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Chairman's Statement
| On behalf of the Board of Directors, it gives me great pleasure to present the Annual Report of Alam Maritim Resources Bhd (AMRB) for the financial year ended 31 December, 2010. |
| Economic Overview |
| In the year under review we witnessed a modest recovery in the world economy with an average growth of about 3.9% after the contraction in 2009. In Asia the outlook remains strong underpinned by strengthening domestic demand. The Malaysian economy in 2010 rebounded by 9.4%, year on year, buoyed by strong exports and a resurgence of demand from the domestic market. Inflation averaged at a manageable rate of slightly less than 2%. In a nutshell, the Malaysian economy seems firmly on the recovery path, with many initiatives undertaken by the Government. |
| Industry Overview |
| Despite the recovery, the oil and gas industry was not growing at similar pace compared to the other economic sectors, judging from the cutback in the investments and postponements of projects. We could say the worst of the global economic meltdown was over but the pace of recovery varied from industry to industry. The oil and gas industry was still in recovery mode and was grappling with such issues as debt over hangs and tight credit facilities. Global demand shrank from about 86 million barrels per day in the first half of 2008 to about 84 million barrels per day in 2010, a decline of some 2 million barrels per day - the biggest decline in over 3 decades. Demand contraction could not have come at a worse time for the industry, which has invested heavily in previous years when prices were peaking and WTI reaching record high of USD147 per barrel in July 2008. Since then prices have been sliding downwards and plunged to a level low USD40 per barrel before gradually strengthening to the current level. And, compounding this was the fact that whilst oil prices and global demand fell, cost remain high - a 50% - 60% decline in oil prices commensurate with a 5% - 6% decline in major costs such as drilling rigs, construction of facilities and prices of commodities. This environment of 'low price and high cost' has adversely impacted the industry's margin, leading to a period of uncertainty and cautious approach by industry players in moving forward. Understandably, we see deferment of projects, cancellations and manpower optimization as we come into 2010. Hence, consequently, we continue to see the 'soft patches' in the oil and gas industry during the year under review while the industry players get their acts adjusted to the new scenario. We believe a full recovery could still be some way away. |
| Financial Hightlights |
| For the year ended 31 December 2010, AMRB posted a net loss of RM13.0 million from a revenue of RM242.2 million. Earnings per share for the year stood at 2.2 sen per share while net tangible assets per share was 60 sen. In contrast to 2009, the financials of 2010 are without a doubt weaker, but then 2010 was not an ordinary or average year, with trials and tribulations at every corner. This is attributable mainly to impairment loss on trade receivables. Under the circumstances we have performed well, keeping the company on a steady course, and we hope to reap the benefits of the better operating environment in 2011. |
| Outlook |
| Bank Negara has recently reported that it expects Malaysia's GDP to grow by about 5% to 6% in 2011 with inflation expected to increase to about 2.5% to 3.5% this year. Numerous transformation efforts including the Economic Transformation Program or ETP, the New Economic Model and the 10th Malaysia Plan, among others, helped boost the sentiment and kick start the economy throughout 2010 and into 2011. Interestingly the oil and gas sector is identified as part of the 12 National Key Economic Areas, which will be emphasized on by the Government. This should not come as a surprise considering the oil and gas sector makes up about 20% of Malaysia's GDP and contributes up to 40% to the government's coffers. With the ETP and the Government's focus on oil and gas sector plus the planned capital expenditure of about RM40 billion by PETRONAS for 2011, we remain positive about the offshore services industry in the years ahead. |
| Strategic Partnership |
| We have taken various strategic steps to ensure that we are well positioned to participate actively in the expected growth of the business sector. Towards the end of 2009 AMRB formed two joint venture companies; Alam Swiber DLB1 (L) Inc and Alam Swiber Offshore (M) Sdn Bhd with SWIBER GROUP, a Singapore based international operator to venture into pipeline installation and offshore construction activities. Alam Swiber took delivery of a pipe laying barge in September last year and is pursuing some projects to keep her employed. In October 2010 AMRB signed a Memorandum of Understanding with state controlled Yayasan Sabah which is aggressively seeking to increase its involvement in the oil and gas industry. The three main areas which Yayasan Sabah and Alam Maritim plan to venture into include pipeline installation, marine services and subsea works. Other than the above, Alam Maritim's unit Alam Maritim (L) Inc also formed a joint venture with Singapore based Pacific Crest Pte Ltd to own an accommodation working barge valued at US$29 million. |
| Corporate Exercise |
| A bonus issue of one for two was approved at the AGM held on 25 June 2010 and in July 2010 the bonus issue amounting to 254,237,816 million shares of RM0.25 each was floated on the Bursa Malaysia. |
| Acknowledgement & Appreciation |
| On behalf of the Board of Directors I would like to bid farewell to YBhg Dato' Mohamed Idris bin Mansor who has left us in April 2010 for a position on the Board of PETRONAS. It was a pleasure working with Dato' Idris on our Board especially with his wealth of experience in the oil and gas industry. We wish him well in his new position with Petronas. I would also like to welcome on board Puan Fina Norhizah binti Haji Baharu Zaman as an Independent Non-Executive director. Her vast experience garnered in PETRONAS, and MISC coupled with her legal background will be an asset for the Board of AMRB. I would like to thank our stakeholders for their continuous trust, support and confidence in AMRB. My sincere appreciation also goes to our customers, shareholders, business associates as well as the various regulatory and government authorities. Last but not least my thanks to the dedicated management team and employees for their commitment and contribution to the success of Alam Maritim. |
| Dato' Captain Ahmad Sufian @ Qurnain bin Abdul Rashid |
| Chairman 29 April 2011 |
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