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Email This Print ThisChairman's Statement
Extracted from Annual Report 2017

Dear Shareholders,

FINANCIAL REVIEW

For the financial year ended 31 December 2017 ("FY2017"), the Group registered an increase in revenue of 13.4% year on year ("y-o-y"), achieving record revenue of $172.6 million. The Group reported a net profit of $9.5 million for FY2017 compared to a $9.5 million loss for the year prior. Excluding foreign exchange differences, impairment reversals and allowances, the Group's net profit increased by 8.8% y-o-y to $8.6 million.

We generated net cash from operating activities of $8.2 million and remained in a net cash position with cash and cash equivalents of $26.1 million as at 31 December 2017.

OUR BUSINESS

Our main revenue driver, the Marine and Offshore Supply business, contributed 98% of the Group's revenue. Underpinned by a strengthened global economic outlook, global trade volumes saw gradual improvements during the year, driving higher sales from the marine and offshore supply business. This led to a 14.0% jump in revenue y-o-y to $169.0 million, with revenue increasing year on year across all three geographical segments. Consequently, the Marine and Offshore Supply business achieved a 3.6% y-o-y increase in net profit to $7.6 million for FY2017. The increases in revenue and net profit were also a result of the Group's marketing initiatives, continuing efforts in maintaining strong relationships with key clientele and further widening our reach in existing major markets.

ASSET HELD FOR SALE

Further to the impairment loss which was provided for in FY2016, the Group entered into two full and final deeds of settlement on 8 December 2017 to resolve all disputes on the jointly-owned seismic vessel. This resulted in a reversal of impairment loss of approximately $1.4 million which is reflected in the FY2017 income statement.

OUTLOOK AND PROSPECTS

The marine and offshore sectors were adversely affected in the last couple years by the plunge in oil prices, shipping overcapacity, and muted global economic growth. It may seem that a path to normalcy is afoot, with the stabilisation oil prices and favourable macroeconomic factors coming into play, but the year ahead is not expected to be all smooth sailing. The offshore industry, in particular, continues to remain extremely challenging with further corporate restructuring expected in the short term.

The Group's ongoing strategy remains one of structured pragmatism, aimed at identifying key pockets of opportunity such as container shipping, LNG, product tankers and possibly dry bulkers which could help sustain our growth.

As the industry climate continues to improve, we press ahead with our marketing efforts to capture opportunities in the market. This year, we also fully completed the redevelopment of our existing warehousing infrastructure in Singapore. This added a further 54,000 square feet of warehousing space to our current storage facilities and enhanced our cold chain integrity with increased freezer, chiller and ante-room capability. The acquisition of refrigerated delivery truck, coupled with our impending ISO 22000 and HACCP certifications, will extend our cold chain supply capabilities, enabling us to explore expansion into additional industry sectors.

In the Asia Pacific region, the oil and gas sectors are beginning to display a slow and gradual recovery due to the improvement in oil prices over 2017. That being said, a full recovery is not expected in the foreseeable future as it will take time for upstream companies to increase production and for these increases to be passed down to midstream and services businesses. Depending on global oil demand and economic performance, a pickup in oil supply may result in the oil demand and supply gap holding steady for the year. In Australia and Thailand, where our operations primarily serve the oil and gas sectors, we do see encouraging results. Through a combination of quality supply and reliable service, we were able to secure new customers whilst retaining our existing client base. We will continue to work closely with our business partners to enable us to maintain our position as the market leader in Western Australia and build on our strong foundation in Thailand.

Adopting a systematic and measured approach, we have managed to turn adversity into opportunity, emerging a stronger entity than when we entered into these tough times. Our financial position remains strong and our robust operating cash flow continues to fuel our ability to shore up our operations.

PROPOSED DIVIDENDS

In appreciation to our loyal shareholders, the Board has recommended a final dividend of 0.5 cents per share. During the year, the Group paid out an interim dividend of 0.5 cents per share. Overall, this represents a dividend payout out ratio of 35.8% for FY2017.

APPRECIATION

The Group has achieved a set of excellent results amidst the challenges faced, and it is with sincere gratitude that I recognise my fellow Board members, management team and staff for their dedication and commitment. I would also like to thank our shareholders, partners, suppliers, customers, bankers and business associates for their unwavering support.

SIM YONG TENG
Executive Chairman