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First Quarter Results Financial Statement And Related Announcement 2017

Financials Archive

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Consolidated Income Statement

Consolidated Statement Of Comprehensive Income

Balance Sheet

Review of Performance

Revenue

Group's revenue increased by US$13.1 million (17%) for the three months ended 30 November 2016 ("1Q17") when compared to the corresponding period for the three months ended 30 November 2015 ("1Q16").

The increase was mainly due to:

  1. Contributions from two units of multi-purpose support vessels ("MPSVs"), three units of chemical tanker, four units of escort tugs, one unit of scientific research vessel and two units of oil tankers during the financial period; and
  2. Contribution from Strategic Marine Group for the construction of aluminium crew boats and wind farm vessels.

The increase was partially offset by absence of contribution from one unit of SEU – BH320 which was delivered during FY16 and lower contribution from four units of SEU which were at near completion stage as at end of 1Q17. Contributions from all these five units of SEU, collectively, were material during 1Q16.

Gross profit

The decrease in gross profit in 1Q17 from its comparative period was mainly due to lower gross profit margins resulting from different mix of projects and competitive market environment.

Other income, net

Other income increased from US$0.1 million in 1Q16 to US$0.4 million in 1Q17, mainly due to exchange differences.

Administrative expenses

Administrative expenses increased from US$6.6 million in 1Q16 to US$7.3 million in 1Q17, mainly due to increase in expenses related to maintenance of plant and equipment.

Financial expenses

Financial expenses increased from US$1.1 million in 1Q16 to US$1.6 million in 1Q17, mainly due to higher amount of loan drawdowns to finance the working capital of the on-going projects.

Profit before tax

Profit before tax for 1Q17 decreased by US$5.0 million (72%) compared to 1Q16. The decrease was mainly due to lower gross profit generated and higher administrative expenses and financial expenses incurred during the financial period.

Tax

Tax credit for 1Q17 was US$0.1 million, as compared with tax expense of US$0.9 million in 1Q16, mainly resulting from an adjustment of overprovision of tax payable in the prior year.

Review of Statement of Financial Position and Cash Flows:

Non-current assets

The decrease in non-current assets was mainly due to depreciation charged during the financial period. The decrease was partially offset by purchase of operating equipment and upgrade of facilities at two of the yards in Vietnam and additions of the development cost of intangible assets.

Current assets

The increase in current assets was mainly due to:

  1. Increase in inventories and work-in-progress reflecting higher stockholding for the on-going shipbuilding and fabrication projects;
  2. Increase in trade receivables, mainly due to progress revenue recognised on the on-going projects; and
  3. Increase in other receivables arising from higher amount of value added tax claimable for purchase of materials and equipment in Vietnam.

The above increases were partially offset by decrease in amount due from related companies, mainly due to payment received and cash pledged.

Current liabilities

The increase in current liabilities was mainly due to:

  1. Increase in trade payables as a result of purchase of materials and equipment for the on-going projects;
  2. Increase in other payables, mainly due to higher advance billings to customers and accruals for costs of certain equipment delivered during the financial period;
  3. Increase in amount due to related companies in relation to services rendered to the Group; and
  4. Increase in bills payable to banks and bank term loans to fund working capital for the on-going shipbuilding and fabrication projects.

Non-current liabilities

No material change in 1Q17 from its comparative period.

Equity

The increase in shareholders' equity was mainly due to net profit generated during the financial period.

Cash flows

The Group recorded net cash outflow from operating activities of US$23.3 million in 1Q17, mainly due to:

  1. Net increase in inventories and work-in-progress reflecting higher stockholding for the on-going shipbuilding and fabrication projects;
  2. Net increase in trade receivables, mainly due to progressive revenue recognised during the financial period; and
  3. Net increase in other current assets resulting from downpayment payments made to suppliers.

The above were partially offset by:

  1. Net decrease in amount due from related companies, mainly due to payment received; and
  2. Net increase in trade and other payables as a result of purchase of materials and equipment for the ongoing projects and increase in advance billings to customers.

Net cash generated from investing activities was US$7.9 million in 1Q17, mainly due to decrease in cash pledged. This was offset by the purchase of operating equipment and upgrade of the facilities at two of the yards in Vietnam and purchase of intangible assets.

Net cash generated from financing activities was US$15.2 million in 1Q17, as a result of net loan drawdown for working capital.

Financial ratios

The Group's net debt to equity ratio (defined as ratio of total external indebtedness (net of cash and cash equivalents) owing to bank and financial institutions to shareholders' equity) increased from 0.60 to 0.66 times, in 1Q17 compared to FY16. Approximately 96% of the Group borrowings as at 30 November 2016 relates to working capital financing.

Commentary

Over the past 12-18 months, the Group has successfully diversified its clientele base and expanded its product offerings beyond Oil and Gas ("O&G") related assets. This resulted in new product lines being added to its orderbook, such as the chemical tanker, scientific research vessel, windfarm crew transfer vessel and LNGpowered aluminium catamaran. TRIYARDS' primary business segment remains focused on fabricating assets for the full O&G value chain – construction and production, as well as decommissioning, inspection and maintenance of offshore infrastructure servicing the existing offshore fields – thereby also enabling TRIYARDS' products to stay relevant in this difficult market. The Group continues to see interest in its offerings with its diversification strategy initiated despite the current challenging O&G environment.