Ezra Holdings

[freedom]

ezra is capex after capex, never ending one...

sigh...

[d.o.g.]

ezra is capex after capex, never ending one...

It is worse than just unending capex. Ezra also has severe problems with bill collection. I was just showing a friend Ezra's balance sheet and suddenly it became clear that their Deepwater Subsea segment is in deep trouble.

If you look at the FY2008, FY2009 and FY2010 annual reports you will see that the total revenue earned by the Deepwater segment across the 3 years was US$29m, US$46m and US$21m respectively, total of US$96m. But the FY2010 report also discloses that trade receivables for this segment amounted to US$88m as of 31 Aug 2010. In other words, over 90% of the revenues ever recorded in this segment have not been collected.

In FY2010 only US$21m of revenue was recorded, yet receivables outstanding were US$88m. Therefore US$67m of the trade debts were at least one year old. Ezra is refusing to take write-downs on this debt, in particular it claims that US$75m of the trade debt is secured by a drilling permit in waters off New Zealand. The permit is supposedly worth more than the trade debt.

Ezra said the same thing last year when that same debt was over 120 days old as at 30 Aug 2009. So on 31 Aug 2010 the debt was over 485 days old. This debt does not appear to have been collected as of 30 Nov 2010, as total group trade receivables have continued to climb. So this US$75m debt is at least 570 days old, and if we bring it forward to today, the debt is over 650 days old.

650 days is a rather long time to wait for payment. About time they seized this permit and sold it off, I'd think. Who is their auditor, Rip Van Winkle? Oh sorry, it's Ernst & Young. IMHO the auditors have some serious questions to answer as to why they did not force Ezra to either seize and sell the permit, or take an impairment charge for bad debts.

As usual, YMMV.

[Musicwhiz]

To add on to what d.o.g. has mentioned on Ezra's deepwater subsea segment, I've noticed from FY 2010 that gross margins were only 3%! They conveniently omitted the gross margins by division in their 1Q 2011 results. If this is true, then the division is either just marginally profitable or even unprofitable......

So perhaps the deal to AMC is to somehow boost their gross margins and prospects in this segment. Personally I feel Ezra is too ambitious - they should just stick to what they are good at in terms of chartering OSV and doing fabrication and construction instead of always going for growth, growth and more growth. The price to pay may be extremely high, as we shall probably witness in the coming quarters.

Note: I am not vested.

[d.o.g.]

Personally I feel Ezra is too ambitious - they should just stick to what they are good at in terms of chartering OSV and doing fabrication and construction instead of always going for growth, growth and more growth.

I do not know whether Ezra is any good at chartering vessels or fabricating and constructing structures. But it seems that they ARE good at dressing up their financial statements:

1. Sale and leaseback of vessels to create profits and reduce reported debt
2. Accounting for EOC as an associate even though Ezra controls EOC
3. Refusing to impair a trade debt that is 650 days old

The SBA should give them an Innovation Award for their accounting achievements. Or maybe Cosmoprof can give them a Best Makeup award for their financial statements makeover...

[Musicwhiz]

EOC has just released its 2Q FY 2011 results today. Seems net profit dipped slightly for 2Q 2011, and Balance Sheet remains as heavily geared as before. Trade Receivables seems to have gone up yet again! Cash Flow Statement shows no free cash flows for 1H FY 2011.

Ezra will be releasing its results after market close. They always call for a half-day trading halt - I don't know of any other listed company which does this.

(Not Vested in either EOC or Ezra)

[Musicwhiz]

Good news all around! But come to think of it, even when I was vested in Ezra previously, did it ever have a habit of reporting "bad" news?

Business Times - 15 Apr 2011

Ezra's new unit bags US$254m in orders since October

It is also bidding for US$3b worth of work in Asia-Pac and West Africa

By LYNN KAN

SUBSEA player Ezra Holdings' US$250 million purchase of subsea installation specialist Aker Marine Contractors (AMC) last October has quickly reeled in about US$254 million in subsea construction contracts to date.

