Yinson Annual Report 2018

Being a Group that generates almost its entire revenue from offshore operations, our Group financial results will continue to be exposed to foreign exchange fluctuations – especially between the Ringgit and US Dollar – where the unfavourable foreign exchange movement of RM43.69 million in the current financial year was apparent as compared to the previous financial year. The Management endeavours to minimise such exposure through optimal hedging strategy on contract execution and the use of appropriate market instruments. During the financial year under review, we also saw the contribution from joint ventures deteriorate 47.8% from RM82.46 million to RM43.08 million as a result of the termination of our FPSO PTSC Lam Son bareboat charter contract in June 2017 and scheduled charter contract rate reduction. Nevertheless, the full settlement of the FPSO PTSC Lam Son related loan in January 2018 and the securing of an interim contract in March 2018 were encouraging outcomes. With the Group’s business expansion into Ghana through FPSO JAK chartering contract, our current assets and current liabilities have increased to RM1,234.37 million and RM761.35 million respectively. Stewardship The Group’s liquidity position has since seen the Current Ratio and Net Gearing Ratio strengthen to 1.62 times and 0.90 times respectively in the current financial year under review, as compared to 1.53 times and 1.15 times of the previous financial year post successful deployment of FPSO JAK. For the Net Gearing Ratio in particular, the reduction demonstrates the Group’s strong cash flows which allowed the lowering of outstanding loans and borrowings by RM383.02 million while preserving a relatively stable cash and bank balance of RM637.12 million as at FYE2018. The financial results for FYE2018 ended on a more upbeat note when assessing the Group’s core business profitability by excluding items as indicated in the pie chart on page 15 – Group Financial Highlights (e.g. significant items such as realised and unrealised forex gain/loss and impairment losses). The indicative core profit after tax is RM345.76 million, representing an improvement of RM115.51 million or 50.2% against last financial year of RM230.25 million. Management Discussion and Analysis (Cont’d) 44 Yinson Holdings Berhad Annual Report 2018