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Offshore Support Journal

Offshore Support Journal

POSH eating into losses but impairments will affect next quarter

Mon 13 Nov 2017 by David Foxwell

POSH eating into losses but impairments will affect next quarter
Gerald Seow: “POSH has made headway narrowing losses but must reassess the carrying value of its fleet and goodwill and further impairments are expected”

PACC Offshore Services Holdings (POSH) is making good progress reducing losses and driving down costs but said the next few quarters will be tough, not least because it will have to recognise impairment.

POSH chief executive Captain Gerald Seow said a focus on driving vessel utilisation and cost rationalisation strategies have helped the company navigate challenging market conditions.

“We have made good headway in narrowing losses and, importantly, we continue to generate positive operating cashflow.

“The market seems to have bottomed out but the timing and pace of recovery remains uncertain. We will continue to manage our costs prudently and drive vessel utilisation to meet the challenges ahead.”

The company said that capital expenditure on E&P activity remains subdued and demand for offshore vessels remains weak. This will continue to exert significant pressure on charter rates and vessel utilisation and will have a negative impact on the group’s financial performance in the next few quarters.

Under these circumstances, the group will reassess the carrying value of its fleet and goodwill and further impairments are expected. While the amount is yet to be determined, this will have a material adverse impact on the group’s financial results in Q4 FY2017 and the 12 months ending 31 December 2017.

As of Q3 FY2017, the group had deployed six vessels to the Middle East for long-term charter contracts with a national oil company and another six vessels will be deployed progressively by Q4 FY2017.

In Q4 FY2017, the company’s 750-pax semi-submersible accommodation unit POSH Arcadia will continue to provide accommodation support for the hook-up and commissioning of the Shell Prelude floating liquefied natural gas facility, the POSH Terasea JV having completed the towage of the Prelude facility in Q3 FY2017 and will be executing the towage of the Egina FPSO in Q4 FY2017.

The company said the Middle East and West Africa remain active key regions where oil majors continue to issue tenders for vessel requirements. The group will continue to focus on and participate actively in tenders in these regions.

Q3 FY2017 revenue was up 27% year-on-year to US$52.8M; the net loss attributable to shareholders narrowed by 25% to US$9.8M. Net operating cashflow was at US$10.8M for Q3 FY2017 and net gearing was at 1.1x times as of the end of September.