First Quarter Results Financial Statement And Related Announcement
Financials Archive
Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
Profit and Loss Statement
Statement of Comprehensive Income
Review of Group Performance
Consolidated Income Statement and Statement of Comprehensive Income
(a) Revenue
Group's revenue increased by US$43.8 million or 29.1%, from US$150.6 million in first quarter ended 31 March 2011 ("1Q2011") to US$194.4 million in 1Q2012. The growth in revenue was due to progressive revenue recognition from the various contracts awarded to the Group in year 2010 and 2011 as works progressed, concentrated in South East Asia and South Asia regions.
(b) Cost of sales and gross profit
In consistent with a higher proportion of revenue, cost of sales increased by US$29.8 million or 23.6%, from US$126.2 million in 1Q2011 to US$156.0 million in 1Q2012. Cost of sales comprises mainly charter hire, sub-contractor cost, material cost, crew salaries and related expenses, depreciation and labor related cost and consumables. In 1Q2012, the Group also recorded higher gross profit margin of 19.8%, as compared to 16.2% in 1Q2011.
(c) Other operating income
Other operating income decreased by US$9.1 million or 82.8%, from US$11.0 million in 1Q2011 to US$1.9 million in 1Q2012. The decrease was due mainly to the followings:
- gain on changes in fair value of financial derivative embedded in the Convertible Bonds of US$6.9 million recorded in 1Q2011; and
- realized gain on interest rate swap contract (related to the multicurrency medium term note) of US$2.9 million in 1Q 2011.
(d) Administrative expenses
Administrative expenses for 1Q2012 increased by US$1.1 million or 8.9%, from US$12.7 million in 1Q2011 to US$13.8 million in 1Q2012. The increase was due mainly to inclusion of first three months depreciation of an office building acquired at end of 1Q2011 and increase in head count. As at 31 March 2012 and 31 March 2011, the Group had 2,604 and 1,962 employees respectively (inclusive of onshore and offshore personnel).
(e) Other operating expenses
Other operating expenses increased by approximately US$1.0 million or 22.8%, from US$4.4 million in 1Q2011 to US$5.5 million in 1Q2012. The increase was due mainly to the changes in fair value of financial derivative embedded in the Convertible Bonds of US$1.8 million.
(f) Share of profit from associates and joint ventures
Share of profit of associates and joint ventures decreased by approximately US$528,000 or 17.6%, from US$3.0 million in 1Q2011 to US$2.5 million in 1Q2012. The decrease was due mainly to certain joint ventures recorded operating losses.
(g) Finance costs
Finance costs decreased by US$1.6 million or 19.9% from US$7.8 million in 1Q2011 to US$6.2 million in 1Q2012. Lower interest expense recorded in 1Q2012 was due to capitalization of borrowing costs that are directly attributable to the construction of a derrick crane barge.
(h) Profit for the period
Given the above, profit for 1Q2012 increased marginally by approximately US$696,000 or 5.9%, from US$11.9 million in 1Q2011 to US$12.5 million in 1Q2012.
Statements of Financial Position
(i) Trade receivables and construction work in progress ("CWIP")
In line with the increase in revenue, Group‘s trade receivables and CWIP increased by US$58.7 million from US$281.4 million as at 31 December 2011 to US$340.2 million as at 31 March 2012. Subsequent to 31 December 2011, the Group received settlement and billing of approximately US$75.0 million.
(j) Inventories
Inventories decreased by US$19.9 million, from US$91.7 million as at 31 December 2011 to US$71.8 million as at 31 March 2012, the decrease was due to continued consumption of materials in project execution.
(k) Other assets and receivables (current)
Other current receivables increased by US$68.0 million from US$118.8 million as at 31 December 2011 to US$186.9 million as at 31 March 2012. The increase was due to:
- increase in various output taxes; and
- advance payments to sub-contractors and suppliers for projects executing in South Asia and advances to associates and joint ventures.
- increase in amount due from associate as a result of partial disposal of shares in a subsidiary with retention of an associate status.
(l) Property, plant and equipment
Property, plant and equipment decreased by US$61.2 million from US$552.7 million as at 31 December 2011 to US$491.6 million as at 31 March 2012. The decrease was due to partial disposal of shares in a subsidiary with retention of an associate status.
Depreciation increased by US$1.3 million or 28.1%, from US$4.7 million in 1Q2011 to US$6.0 million in 1Q2012. The increase was due mainly to addition of the derrick pipelay barge in financial year 2011.
