Yantai Raffles Buoyed by Marginal Increase

Yantai Raffles Shipyard reported a consolidated revenue of $668 million and a net profit of approx. $19.9 million, a marginal increase from the previous financial year. Gross profit decreased by 14.6% to $79 million, mainly due to an one-off contingency provision for impaired work-in-progress and also, lack of new orders.

Operating profit increased by 59.2% to $46.6 million, mainly as a result of effective foreign exchange hedging which brought net foreign exchange losses to less than S$1 million, as opposed to net losses of S$18.7 million in FY2008. Further, with a view to dispose non-core assets and investment of the Group, YRS reached a settlement for a debt investment and recorded a gain S$5.8 million. In FY2008, there were losses of S$18.5 million on investment in an associated company and mark-to-market available for- sale investments. While a substantial part of the value of the investments has recovered in 2009, the reversal of loss was not reflected in the profit statement as guided by Accounting Standards.

The Group-wide costs control measures have seen reasonable results as evident by savings in administrative expenses of approximately 10.5%. However, interest costs surged by 242% to $13 million, due to a significant higher level of borrowings to support the Group’s working-capital requirement and CAPEX investment. Profit before tax improved by 25.1% to $33 million.

In FY2009, the main Chinese operating subsidiaries of the Group, Yantai CIMC Raffles Offshore Ltd obtained Advance Technology Enterprise status and benefited from tax concession of 15% tax rate for 3 years from FY2009. As a result, profit net of tax further improved by 29.9% to $24 million. Net profit after minority interest reported at $19.9 million, 1.5% up from previous year.

Total assets have grown by 14.8% to $1,439 million, as a result of high working capital requirement at the peak of the projects construction stage. CAPEX investment was lowered by 33% from FY2008, as the Group adopted a prudent approach in view of the uncertain economic environment. External borrowings surged by 118.6% to $646.9 million to support the production and CAPEX requirement. Gearing ratio, as calculated by net debt (borrowing plus payables) over net debt plus equity increased from 50% to 65% as at December 31, 2009. 36.5% of the borrowings are non-current due to successful restructuring of short term debt to 3-years long term debt. Accordingly, liquidity ratio improved to 1.30 as at December 31, 2009 from 1.06 in end of FY2008.

Based on the latest full-year results, the Group's earnings per ordinary share was 9.99 Singapore cents, while net asset value per share was S$2.23. The Group’s existing order book will provide a sustainable revenue stream through to 2011.

Said Mr Mai Bo Liang, Chairman of YRS, "CIMC become the controlling shareholder in Jan 2010 and we are confident that YRS will continue on its path to success in the oil and gas industry. Projects are in advanced production phase and year 2010 will see many deliveries. Going forward, the Group will focus on growing its revenue through securing new orders. In addition, the Group will continue to leverage upon its superior resources to meet the challenges of the future."