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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 2019 ("Q2 FY19") vs 2nd Quarter 2018 ("Q2 FY18")

The Group registered revenue of US$74.0 million in Q2 FY19, 11% decrease from US$83.1 million in Q2 FY18. Higher revenue in the OSV and T&I segments were offset by lower contributions from OA and HSER.

OSV

Revenue increased 4% to US$27.1 million (Q2 FY18: US$26.0 million) mainly due to income from mobilising two vessels for work in Mexico. Vessel utilisation was at 74% in Q2 FY2019 (Q2 FY2018: 76%). Due to higher repair and maintenance and mobilisation costs, the segment recorded a gross loss of US$1.1 million in Q2 FY19 compared to US$0.8 million profit in Q2 FY18.

OA

Revenue decreased 43% to US$25.8 million (Q2 FY19: US$45.4 million). In Q2 FY19, POSH Xanadu continued its charter to Petrobras and POSH Arcadia on-hired for a charter in June. This is compared with Q2 FY18, when both of the Group’s Semi-Submersible Accommodation Vessels (“SSAV”) were fully employed. Correspondingly, gross profit declined 56% to US$5.1 million (Q2 FY2018: US$11.6 million). The segment’s performance was mitigated by contribution from the monohull fleet where all four Light Construction Vessels (“LCVs”) and three Multi-Purpose Support Vessels (“MPSVs”) were deployed during the quarter.

T&I

Revenue increased 213% to US$14.5 million (Q2 FY18: US$4.6 million), mainly attributable to contribution from the subsea operations while vessel utilisation for the remaining vessels remain stable at 76% (Q2 FY18: 75%). As a result, the segment registered higher gross profit of US$3.1 million in Q2 FY19 compared to US$0.8 million in the previous corresponding quarter.

HSER

HSER recorded 8% decrease in revenue to US$6.6 million (Q2 FY18: US$7.1 million), mainly due to absence of salvage jobs during Q2 FY19 for the ER business segment. Gross profit grew by 40% to US$1.3 million (Q2 FY18: US$0.9 million) mainly due to higher margin from harbour tugs working overseas.

General & administrative (“G&A”) expenses and other income

General and administrative expenses increased by US$2.0 million or 23% to US$10.4 million (Q2 FY18: US$8.4 million) mainly due to increased legal fees and personnel costs in Q2 FY19.

Finance costs increased by 7% to US$7.8 million (Q2 FY18: US$7.3 million) due to higher interest rates in Q2 FY19.

The Group's share of results from joint ventures (“JVs”) was a loss of US$1.9 million in Q2 FY19 as compared to US$1.0 million loss in Q2 FY18. This was mainly due to lower vessel utilisation of our JV, POSH Terasea.

The Group reported a tax credit of US$1.3 million due to a reversal of overprovision of Australian corporate tax of US$1.4 million.

The Group recorded a net loss attributable to equity holders of the Company of US$8.6 million in Q2 FY19 as compared to US$5.8 million in Q2 FY18.

6 Months ended 30 June 2019 ("1H FY19") vs 6 Months ended 30 June 2018 ("1H FY18")

The Group registered revenue of US$135.8 million in 1H FY19, 12% decrease from US$153.7 million in 1H FY18. Higher revenue in the OSV, T&I and HSER segments were offset by lower contribution from OA.

OSV

Revenue increased 8% to US$51.3 million (1H FY18: US$47.8 million) on improved vessel utilisation of 73% in 1H FY2019 (1H FY18: 72%). However, due to higher repair and maintenance and mobilisation costs, the segment recorded a gross loss of US$1.4 million in 1H FY19 compared profit of US$0.6 million in 1H FY18.

OA

Revenue decreased 41% to US$49.7 million (1H FY18: US$84.3 million). In 1H FY19, POSH Xanadu was deployed for its charter to Petrobras since January and POSH Arcadia on-hired for a charter in June. This is compared with 1H FY18, when both of the Group’s Semi-Submersible Accommodation Vessels (“SSAV”) were fully employed. Correspondingly, gross profit declined 52% to US$10.1 million (1H FY2018: US$21.0 million). The segment’s performance was mitigated by contribution from the monohull fleet where all four Light Construction Vessels (“LCVs”) and three Multi-Purpose Support Vessels (“MPSVs”) were deployed during 1H 2019.

T&I

Revenue increased 128% to US$22.0 million (1H FY18: US$9.7 million) mainly due to contribution from our subsea operations and improved vessel utilisation of 68% from remaining vessels (1H FY18: 63%). As a result, the segment registered higher gross profit of US$4.0 million in 1H FY19 compared to US$1.3 million in the previous corresponding period.

HSER

HSER recorded a 6% increase in revenue to US$12.8 million (1H FY18: US$12.0 million), mainly due to an increase in the number of overseas charters for harbour tugs. Correspondingly, gross profit grew by 80% to US$2.4 million (1H FY18: US$1.4 million), due to higher margins from these overseas charters.

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

General and administrative expenses increased by US$5.0 million or 31% to US$21.0 million (1H FY18: US$16.0 million) mainly due to increased legal fees and personnel costs in 1H FY19.

Finance costs increased by 10% to US$15.5 million (1H FY18: US$14.1 million) due to higher interest rates in 1H FY19.

The Group's share of results from JVs was a loss of US$3.4 million in 1H FY19 as compared to US$0.5 million loss in 1H FY18. This was mainly due to lower vessel utilisation of our JV, POSH Terasea.

The Group recorded a net loss attributable to equity holders of the Company of US$21.4 million in 1H FY19 as compared to US$13.0 million loss in 1H FY18.

Statement of Financial Position

The Group's net asset was US$331.6 million as at 30 June 2019.

The Group has net current liabilities of US$207.3 million mainly due to bank borrowings due within one year.

Statement of Cash Flows

The Group generated negative net operating cash flow of US$10.9 million for 1H FY19. This was mainly due to (i) lower operating gross profit; (ii) legal fee for the Mexico arbitration case and (iii) tax provided for in FY18 and paid in Q2 FY19.

The Group’s net cash used in investing activities was US$0.1 million in 1H FY19, significantly lower than US$9.9 million used in 1H FY18, mainly due to lower spending for acquisition of fixed assets.

Net cash generated from financing activities was US$13.5 million in 1H FY19 (1H FY18: US$2.3 million) mainly due to higher loan drawdowns during 1H FY19.

Commentary

Oversupply of vessels continues to be a drag on charter rates although there are signs of increased activities in select segments. The Group is undertaking a comprehensive review of its business including divesting non-performing assets and investments.

For the OA segment, confirmation has been received that the eight-month charter of POSH Xanadu, which commenced in January 2019, will be extended for another eight months. POSH Arcadia has been hired for short-term work in offshore Malaysia in June 2019. Aside from the two SSAVs, all monohull vessels in the OA fleet were deployed in 1H FY2019, with higher charter rates as compared to the same period in the previous year. The Group expects continued gradual improvement to utilisation and charter rates for the monohull segment for the rest of FY2019.

For the OSV segment, POSH continued to deliver on its 13 long-term charters for a National Oil Company in the Middle East in Q2 FY2019.

The Group saw growth momentum for its two new business segments. POSH Subsea completed two projects in 1H FY2019, and will focus on South Asia and the Middle East for further opportunities. In the renewables sector, POSH Kerry Renewables (“POSH Kerry”) secured several contracts in 1H FY2019 to support offshore survey and preparatory works for windfarm construction in Taiwan. We expect revenue growth from these new business segments in the next 12 months.


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