Jutal Offshore Oil Services : Ser Announces 2015 Annual Results 2016-03-31

Jutal Offshore Oil Services Limited announces its 2015 annual results on 31 March 2016 at Hong Kong.

Jutal achieved a total revenue of RMB658,566,000 in year 2015, decreased by 30.74% compared with that in year 2014. The gross profit and net profit were RMB128,769,000 and RMB26,714,000 respectively, decreased 30.84% and 6.12% compared with that in year 2013. Basic earnings per share is RMB0.0334.

The Board also announced a final dividend of HK$ 0.01 per ordinary share.

In 2015, global economic growth has generally slowed down and the oil and gas industry reached the trough of its cycle. As the overall oil supply around the world continued to outstrip demand, international oil prices overtook the previous low during the financial crisis. As a result, global capital expenditures on the oil and gas industry as well as the scale of the relevant engineering service market continued to shrink. International oil companies were struggling through this ice age for the industry by adopting measures to control investment and high-risk projects so as to control costs and number of staff.

Since early 2015, we implemented cost and expenditure reducing measures including adjusting and streamlining structure and personnel, slashing and strictly control of various expenses, and optimising production and logistics management in order to enhance operation efficiency and maximise performance. Affected by the industry environment, the number of projects and work orders obtained by the Group fell in 2015 as compared with year 2014.

The contract of the subsea equipment for a deep water natural gas field in Australia was completed and delivered in early 2015 after over 30 months of fabrication since 2012. We achieved a record of zero injury for over 2 million working hours for this project, and the quality of the product exceeded customer's expectation and earned us the honour of 'Year Recognition Contractor of 2014' from the end customer and build up a long-term global strategic partnership with this customer. After the completion and delivery of our first FPSO topside module project at the end of 2014, the Group has taken up another FPSO topside module project in 2015 for another world renowned oil equipment and facility supplier, thereby entering into the mainstream oil and gas fabrication market. Through partnership, we have received high regard from many internationally renowned customers. The newly contracted E-House facility-set manufacturing project, the fabrication of natural gas processing facility for Saudi Arabia and the fabrication of oil processing module to be installed in South America have commenced one by one during the year. We have also undertaken the construction of phase IV of our Zhuhai manufacturing site and installed new equipment and facilities so as to be well prepared for future business development.

Due to reduce of capital expenditures and service budgets of oil enterprises, the business of offshore oil and gas technical support services also declined in 2015. Facing unfavourable market circumstances, we surmounted the challenges by compressing our costs and launching more proactive marketing campaigns. We have also established the Zhoushan branch during the year to expand our business of offshore oil and gas technical support services further into the East China Sea region.

During the reporting year, the shipbuilding industry remained depressed, which has also caused pressure on our business of shipbuilding technical support services. In order to cope with market changes, our Dalian company has shifted its major business to the building of offshore engineering ships and deep water semi-submersible drilling rigs, and offshore engineering fabrication. In the meantime, we applied the successful experience that we learnt through years of collaboration with Dalian Shipbuilding Industry Offshore Company Limited to other markets including Liaohe, Yantai, Qingdao, Shanghai and Guangzhou. It has become the designated on-site drilling rig leg manufacturer in these five drilling platform fabrication sites, realising stable business development.

Our associate, Penglai Jutal Offshore Engineering Heavy Industries Company Limited ('Penglai Jutal'), has adequate work orders during the year. Its manufacturing activities have overall progressed steadily and achieved satisfactory operating results.

The market currently anticipates that global crude oil supply will continue to outstrip demand and international oil prices will stay low in the next few years. As such, international oil companies will insist on limiting scale, upholding efficiency, curtailing investment and cutting costs for a relatively long period. Nevertheless, the leading position of oil and gas over the world will remain unchanged and even become more competitive in the market.

In the coming year, we will implement reforms in terms of our corporate governance. For examples, operating entities and management departments will be streamlined while the allocation of staff, operations and production will have better coordination. Given the current market conditions, we will strictly control fixed asset investment, tighten internal control, optimise management procedures, improve efficiency and reduce costs so as to maintain sound cash flows, strengthen overall competitiveness and maximise our performance.

After years of marketing efforts, we have developed a number of new accounts leveraging on our smooth collaboration with existing customers. The successful deliveries of various quality projects have also earned us good international reputation. Looking ahead to the coming year, we will put additional efforts into marketing, particularly in the Middle East and North America. We will adjust our strategies and focus on key business regions and customers according to market changes.

Capitalising on our advantageous fabrication sites, facilities, technologies and techniques, we will foster our oil and gas fabrication business and module fabrication business, and continue to pursue technological advancements in the oil and gas sector. We will also expand into environmental protection business through studying and developing new operations in order to satisfy customers' needs while gaining new growth momentum.