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Financials Results

Unaudited First Quarter Financial Statements And Related Announcement For The Period Ended 30 June 2018

Financials Archive

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Consolidated Income Statements

Income Statement

Consolidated Statements of Comprehensive Income

Statements of Comprehensive Income

Statements of Financial Position

Statements of Financial Position

Review of the Group's Performance

Revenue

1Q FY2019 vs 1Q FY2018

Revenue

For the three months ended 30 June 2018 ("1Q FY2019"), the Group's revenue was S$15.2 million with a decrease of S$3.2 million or 17.5% compared to S$18.4 million for the corresponding period ended 30 June 2017 ("1Q FY2018"). The decrease was mainly contributed by the decrease of S$2.0 million in the rigging and lifting segment due to completion of projects and low level of activity by our major customers attributed to weak oil prices and decrease of S$1.2 million in the ship chandling segment due to seasonal purchase by Ship chandling customers.

Gross profit

1Q FY2019 vs 1Q FY2018

Gross profit decreased by S$1.0 million or 29.4% from S$3.5 million in 1Q FY2018 to S$2.5 million in 1Q FY2019. The corresponding gross profit margin decreased from 19.1% to 16.4%. The decrease was mainly due to the tighter product margins result from the new pricing policy to enhance the company's competitiveness.

Other operating income (expense)

1Q FY2019 vs 1Q FY2018

Other operating income increased by S$0.8 million in 1Q FY2019 compared to 1Q FY2018 mainly due to gain on disposal of PPE of S$0.4 million in 1Q FY2019 by a subsidiary and net foreign exchange gain of S$0.4 million.

Distribution costs

1Q FY2019 vs 1Q FY2018

Distribution costs in 1Q FY2019 decreased by S$0.2 million compared to S$1.2 million in 1Q FY2018 mainly due to decrease in marketing expenses.

Administrative expenses

1Q FY2019 vs 1Q FY2018

Administrative expenses in 1Q FY2019 did not vary significantly from that of 1Q FY 2018.

Finance cost

1Q FY2019 vs 1Q FY2018

Finance cost in 1Q FY2019 decreased by S$0.2 million compared to 1Q FY2018 mainly due to lower interest of S$0.2 million resulting from the repayment of bank borrowings.

Loss before income tax

As a result of the above reasons, loss before income tax was S$1.7 million for 1Q FY2019.

Review of statement of financial position and cash flows

Current assets

The current assets decreased by S$11.6 million from S$150.2 million as at 31 March 2018 to S$138.6 million as at 30 June 2018. The decrease was mainly due to: (i) a decrease in cash and cash equivalents of S$12.4 million arising from repayment of bank borrowing and loan and (ii) a decrease in inventories by S$2.2 million due to inventories sales during the normal course of business, offset by (i) an increase in trade receivables by S$2.7 million mainly due to sales surge in June 2018, and (ii) an increase in other receivables by S$0.3 million mainly arise from the prepayment and advance payment to supplier.

Non-current assets

The non-current assets decreased by S$0.8 million from S$32.2 million as at 31 March 2018 to S$31.4 million as at 30 June 2018. The decrease was mainly due to a drop in PPE by S$0.8 million (mainly due to depreciation of S$0.9 million in 1Q FY2019 and net additions of PPE of S$0.1 million).

Current liabilities

The current liabilities decreased by S$8.3 million from S$24.5 million as at 31 March 2018 to S$16.2 million as at 30 June 2018. The decrease was mainly due to (i) repayment of bank borrowings and related interest of S$5.4 million (ii) decrease in other payables of S$3.2 million mainly due to repayment of loan from a third party of S$2.0 million, (iii) decrease in provision of restructuring cost of S$0.2 million due to repayment, offset by increase in trade payables of S$0.6 million.

Non-current liabilities

Non-current liabilities decreased by S$2.6 million from S$48.5 million as at 31 March 2018 to S$45.9 million as at 30 June 2018. The decrease mainly due to repayment of bank borrowings amounting to S$2.5 million and repayment of finance lease of S$0.1 million.

