Chairman's Statement

Chairman's Message

Dear Shareholders,

On behalf of the Board of Directors (“Board”) of Kim Heng Ltd. (“Kim Heng”) and together with its subsidiaries (the “Group”), I present to you our annual report for the financial year ended 31st December 2023 (“FY2023”).

Emerging Stronger

The Group has emerged stronger by achieving remarkable success in terms of revenue growth. Our FY2023 revenue increased by 27% year-on-year (“yoy”) to S$101.2 million mainly due to an increase in revenue of S$15.1 million from the trading of vessels by acquiring vessels at a attractive price and retrofitting by the shipyard to resell for a profit. While the retrofitting had kept the shipyard busy and at the same time enabled the workers to stay relevant and upskilled. Marine offshore support services which included the renewable energy segment saw an increase in revenue of S$6.3 million yoy. This increase was mainly contributed by the Renewable Energy business where revenue increased by S$7.9 million from S$9.8 million from FY2022 to S$17.7 million in FY2023. In line with the increase in revenue, the Group’s FY2023 gross profit improved 18% to S$32.8 million. Administrative and operating expenses were higher yoy mainly due to current inflationary macro environment. Finance cost have also increased due to new loan facillties taken up in FY2023 for vessels financing. In taking into the account of the above, the Group mananaged to achieve a net profit before tax of S$6.1 million for FY2023.

The Group’s strategy to expand into renewable energy not only contributes to environmental sustainability, but also offers economic advantages, regulatory compliance and a positive impact on the company’s reputation. This strategic move can lead to long-term resilience, and a strengthened position in the market.

Securing Contracts and Forming Partnerships

While we have achieved two consecutive profitable years, the Group remains steadfast to strive for a long-term sustainable growth. In this regard, we have made headway in securing new contracts and in forming new partnerships through agreements and memorandums of understanding.

In September 2023, our 50% owned indirect subsidiary, Thaitan International Pte. Ltd. was awarded a contract for the installation of pipe conduits using horizontal directional drilling by Alcatel Submarine Networks relating to the optical submarine installation works in Singapore. Under this contract, the group will provide design, engineering, and installation for the purpose of the HDD works.

In October 2023, our wholly owned subsidiary, Kim Heng Shipbuilding & Engineering Pte Ltd (“KHSE”) was awarded a shipbuilding contract of approximately S$10.6 million by TIPC Marine Corporation, Ltd., which is a subsidiary of state-owned company Taiwan International Ports Corporation. Under this contract, KHSE will provide design, engineering and newbuild of a self-propelled split hopper barge. We are glad that we have made further inroads in Taiwan in securing more newbuild projects and charter contracts. Our proven track records in newbuilds and vessel modifications, successful delivery of several vessels to Taiwanese customers as well as the completion of Horizontal Directional Projects in the Offshore Windfarm is testament of our capability.

Apart from securing new contracts, forming partnerships is another strategic direction to further expand the Group’s business for the future.

In February 2024, Adira Renewables Pte Ltd, the whollyowned subsidiary of Kim Heng together with Soiltech Engineering Co Ltd Korea (“STE”) had signed a vessel framework agreement with an established global offshore windfarm developer in Korea, exclusively over the next 4 years with a 2-year extension option. The Group will provide a geotechnical drilling vessel while STE will provide offshore geotechnical investigation services to the established global offshore windfarm developer for various geotechnical survey projects of their offshore windfarm business in Korea. This strategic collaboration with Soiltech enable us to provide geotechnical investigation services to one of the largest renewables offshore windfarm developers globally. This partnership is yet another a significant step forward for Kim Heng’s diversification into renewable energy.

Furthermore, the Group has also signed a few MOUs. In June 2023, our wholly-owned subsidiary, Kim Heng Offshore & Marine Pte Ltd entered into a non-binding MOU with KOMS CO. LTD. to co-operate in relation to offshore windfarm projects and other offshore projects in South Korea.

In August 2023, our wholly-owned subsidiary, Kim Heng Marine & Oilfield Pte Ltd, signed an MOU with offshore marine services contractor Dyna-Mac Engineering Services Pte. Ltd., a wholly-owned subsidiary of Dyna-Mac Holdings Ltd (“Dyna-Mac”) where Kim Heng will support Dyna-Mac on a preferred partner basis to carry out various projects. This preferred partnership arrangement provides an option for Dyna-Mac to secure the use of Kim Heng’s yard facilities, and at agreed tariff rates. The Group believes that this will be a win-win partnership with Kim Heng offering Dyna-Mac greater flexibility to address the spikes in Floating Production Storage and Offloading (“FPSO”) vessel module fabrication demand and allows it to further entrench its strategic presence in the FPSO module fabrication business, while Kim Heng can benefit by participating in larger, more complex and valuable projects tapping on Dyna-Mac’s know-how and client base in the FPSO module fabrication business. On the offshore rig segment, we have successfully secured several reactivations of Jackup rigs and thrusters removal & installation work for drillships.

As we crossed into 2024, we are expecting more growth in the region for offshore oil & gas exploration and development activation activities. On 12 March 2024, the Group had achieved another significant milestone with the launch and delivery of a 500 cubic meter hopper barge for a Taiwanese customer.

Our wholly-owned subsidiary, Kim Heng Marine & Oilfield Pte Ltd, entered into a non-binding MOU in March with Mansam Pty Ltd, an Australian company with businesses in Southeast Asia, to co-operate in relation to offshore windfarm projects and other offshore projects.

Appreciation and Welcome

Singapore Exchange Regulation (SGX RegCo) announced listing rule changes to limit to nine years the tenure of independent directors serving on the board of listed companies. Mr Ho Boon Chuan Wilson and Mr Ong Sie Hou Raymond, in anticipation of the new rules, relinquished their positions as Independent Directors with effect from 26 April 2023. On behalf of the Board and the Group, I would like to express our appreciation to Mr Ho and Mr Ong for their invaluable contributions during their term as Independent Directors.

The Board welcomed two new Independent Directors, Mr Tran Phuoc and Mr. Tan Kok Kiong Andrew in 2023. Mr Tran Phuoc is a qualified Chartered Accountant with over thirtyfive years of public accounting experience and was a partner with KPMG from year 2000 to year 2020. Mr Andrew past appointments were Managing Director with Temasek International, CEO of both the National Environment Agency and Maritime & Port Authority of Singapore. I believe that their experience and expertise in their respective fields bring with them invaluable contributions. The group is well-positioned with the new board to steer the company to greater heights.

As part of the Group’s succession planning ,the Group has also promoted Mr Justin Tan Wen Hao as the Group’s Deputy CEO. Over the last decade, Mr Justin Tan has held several senior management appointments within our Group including the COO Offshore & Marine and General Manager.

Appreciation to shareholders and staff

In closing, I would like to thank all our stakeholders for their unwavering support and confidence in Kim Heng. With another profitable year, the Group is recommending a final dividend of S$0.2126 Singapore cents per ordinary share. On behalf of the Board, I would also like to commend the diligence of our management and staff. We have overcome past challenging years with resilience and managed to achieve two consecutive profitable financial years. Together, we will continue to set new milestones and explore avenues for sustainable growth.

Thomas Tan Keng Siong
Executive Chairman & Chief Executive Officer