5
/ MTQ CORPORATION LIMITED /
ANNUAL REPORT
2014/2015
At some point, the impact of reducing reserves and
steadily growing demand will trigger the inevitable
recovery. In the meantime, all our businesses will
focus on opportunities which remain in the market,
working closely with key customers with the focus on
maintenance and other service-related opportunities.
OILFIELD ENGINEERING – POISED FOR
BETTER MARKETS
The Oilfield Engineering business comprises our
engineering facilities in Pandan Loop and Loyang
in Singapore, our facility in Bahrain and the Binder
Engineering Group with facilities in Perth, Australia
and Jakarta, Indonesia. While we recorded a profitable
year for the whole, general activity in our business
areas is weaker in line with overall sentiment. The
exception is in Bahrain where the Middle East market
has been more resilient. Within South-East Asia, our
big challenge has been the decline in drilling asset
utilisation. This has led to increase instances of assets
being stacked due to inactivity.
Our Bahrain revenues continue to increase and we
achieved our best financial performance this year.
Our capabilities as a team continue to raise and we
are making inroads with the key customers within
the region. National oil companies continue to drive
exploration expenditure in the Middle East and it
is noticeable that overall activity remains steady,
consistent with the reported reluctance to concede
market share. Our revenues in Bahrain are more
skewed towards maintenance opportunities which
tend to be less discretionary. However, customers are
looking to achieve cost savings which puts us under
pricing pressure.
The Binder acquisition has been disappointing so far.
Revenue suffered as customers defer planned orders
and activity contracted. Our strategic rationale of
trying to move into more product design aspects of
engineering remain important as is the opportunity
to gain a presence in the domestic Indonesian oil and
gas market. We have had some headcount reduction in
both Perth and Indonesia as we respond to the market
environment. We remain confident that LNG plants
will continue to be developed moving ahead, notably
in markets like Australia, the Middle East, India and the
United States. However, as part of the annual audit
exercise, we concluded that goodwill impairment was
appropriate and a S$5.9 million impairment charge
was recorded for the year.
In Singapore, workshop activity in Loyang and
Pandan Loop has decreased since late 2014. Service
opportunities still exist and remain a focus of the
current sales effort but the challenge is that our
customers are receiving lower revenues for drilling
and hence operate on lower budgets. We had recorded
steady revenues from new manufacturing to help
OEMs fulfill their new equipment deliveries in recent
years. Such opportunities have been reducing and
we are entering a quieter period for new equipment
purchases. We tapped on government incentives to
strengthen machining and cladding capabilities to
better serve our customers. Manpower continues
to remain a challenge, any cost mitigation from not
renewing unneeded foreign workers is balanced by
the real risk of even lower quotas in Singapore. Our
agency business continues to contribute as it focuses
on aftermarket opportunities.
NEPTUNE MARINE – SUSTAINABLE
PERFORMANCE
We are pleased to note that Neptune recorded a
modestly profitable year on the back of revenues
of S$151.9 million. This represents two consecutive
profitable years as part of MTQ. Steady contributions
were recorded by most of the businesses, with focus on
executing well on niche services and packaging services
effectively.
Our activities are focused on shallow water subsea and
production activity. Several major capital projects are
still in their early stages in Australia, notably Gorgon
and Ichthys, so maintenance activity will increase. Much
management effort was spent on growing the trust of
our customers and upgrading management expertise.
At the same time, Neptune are looking to grow their
capabilities in survey and remotely operated vehicles
(“ROV”) in SE Asia. Good progress has been made in
GROUP CEO’S STATEMENT
