Investor Relations

Unaudited Financial Statements And Dividend Announcement For The Fourth Quarter And Financial Year Ended 30 June 2018

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Unaudited Financial Statements And Dividend Announcement For The Fourth Quarter And Financial Year Ended 30 June 2018

* Included borrowing costs, amounting to US$2.1M (in FY2017) and US$0.5M (in 4Q FY2017), arising from the loans taken up for the acquisition of the Group's Thailand operation, which was capitalised under oil and gas properties previously. The Group incurred US$1.3M and US$0.3M of such borrowing costs in FY2018 and 4Q FY2018 respectively. Please refer to the Company's 2017 Annual Report for further details on the prior year adjustment.

1 "4Q FY2018": Period from 1 April 2018 to 30 June 2018
2 "4Q FY2018": Period from 1 April 2017 to 30 June 2017
3 "FY2018": Period from 1 July 2017 to 30 June 2018
4 "FY2017": Period from 1 July 2016 to 30 June 2017
5 "NM": Not Meaningful

Balance Sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.

Review Of Group Performance

Review for 4Q FY2018 vs 4Q FY2017

Consolidated Statement of Comprehensive Income

Revenue increased by US$0.2M or 16%, from US$1.6M in 4Q FY2017 to US$1.8M in 4Q FY2018, due to the increase in revenue from the oil and gas business segment. The increase in revenue from the oil and gas business segment was due to the increase in average oil price from US$45.47 per barrel in 4Q FY2017 to US$67 per barrel in 4Q FY2018. This was partially offset by a decrease in the Group's share of oil production volume from its Thailand concession of 7,515 barrels, from 35,645 barrels in 4Q FY2017 to 27,109 in 4Q FY2018. Notwithstanding the increase in sales, cost of sales decreased by US$0.4 million or 30%, from US$1.3M in 4Q FY2017 to US$0.9M in 4Q FY2018, mainly as a result of a decrease in the depletion of oil and gas properties from US$0.8 million in 4Q FY2017 to US$0.4M in 4Q FY2018. Accordingly, gross profit increased by US$0.6M, from US$0.3M in 4Q FY2017 to US$0.9M in 4Q FY2018.

Interest income increased by US$0.1M which was mainly due to the interest arising from a long-term loan extended by the Company to an associate company (FIT Global Pte Ltd ("Fit Global")).

Other income decreased by US$22.0M which was mainly due to the absence of a gain on derecognition of deferred consideration of US$22.0M recorded in 4Q FY2017.

Administrative expenses decreased by US$0.4M, from US$0.8M in 4Q FY2017 to US$0.4M in 4Q FY2018, mainly due to a decrease in staff costs.

Finance costs decreased by US$0.3M, from US$0.6M in 4Q FY2017 to US$0.3M in 4Q FY2018, mainly due to the decrease in the Group's borrowings.

Other charges decreased by US$6.3M, from US$7.7M in 4Q FY2017 to US$1.4M in 4Q FY2018, mainly due to the absence of (i) impairment losses on goodwill (US$1.9M) and oil and gas properties (US$5.1M) as the fair valuation of the oil and gas properties exceeded the carry amounts as at end of 4Q FY2018; and (ii) prepayment written off (US$0.7M) in 4Q FY2017. There were no such items in 4Q FY2018. Other charges in 4Q FY2018 related mainly to (i) net foreign exchange loss of US$0.5M due to the weakening of SGD and THB against USD, the Group's reporting currency; (ii) decrease in fair value of a quoted investment security of US$0.2M; and (iii) provision made for bond receivable of US$0.7M pursuant to a conservative review of the recoverability of the bond given the current weak market conditions and the bond issuer's financial position.

Share of results of associate company mainly related to setup-costs in the Company's associate company (Fit Global). The associate company incurred set-up costs in the setting up of its bilateral trading business providing access to exchange-traded and over-the-counter markets, including spot and derivative contracts. The associate company has been generating revenue since the commencement of operations in the second half of 2018.

Income tax expense increased by US$0.3M, from US$0.1M in 4Q FY2017 to US$0.4M in 4Q FY2018, mainly due to higher profit before income tax recorded by the Thailand operation in 4Q FY2018.

