KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
07
FY2014 PERFORMANCE
The second half of 2014 saw macro-economic and
geopolitical conditions deteriorate. Key macro indicators
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their recessionary phase whilst China’s economic growth
slowed to its weakest in 24 years. On the geopolitical front,
disparity in the approach to oil supply between Organization
of the Petroleum Exporting Countries (“OPEC”) and non-
OPEC nations is a key reason which has resulted in oil
prices falling almost 50 percent from July 2014 to December
2014, adversely affecting businesses across the broad oil
and gas industry. Additionally, the weakened economies
and slowdown in growth further diminished the demand
for oil and gas related services. In spite of this, the Group
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The falling oil prices resulted in lower demand for oil and
gas related services as companies cut their exploration and
production spending in view of the market conditions. This
put a downward pressure on prices for the maintenance
of rigs, the provision of goods and services, and caused
an upward trend of delays in the arrival of drilling rigs and
offshore support vessels from our customers. As such,
revenue performance by our core Offshore Rig Services
and Supply Chain Management (“ORS-SCM”) segment
recorded a 17.3% dip in revenue to S$69.3 million.
However, the drop in revenue in our ORS-SCM segment
was partially offset by the increase in our revenue stream
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segment saw a jump in revenue contribution to S$8.6 million
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(“FY2013”). Overall, despite stiff competition and downtrends
in the industry, we managed to achieve revenue of S$78.0
million in FY2014, a slight decrease of 8.1%.
The fall in prices in oil and gas related services translated into
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