banner

 RSS FeedEmail This Print This Message to Shareholders

extracted from Annual Report 2016

Dear Valued Shareholders,

Sealink Group faced another challenging year and registered a turnover of RM122.9 million, a decline of 13% or RM18.6 million compared to RM141.5 million in FY 2015. Despite a higher loss suffered, net cash flows provided by operating activities amounted to RM46.3 million, which exceeded the corresponding FY 2015 figure by RM14.8 million.

2016 was a challenging year for the oil and gas industry globally. Worldwide, the financial results of oil and gas service providers were impacted by the continued low price environment and excess capacity.

Lower oil prices sharply impacted investments by oil companies. It was the first time since the 1980s that the world has seen a third consecutive year of decline in global exploration and production investments, which fell by approximately 20% annually. Market conditions combined with the outlook described above gave rise to expenditure rationalization by the oil companies and over capacity of vessels, resulting in impairment of vessel carrying values particularly the offshore support vessels.

Despite the market overhang in offshore support vessels, Sealink group sold all three (3) of our newly constructed landing crafts in the 1st half of 2016 delivered to clients in the UAE and Cuba. Although the Group suffered a pre-tax loss of RM63.1 million (after a non cash impairment charge of RM30.5 million), the Group's total liabilities reduced by RM94.7 million with gearing reduced from 65% to 55% as at 31st December 2016. During the FY 2016, the group acquired the remaining 50% ordinary shares of Mitra Angkasa Sdn Bhd, a jointly controlled company. The Group anticipates that it will continue to be able to meet all financial obligations in the coming years and have surplus cash flow for extra expenditures and possible acquisitions.

Although the industry is facing a challenging business environment, we are optimistic on the medium to long term outlook of our business. With the right focus and optimization of our existing portfolio, we believe we can successfully steer the Group through this difficult period. We continue to align our strategy for long-term growth and continue to drive down cost as we position the group to reaccelerate production to capitalize on new opportunities once demand returns.

Appreciation

I wish to express my sincere appreciation to our committed management and staff for their hard work and tireless efforts in maintaining our position as one of the leading oil and gas offshore support vessel providers and shipbuilders in Malaysia. Their dedication and professionalism has definitely helped the Group to compete in a challenging and difficult operating environment.

On behalf of the Board, I would like to take this opportunity to thank our valued institutional and individual shareholders for their confidence and belief in the prospects of the group, the oil companies and clients who have been supporting us over the years, our business associates and principals for the successful collaboration with us in various business operations, our bankers for their continued support in extending the banking facilities and the authorities for their vital role in our strategic planning and execution.

Last but not least, my special thanks to my fellow Directors for their invaluable contributions throughout the financial year.

YONG KIAM SAM
Chief Executive Officer