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Quarterly Report For The Financial Period Ended 31 March 2018

Financials Archive

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Unaudited Condensed Consolidated Statement Of Profit Or Loss
For The Quarter And Year-To-Date Ended 31 March 2018

 Income Statement

Condensed Consolidated Statement Of Financial Position
As At 31 March 2018

Financial Position

Review of performance of the Company and its principal subsidiaries

(a) Financial review for current quarter and financial year to date

Review of performance


(I) Operating Revenue

- Revenue declined by 22% in 1Q 2018 as compared to 1Q 2017 primarily due to reduced charter hire income as a result of the sale of a bareboat chartered vessel in 3Q 2017.

- The utilization rate for ship charter division in 1Q 2018 is lower as compared to 1Q 2017.

(II) Operating expenses

- The operating expenses for 1Q 2018 have also reduced but not in tandem with the decline in revenue mainly due to fixed costs of the vessels.

Material changes in the quarterly results compared to the results of the preceding quarter

Review of performance

Group consolidated revenue has decreased by 31% to RM9.6 million compared to the preceding quarter of RM 13.9 million due lower utilization of vessels.

Loss before tax for the current quarter increased by 47% compared to preceding quarter mainly attributed to the losses incurred in an associate.

Commentary on prospects

Although market sentiments are still cautious, there is more optimism over prospects for the oil and gas industry in light of moderate oil price recovery trend. The Group will continue to manage costs and increase efficiency in this turbulent economic climate to improve our competitiveness and resilience. Riding on our strong foundation, we are confident that the Group will achieve good results going forward.

Based on industry analyst reports, oil prices will hover around USD50 to USD70 per barrel in 2018 as crude prices have rallied on the extension of OPEC and non-OPEC members' production cuts, and the market could refocus on the revival of US shale gas production. Improved oil prices have led to a steady rise in activities as evident in the number of active drilling rigs and this should trigger more business opportunities in the industry.

According to Kenanga Research, tendering activities have been on the rise and oil majors are reviewing projects suggesting that they are relatively more upbeat on the upstream sector following the stabilisation of oil prices.

Petronas' Activity Outlook for 2018-2020 also indicates most upstream sub-segments' activities in 2018 were revised higher compared to the previous report. Research indicates that the upward revision could be due to the delayed work orders last year being pushed to 2018 which may potentially lead to better contract flows and further provide order-book replenishment opportunities for the supporting sectors.

The Group will continue its emphasis on its core activities of ship building, ship charter and ship repair. The Group's shipbuilding division will be looking towards building vessels which have a niche market as well as enhancing its docking (ship repair) facilities, whilst continuous efforts will be taken towards optimising capacity utilisation of the Group's vessels. The Group is also looking at building new vessels that are more energy efficient and environment friendly, in line with tighter environmental regulations in the maritime industry. With the ongoing initiatives in sustainable cost rationalisation and exposures, we believe the Group will be well positioned to tide over the current business challenges.

With the Government lending stronger support to the maritime industry with the recent launch of the Malaysia Shipping Master plan, the country is set to become a self-sufficient and internationally competitive nation, that can benefit us along the maritime industry supply chain.

Barring any unforeseen circumstances or events, The Board is optimistic that demand for offshore marine support vessels will improve with further increased expenditure in offshore oil field development and maintenance work by the oil majors. The outlook seems to be improving in anticipation of a shipping recovery.

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