CH Offshore Customer Debts Weighed Heavily in FY 2013

MarineLink.com October 22, 2013

CH Offshore vessel: Image courtesy of the owners

In its financial year ended 30 June 2013 report Singapore's CH Offshore had to make a full allowance for doubtful trade receivables of US$43.95 million as the debts had been long overdue and payment from the client was not forthcoming. Nevertheless a dividend was declared and chairman, Tan Pong Tyea expressed optimism for the future and noted as follows:

"The financial year ended 30 June 2013 (“FY13”) marked the 10th year since CH Offshore Ltd (the “Company”) became a public limited company on 28 February 2003. Over the last 10 years, the CH Offshore Group (the “Group”) like all other organisations had to ride through global financial woes and economic downturns. Although the going was tough, the Group remained profitable over the years since 2003 till recently.

At the end of FY13, the Group had to make a full allowance for doubtful trade receivables of US$43.95 million as the debts had been long overdue and payment from the client was not forthcoming. Although the allowance of the doubtful trade receivables was made in full, we will continue to ensure no effort is spared to recover this outstanding debt. In the event that we are able to recover the balance, adjustments will be made to the allowance for doubtful trade receivables in the subsequent financial year.

As a result of the full allowance made for doubtful trade receivables, the Group made a loss after tax of US$7.108 million for FY13. This is the first time in 10 years the Group has suffered a loss since the Company became a public limited company. If not for this allowance made, FY13 would have been another profitable year for the Group. Due to the lower operating costs, gross profit after direct depreciation increased 12.1% to US$32.525 million from US$29.025 million for FY12

Dividend
Despite suffering a loss after tax of US$7.108 million for FY13, the directors have decided to recommend a first and final tax-exempt dividend of 1.50 SGD cents per ordinary share which will amount to approximately S$10.576 million (equivalent to US$8.374 million).

To arrive at this decision, the directors have taken into consideration the strength of the Group’s financial position as at 30 June 2013. The Group had accumulated profits of US$170.611 million and surplus cash generated from operations of US$14.404 million during FY13."