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INVESTOR RELATIONS | Financial Information| Financials

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Unaudited Second Quarter And Half-Year Financial Statement and Dividend Announcement for the Period Ended 30 June 2017

Financials Archive

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Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income

Balance Sheet

Balance Sheet

Review of Performance

(A) INCOME STATEMENT/STATEMENT OF COMPREHENSIVE INCOME

Turnover Analysis

Total revenue for the Group reported was US$0.245 million for the financial period ended 30 June 2017.

The Group’s Exploration and Production (E&P) activities in Kampung Minyak (KM) Oil Field generated US$56,000 in 1Q2017. There was no E&P revenue recognized in 2Q2017. This was due to the Group’s reassessment of the KM Oilfield as it was no longer profitable to continue due to high costs of oil production.

There was revenue from Oilfield Services In 2Q2017. This came from the sale of materials and equipment amounting to US$189,000 from the inventories of PT. Prima Petrolium Service. 1H2017 revenue decreased by 26% as compared to that of 1H2016. This indicated a continuing decline in revenue and profitability of the oil and gas industry.

There was Other Income in 2Q2017 of around US$4,000 from Government rebates and realized gain in foreign exchange.

Cost and Earning Analysis

Production expenses fell by US$0.646 million or 81% for 1H2017 in comparison with 1H2016. This was due to cost reduction measures in PKM oilfield production throughout 1H2017.

Staff costs were further reduced to US$0.700 million for 1H2017 as compared to US$1.014 million for same period last year.

Depreciation also declined by 86% in 1H2017 as compared to that of 1H2016.

The total loss for 1H2017 was US$0.491 million. This was a 61% improvement as compared to the results of 1H2016.

There was a profit of US$0.560 million in 2Q2017. This was due to the continuing cost savings measures throughout the Group, as well as the cost reduction measures at KM oil field, which was a huge cost burden. The result led to the continuing impairment of KM Oil and Gas properties in 2Q2017, as well as gain arising from the reversal of non-performing liabilities.

This was the eventual result of the decision by the management to provide impairment on KM Oil Field in FY2016.

(B) BALANCE SHEET/STATEMENT OF FINANCIAL POSTION

Assets & Liabilities

The current assets of the Group as at 30 June 2017 decreased by US$1.933 million as compared to 31 December 2016. This was largely due to a net decrease in cash and short-term deposits by US$2.481 million.

Trade and Other Receivables increased by US0.711 million as at 30 June 2017 as compared to 31 December 2016. This was mainly due to a pending deposit advance due to be received from a third party vendor.

The non-current assets decreased by US$2.844 million in 2Q2017 compared to end 2016. This was due to a continued write down on KM Oil field properties amounting to US$2.397 million in 2Q2017. This was however accompanied by a corresponding reversal of oil field operating liabilities of US$4.740 million in favour of the Group.

As the Group is still working towards an eventual full closure of the KM Oilfield, the non-current liabilities pertaining to KM Oilfield and provisions for oil well decommission will not be discharged until full closure is achieved.

(C) CASHFLOW STATEMENT/STATEMENT OF CASHFLOWS

Cash Flow & Working Capital

As a summary, the cash and cash equivalent position (inclusive of exchange effects) saw a net decrease of US$2.481 million for 1H2017 from end of last financial year 2016.

Cash used in operating activities was US$2.485 million for 1H2017. A significant increase in Trade and Other Receivables was mainly due to a US$1.760 million contract advance pending and due to be received from a 3rd party service provider.

As revenue from E&P operations has ceased since 1Q2017, this led to a negative operating cash flow situation for the Group in 1H2017.

However, the cash balance of US$2.215 million will be sufficient for the Group to take on new businesses which will bring back both profitability and positive cash flow.

Update on Use of Proceeds from the Placement and Convertible Loans

From the placement and convertible loans issued between 2H2013 and 1H2015, the Company managed to raise US$37.46 million in total. The amount from the proceeds unutilised as at 30 June 2017 amounted to US$1.58 million. The list below summarises the usage of these proceeds and they are in accordance with the purpose on the placement and convertible loans.

Commentary

The oil and gas industry remains challenging with the low oil prices for the last one and a half years. We have seen this macroeconomic factor affecting many related services in the industry as well.

However, the Company has been able to continue with its oilfield operations due to prudent financial management in the past years with zero gearing. The Company is now actively engaged to discuss with potential partners in businesses outside of the Oil and Gas industry to remove itself from the SGX watch-list.

KM Oil Field

Weak economic climate in the Indonesian Oil Exploration sector continued into 2Q2017.

Since the Group had decided to provide impairments for KM Oil Field’s fixed assets and full impairment for the KSO concession rights in 4Q2016, costs of production was well contained. However this was done at the expense of further loss of revenue since early February 2017. The reason for stopping production was two-fold, i) to further limit losses, and ii) to diversify its revenue source.

The Group had thus decided to return the KM Oil Field back to Pertamina. The return of the Oilfield to Pertamina is in progress and will be completed soon in the future.

The Group will further update on new concrete business plans later.

Oil field services and trading

The Group’s subsidiaries UniTEQ and Acrux had ceased operations in early 2017 and we have applied with ACRA for the said subsidiaries to be struck off in July 2017.

PT. Prima Petrolium Service (PPPS, or formerly known as PT. Kampung Minyak Energy) had sold off its inventories to another oil and gas operator as the Group moves to contain and cut off non-profitable Oil and Gas business units.

However, the Group still retains minority ownership of the GKM Oil Field in Indonesia, as the diversification strategy to embark on new business does not mean the Group is exiting the Oil and Gas/Energy industry. On the contrary, the Group is still seeking new oil services business opportunities, especially with Chinese companies in the Energy sector.

Proposed new business venture with Malaysia listed company

As previously announced, the Group is looking into diversifying into property and construction business. As such, the Group is seeking partnership with a Malaysia listed public company via a joint venture company for housing development contracts in Malaysia. The project is expected to generate sufficient revenue to assist the Group to return to profitability.

The Group will update more on this new business development as it develops and/or materialize.

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