Untitled - Swissco Holdings Limited

OPERATIONS REVIEW
Our ship repair and maintenance business reported an increase
in turnover to S$4.1m in FY2005 as compared to S$2.8m in
FY2004. This is attributed to higher demand for ship repair and
maintenance services as a result of the buoyant marine industry.
The ship repair and maintenance business made a profit after
tax of S$657k in FY2005 (S$249K in FY2004). The higher profit
was partly due to tighter credit and cost control.
Gains from other income of S$10.3m in FY2005 (S$4.4m in
FY2004) came mainly from vessel disposals. On the back of a
bullish used tonnage market for offshore support vessels and
barges, the Group capitalized on the situation to dispose,
upgrade and reconfigure its fleet. The increase in demand for
offshore support vessels and other type of vessels has enabled
the Group to dispose of its older and non-core vessels and
replace them with newer and more specialized
support vessels. This is in line with the Group’s fleet
renewal and reconfiguration policies to strategically
focus on such vessels for Oil and Gas industry.
Our associated companies which offer engineering
services and solutions as well as ship chartering
services continue to contribute favourably to the
Group’s performance. They perform similar marine
logistics support services to the Oil and Gas industry
but in different market segments. Some of our
vessels are deployed in their regional operations.
Consequently, their complementary services
boosted our Group’s performance with an
improved contribution of additional S$0.9m in
FY2005 compared to FY2004
For the year in review, our Group’s two core businesses of
providing marine logistics support services to the shipping and
Oil & Gas industries and ship repair and maintenance services
turned in good results. Our Group’s overall performance was
significantly boosted by disposal of vessels as well as healthy
contributions from associated companies.
In FY2005, our Group registered a higher turnover of S$13.9m
(FY2004: S$8.5m). The higher turnover is attributed to the
increase in revenue from offshore vessel chartering and ship
repair services. The Group’s net profit for FY2005 was a record
of S$12.5m (FY2004: S$3.9m) Our gross profit increased from
S$2.0m in FY2004 to S$4.2m in FY2005. The Group made hefty
gains of S$9.4m from vessel disposals and a favourable
contribution of S$2.0m from associated companies.
Our Group’s earnings per share rose to 8.51 cents in FY2005
from 3.07 cents in FY2004. Correspondingly, our net asset
backing per ordinary share increased from 13.27 cents in FY2004
to 21.75 cents in FY2005.
Our Group’s marine logistics support services to the shipping
and Oil & Gas industries saw an increase in turnover as our
new offshore vessels joined the Group’s fleet throughout the
year. The Group experienced a higher demand for our newer
and higher value vessels which contributed to the increased
turnover and gross profit. During the year, the Group took
delivery of 14 vessels and operated a fleet of 19 vessels
(FY2004:19 vessels were operated)
In August 2005, the Company entered into a
restructuring agreement to restructure the
associated companies. Under the agreement, our Company
acquired 27.5% shares of Swiber Holdings Pte Ltd (Swiber
Holdings) in exchange for the Company’s shares in associates
and APECS, The exercise has resulted in a gain from restructuring
of associated companies of S$1.2m.
In October 2005, our associated company, Swiber Holdings,
increased its share capital from S$12m to S$15m by an allotment
of an additional three million ordinary shares at S$2.34 per
share to an independent and unrelated investor. As a result of
the issue of new shares, our Company’s shareholding in Swiber
Holdings is diluted from 27.5% to 22.0% of the total enlarged
share capital of Swiber Holdings. Our Company made a gain
of S$196K from deemed disposal.
Administrative expenses rose from S$2.4m in FY2004 to S$4.6m
in FY2005 primarily due to the recognition of the service
agreements of its key executives and the resultant performance
bonus plan. However, financial and other expenses decreased
from S$1.1m in FY2004 to S$336K in FY2005.
As at year end FY2005 our Company’s debt to equity ratio was
0.17 (FY2004: 0.07). In consequence of our plans to work
towards an optimal fleet size with emphasis on specialized
offshore vessels, we expect our borrowings to increase in FY2006.
Nevertheless, going forward, we will continue to strive to make
every effort to contain our cost and improve our operational
effectiveness and efficiencies.
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