Capital, reserves and non-controlling interests

The decrease in shareholder's equity of S$1.4 million mainly due to loss of S$1.7 million during the period offset by the increase in translation reserve of S$0.3 million.

Cash Flows

1Q FY2019 ended 30 June 2018

Net cash used in operating activities

In 1Q FY2019, we have operating cash outflows of S$0.8 million from operating activities before changes in working capital.

Our net working capital ouflow amounted to S$5.5 million. This was mainly due to: (i) bank bills paid off of S$4.3 million, (ii) an increase in trade receivables by S$2.4 million, (iii) decrease in other payables of S$1.2 million, (iv) an increase in other receivables by S$0.2 million, and (v) repayment of provision of S$0.2 million, offset by (i) a decrease inventories by S$2.4 million result from sales during the normal course of business, and (ii) an increase in trade payable by S$0.5 million.

We paid interest for bank bills and income tax of S$0.1 million in total.

Overall, our net cash generated used in operating activities amounted to S$6.4 million.

Net cash from investing activities

Net cash from investing activities amounted to S$0.2 million in 1Q FY2019 mainly due to proceeds from net disposal of PPE of S$0.3 million.

Net cash used in financing activities

Net cash used in financing activities amounted to S$6.8 million in 1Q FY2019. This was mainly due to: (i) the repayment of bank borrowings and related interest of S$4.0 million, (ii) repayment of loan from a third party of S$2.0 million, (iii) the repayment of obligations under finance leases of S$0.2 million, and (iv) restricted cash of S$0.6 million due to covenant agreement with bank.

Commentary

Gaylin Holdings Limited ("Gaylin"), a specialist provider of products, services, and solutions to the global offshore oil & gas and maritime industries, today announced it has narrowed its net loss by 47.4% to S$1.7 million for the 3 months ended 30 June 2018 ("1Q FY2019")* as compared with the preceding quarter ended 31 March 2018 ("4Q FY2018"). This significant quarter-on-quarter (QoQ) improvement was achieved as the new management's revitalization strategies aimed at stabilizing Gaylin's business, realigning the cost base, and driving sales began to gain traction.

In 1Q FY2019, Gaylin's revenue decreased by only 2.2% QoQ to S$15.2 million compared to 4Q FY2018. Rigging and lifting revenue declined by 0.8% QoQ largely due to completion of projects and lower activity levels, particularly in its Middle East operations. At the same time, ship chandling sales fell S$500 thousand due to seasonal buying trends specifically linked to customers that have reduced activity and/or ceased projects, which Gaylin views as an isolated occurrence.

Gaylin has since taken swift action to boost its revenue. It has introduced a new pricing policy to promote sales of slow moving and aged inventory and appointed a new Middle East Regional Director based in Dubai, to spearhead business in its European and Middle Eastern markets. With its increased emphasis on regional business development, Gaylin has also secured additional new customers for its ship chandling segment.

As part of its operations and cost rationalization, Gaylin has listed a number of its owned properties in Singapore for sale and has also initiated the planed relocation of inventory to more cost-efficient storage sites. Gaylin is also actively exploring more costeffective production capabilities for its business.

In addition, Gaylin has kickstarted integration planning for the proposed acquisition of Amos International to realize the full benefits.

While still early, the revitalization initiatives implemented by the executive management team to enhance Gaylin's financial stability and operational competitiveness have already begun to yield results as evident from the reduced net loss in 1Q FY2019. Going forward, we expect our competitiveness and capabilities in our major markets to further improve. Helmed by an experienced management team with proven track records in the global offshore and maritime sectors, we believe the Gaylin of today is wellplaced to capitalize on opportunities as those markets strengthen.

In recent months, global oil prices have seen a rebound with per barrel oil price rising from below US$30 in 2015 to over US$70 causing an increasing sense of optimism across the global offshore services market as well as with Gaylin's management.

* Excludes allowance for slow moving and aged inventories and other non-recurring expenses.

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