SAILING THE SEAS OF SUCCESS - Swissco Holdings Limited

OPERATIONS REVIEW
Our Group’s two core businesses are principally to provide
marine logistics support services and ship repair and
maintenance services. In the marine logistics support business,
we charter out our vessels, boats and tugs to the offshore oil
and gas industries and we offer a total one-stop transportation
and logistics service to the shipping industry. Our ship repair
and maintenance services, which is complementary to our
logistics business caters to small to medium sized vessel
owners as well as attend to our own vessels.
In FY04 our Group registered a net profit of S$3.9m (FY03:
S$4.1m) on a lower turnover of S$8.5m (FY03:S$12.1m). The
lower turnover is attributable to mainly lower charter income
as we operate fewer vessels due to the disposal of our older
vessels. This reduced our gross profits by 50% from S$4.1m in
FY03 to S$2.0m in FY04. Nonetheless, the gains from disposal
of vessels, ship repair business and better contributions from
associated companies helped the group to offset the lower
charter income in FY04.
Our Group’s earnings per share dropped to 3.07 cents in FY04
from 3.29 cents in FY03. However, our net asset backing per
ordinary share increased to 13.27 cents in FY04 from 10.17
cents in FY03.
Our marine logistics support business to the shipping and oil
and gas industries saw a reduced turnover due to fewer vessels
in operation as a result of the disposal of our older vessels. In
FY04 we operated a total number of 19 vessels as compared
to 25 vessels in FY03. Gross profits fell as charter of third party
vessels eroded profit margins. However, gains from other
income of $4.3m in FY04 (S$2.0m in FY03) arising from the
disposal of vessels compensated for the lower gross profits. In
view of the buoyant demand for offshore support vessels and
barges, the Group had taken the opportunity to sell off its older
vessels with good gains. This was part of our Group’s strategic
plans to phase out these older vessels in preparation for the
delivery of 14 new vessels throughout FY05.
Our ship repair and maintenance
business reported an increase in
turnover to S$2.8m in FY04 as
compared to S$2.5m in FY03. This
is attributable to higher demand
for ship repairs and maintenance
services as a result of the buoyant
marine industry.
Our associated companies which offer ship
chartering and engineering services are significant
constituent in the Group’s operations. 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 $0.5m in FY04.
During the year, we endeavoured to keep business
costs down with tighter cost and credit control
throughout the Group. However, our Administration
and other operating expenses increased significantly
in FY04 due to the Group’s restructuring and IPO
expenses which are non-recurring. On borrowings,
we have made a conscious effort to maintain a low
gearing. As at year end, our Group’s debt to equity
ratio was 0.07. Moving forward we will continue to
push for better operational efficiencies.
Our ship repair and maintenance business reported an
increase in turnover to S$2.8m in FY04 as compared to S$2.5m
in FY03. This is attributable 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$249k in FY04 (S$43k in FY03) due to
improved cost control and no further requirement to provide
for write down of the ship supply business (RMS), that has since
ceased operations.
ANNUAL REPORT 2004_13