2017.

As of Q3 FY17, the Group has deployed six vessels to the Middle East for their long-term charter contracts with a National Oil Company and another six vessels will be deployed progressively by Q4 FY17.

In Q4 FY17, our 750-pax Semi-Submersible Accommodation Vessel ("SSAV"), POSH Arcadia will continue to provide accommodation support for the hook-up and commissioning of the Shell Prelude Floating Liquefied Natural Gas (FLNG) facility. Our JV POSH Terasea having completed the towage of the Shell Prelude platform in Q3 FY17 will be starting the towage of the Egina FPSO in Q4 FY17.

The Middle East and West Africa remain active key regions where oil majors continue to issue tenders for vessel requirements. The Group will continue to focus on and participate actively in tenders in these regions.