The Board of CIMC Raffles Offshore (Singapore) Limited said Friday that it expects to report a loss for the financial year ended December 31, 2010. CIMC Raffles Offshore, now a subsidiary of China International Marine Containers (Group) Co. Ltd., owns and manages the biggest offshore construction shipyard in China via its subsidiary, Yantai CIMC Raffles Offshore Ltd.
Friday's announcement said "unforeseen changes in basic design for three semi-submersible rigs and their scope of work have caused significant costs overrun and severe delay. On-going negotiations with the rig-owner on compensation amounts have yet to reach a consensus, thereby resulting in a negative impact on the FY2010 results." The group expects finalization in FY 2011.
New orders intake "was cautiously reduced in order for resources to be focused on delivering existing projects," resulting in significantly higher overheads, operating costs and financing costs.
Despite the disappointing financial results for FY2010, the group expects to "leverage on the valuable experiences gained from delivering three vessels in FY2010 and is confident of delivering remaining projects on schedule. Delivery of external projects will see substantial milestone collections. The completion and sale or lease of internal projects will generate immediate revenue and cash flow in FY2011. The Group will focus on actively pursuing new orders in FY2011. Meanwhile, the Group will continue to upgrade its facilities to better serve its customers' requirements."
The statement said "shareholders of the company and potential investors are advised to exercise caution when dealing in the shares of the company."
February 27, 2011