Assets under construction are not depreciated.
(m) Associates and joint ventures
Investment in associates increased by US$1.2 million, from US$110.4 million as at 31 December 2011 to US$111.7 million as at 31 March 2012. The increase was due mainly to share of profit of associates.
Investment in joint ventures decreased by US$1.5 million, from US$20.2 million as at 31 December 2011 to US$18.8 million as at 31 March 2012. The decrease was due mainly to operating losses incurred by the certain joint ventures.
(n) Other assets and receivables (non-current)
Other non-current receivables decreased by US$2.7 million from US$82.8 million as at 31 December 2011 to US$80.2 million as at 31 March 2012, the decrease was due mainly to amortization of capitalized vessel cost.
Other assets and receivables include seller credits granted under the sales and leaseback transactions. The Group has entered into sales and lease back agreements ("Agreements") with several outside parties. Under the Agreements, the Group has granted each buyer of the vessel credit facilities in connection with their purchase of vessel. The seller credits shall serve as security for the obligations of the Group under the respective bareboat charter parties. These deposits will be refunded in the event that the Company decides not to seek for renewal upon the expiry of the Agreement. As such, the seller credits are recorded as deposits in other receivables.
(o) Total current and non-current borrowings
Total current and non-current borrowings include bank loans, bonds, convertible loan notes and finance leases.
Total current and non-current borrowings increased by US$29.3 million from US$577.0 million as at 31 December 2011 to US$606.3 million as at 31 March 2012. The increase was due to higher bank borrowings.
Net debt-to-equity ratio is as follows:
Cross currency interest rate swap contracts relating to the above-mentioned issued notes have been established and creating an effective cash flow hedge against the foreign currency and interest rate movement.
Convertible loan notes
The increased amount of Convertible Bonds represents changes in fair value of financial derivative embedded in the Convertible Bonds of US$4.4 million in 1Q2012, such changes in fair value was accounted for at fair value through profit or loss.
All or some of the Convertible Loan Notes may be redeemed at the option of the relevant holder on 16 October 2012 at 100% of their principal amount.
(p) Other payables (current)
Other current payables decreased by US$9.4 million from US$98.1 million as at 31 December 2011 to US$88.7 million as at 31 March 2012. The decrease was due mainly to lower accrual of project related expenses.
Consolidated Statement of Cash Flows
(q) Cash flow used in operating activities
In 1Q2012, the Group net cash used in operating activities amounted to US$42.3 million, this comprised operating cash flow before working capital changes of US$31.2 million, and adjusted for net working capital outflows of US$69.4 million and income tax and interest payment of US$4.1 million. The net working capital outflows were mainly the result of the followings:
- increase in trade receivables of US$59.8 million;
- increase in other assets receivables of US$73.3 million;
- increase in trade and other payables of US$42.8 million; and
- decrease in inventories of US$19.9 million.
(r) Cash flow used in investing activities
In 1Q2012, the Group's net cash used in investing activities amounting to US$26.8 million, which was due mainly to purchase of property, plant and equipment and capital expenditure of US$28.8 million.
(s) Cash flow generated from financing activities
In 1Q2012, the Group recorded net cash inflow from financing activities of US$79.8 million, which was due mainly to new bank borrowings and proceed on issuance of ordinary shares amounted to total US$169.0 million. This cash inflow was however partially offset by repayment of bank loans amounting to US$72.9 million.
Commentary
Notwithstanding that world economy remains uncertain, largely due to financial instability of the European countries, global offshore oil production has been forecasted to grow steadily, and there is also the constant need for repair and maintenance of oil field infrastructure to ensure smooth production from the oil wells. The growth in offshore production is expected to drive global operation and capital expenditure. With oil prices forecasted to be at sustainable level, the demand for offshore engineering, procurement, installation and construction and support services should remain robust.
As of May 2012, the Group has an order book of approximately US$1.2 billion and it is expected to contribute to the Group's results over the next two years, barring unforeseen circumstances.
The Group continues to strengthen its position as an experienced and reputable offshore service provider within the market and will continue to penetrate into new market. Offshore exploration and development is forecast to increase in prominence in the near-term. Notwithstanding the macroeconomic uncertainty, the management remains confident in the long-term value of oil. With the right resources, a strong fleet of vessels and experienced management team, the Group is well positioned to bid for major contracts and continue to focus on winning new contracts.
Balance Sheet
