KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
18
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resilient against a competitive and softening offshore and
marine sector. Our Offshore Rig Services and Supply
Chain Management (“ORS-SCM”) segment accounted for
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31 December 2014 (“FY2014”). Singapore remained the
largest market for the Group, contributing S$45.6 million or
58.5% to the Group’s revenue.
OPERATIONS REVIEW & OUTLOOK
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MANAGEMENT
The ORS-SCM segment accounted for 88.9% of the
Group’s revenue for FY2014. Revenue was down by
17.3% year-on-year (“y-o-y”) to S$69.3 million for ORS-
SCM. The softening oil and gas market resulted in weaker
demand for rig maintenance and its related services. This
resulted in downward pressure on rates for maintenance of
rigs and the provision of goods and services to customers.
The weak oil & gas outlook was accompanied by the
increasing trend of delays in the arrival of drilling rigs
and offshore support vessels from our customers.
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offshore support services income of S$3.8 million and in
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OPERATIONS AND
FINANCIAL REVIEW
In addition to this, sale of materials decreased by S$12.9
million although S$4.0 million in the previous year can be
attributed to a one-off supply of bunker oil to a customer in
1Q2013. The declines were partially offset by an increase
in chartering and towage income of S$5.0million to S$22.3
million, mainly from an increase in demand from one of our
major customers.
Going forward, the Group expects industry conditions to
remain challenging in 2015. Along with reducing day rates,
the charges for maintenance of rigs and prices for the
provision of goods and services may remain soft as well.
To set us up for the future, improvements are underway
to ensure we have the relevant infrastructure and support
to provide the high standards our clients are accustomed
to. These include new investments into our yard and
surrounding structures, such as a newmulti level workshop
and warehouse. Currently, with our yard at 100 percent
utilization, these investments will increase our yard’s water
depth and remove our space constraints, thus giving us
a more substantial operational capacity and the ability
to take on larger vessels. In addition, we will be able to
undertake the upslip of vessels in our yards, giving us the
ability to do our own maintenance, instead of outsourcing,
thereby reducing our costs. Moreover, moving ahead with
our expansion plans allows us to be in good stead when
the oil and gas industry recovers.