As a result of the above, the Group recorded a loss after income tax of US$1.8M in 4Q FY2018, as compared to a profit after income tax of US$13.0M in 4Q FY2017.

Excluding a one-off gain on derecognition of deferred consideration of US$22.0M in 4Q FY2017, the Group recorded a smaller loss after income tax of US$1.8M in 4Q FY2018, as compared to a loss after income tax of US$9.0M in 4Q FY2017.

Consolidated Statement of Financial Position

The Group's non-current assets decreased by US$0.6M, from US$107.0M as at 31 March 2018 to US$106.4M as at 30 June 2018. The decrease was mainly due to (i) the provision made for bond receivable of US$0.7M as mentioned above; (ii) the decrease in investment in associate of US$0.1M which was due to the share of losses for the period; and (ii) the decrease of US$220k in the fair value of a quoted investment security. These decreases were partially offset by the increase in oil and gas properties of US$0.5M.

The Group's current assets decreased by US$0.4M, from US$10.2M as at 31 March 2018 to US$9.8M as at 30 June 2018. The decrease was mainly due to the decrease of US$0.9M in cash and cash equivalents (please refer to the explanation of cash and equivalents under consolidated statement of cash flows below). This was partially offset by the increase of US$0.7M in trade and other receivables, mainly attributed to the increase in amount due from Thailand operation.

The Group's non-current liabilities decreased by US$0.6M, from US$56.7M as at 31 March 2018 to US$56.1M as at 30 June 2018. This was mainly due to the reclassification of bank borrowings, which is due within 1 year, from non-current liabilities to current liabilities. This was partially offset by the increase in deferred tax liabilities in relation to the Thailand operation.

The Group's current liabilities increased by US$1.4M, from US$8.3M as at 31 March 2018 to US$6.9M as at 30 June 2018. The increase was mainly due to the reclassification of bank borrowings, which is due within 1 year, from non-current liabilities to current liabilities, coupled with accruals for drilling cost in relation to the drilling campaign which commenced in late May 2018.

The Group reported a positive working capital position of US$1.5M as at 30 June 2018, as compared to US$3.3M as at 31 March 2018.

The Company's total equity decreased from US$53.6M as at 31 March 2018 to US$51.8M as at 30 June 2018 due to the loss incurred for 4Q FY2018.

Consolidated Statement of Cash Flows in 4Q FY2018

The Group generated net cash of US$0.4M from its operating activities. Major movements of the cash flows from operating activities mainly comprised (i) increase in trade and other receivables of US$0.7M; (ii) increase in trade and other payables of US$0.8M; and (iii) operating cash flows before working capital changes of US$0.2M.

The Group used net cash of US$0.8M for its investing activities mainly related to the drilling campaign in Thailand.

The Group used net cash of US$0.6M for its financing activities mainly related to the repayment of banks borrowing and interest.

As a result of the above, and taking into account foreign currency translation adjustments, cash and cash equivalents decreased by US$0.9M, from US$6.6M as at 31 March 2018 to US$5.7M as at 30 June 2018.

Commentary

The trade war between United States and China is putting pressure on and creating uncertainty for oil demand. On the supply front, Organization of Petroleum Exporting Countries ("OPEC") has been raising their output, while the full impact of the sanctions on Iran oil and instability in Venezuela remains to be seen. Geopolitical influences are at play and oil prices are expected to be affected in the coming 12 months. Despite this, the fundamentals are still strong with global demand for oil expected to grow.

The drilling campaign for the Thailand concessions has been successfully completed for 2018, with three out of three wells encountering hydrocarbons. Technical work and logistics planning are being made for a new drilling campaign in first half of 2019, focusing on in-fill/appraisal wells with the main aim of increasing production.

The Group's associate company, Fit Global, has started its bilateral trading business by providing access and quotes for exchange-traded and over-the-counter markets to its counterparties. Fit Global has been generating revenue since the commencement of operations in the second half of 2018.

The Group will continue to source for new opportunities to grow its business in a prudent manner. The investment business segment is expected to contribute to the Group as the business grows.