The latest is also the new merged unit's largest to date. Awarded by Noble Energy, EMAS AMC's subsea installation project is worth US$88 million.

EMAS AMC is expected to start work next year, laying about 330km of umbilicals and subsea equipment, and delivering suction piles and jumpers for the Tamar development in the Mediterranean Sea.

Lionel Lee, managing director of Ezra who relocated to Houston, Texas, after the AMC acquisition, revealed that the unit is actively bidding for about US$3 billion worth of work in the Asia-Pacific region and West Africa.

The newest contract from Noble signals that the company has finally entered the big league in the subsea sector, competing head-on with the largest SURF (subsea umbilicals, risers and flowlines) players like Subsea7, Saipem and Technip, said Mr Lee.

The future for the subsea sector looks bright despite concerns of oversupply, he added.

'From our perspective, contracts are 'combo' projects - heavy lift, pipelay and SURF - because it's easier for oil majors to manage contractors, so you must be able to do all three,' Mr Lee said at a media briefing yesterday.

'We had heavy lift and pipelay, but without AMC, no SURF. The oil majors also didn't look at us because we didn't have experience in that area.

'The beauty of EMAS today is that we have a 20- year history with a 40-year legacy because the track record from AMC starts from 1972.'

AMC's earnings and income kick in only in Ezra's second half of FY2011 but Ezra shifting its heft into the subsea market is already producing gains, going by the sharp increase in revenue from subsea services in its latest H1 2011 results, released yesterday.

Subsea services leapt more than nine-fold from US$3 million in H1 2010 to US$27.1 million this year.

Ezra's profit after tax ended 23 per cent down year-on-year to US$7.9 million in its second quarter ended Feb 28, 2011.

The drop was mainly due to the increase in financial expenses to support Ezra's expansion which jumped to $6.1 million from $2.7 million in the comparable quarter last year.

However, Ezra showed a strong gain in turnover of 33 per cent to US$98.8 million in its Q2 from US$74.5 million last year.

Its results for the first half were similar.

Net profit was down 26 per cent to US$21.2 million from US$28.8 million last year.

Revenue climbed 29 per cent to US$174.8 million from US$135.4 million.

Earnings per share for H1 2011 stands at 2.76 US cents, down from 4.12 cents the year before.

EMAS AMC has also signed a letter of intent to provide subsea support services to an international oil major in Africa worth US$32 million.

Ezra's shares closed unchanged yesterday at $1.77.

[Nick]

http://www.remisiers.org/cms_images/rese...y_DBSV.pdf - Lengthy report from DBSV

(Not Vested)

[Musicwhiz]

Business Times - 17 Jun 2011

Ezra aims for US$300m of subsea jobs in Asia by April

OIL services provider Ezra Holdings aims to win around US$300 million of new subsea service contracts in Asia by April next year as the depletion of shallow fields in the region results in more deepwater drilling projects.

Asia has increased deepwater drilling as the region's shallow water fields get depleted, managing director Lionel Lee said at the Reuters Global and Energy Summit on Wednesday.

Energy demand in the world's fastest-growing nations China and India is surging, forcing companies to push the limits to explore for oil and gas in deeper waters.

The company said earlier this year that it aims to grow its order book to US$1 billion by April 2012.

'The deeper they go, the better it is for us. Most of the deepwater projects are in the US Gulf and the North Sea because they depleted their shallow water fields a long time ago,' said Mr Lee. 'But the depletion is starting to happen in Asia and we're seeing the growth coming from this region. We're bidding for a number of projects.'

Malaysia's Petronas will tap more deepwater reservoirs to sustain its national production, the state oil company's CEO, Shamsul Azhar Abbas, said in Kuala Lumpur last week. He pointed out that the oil industry spent US$2.4 trillion between 2005 and 2010 in order to just keep output steady.

Mr Lee said: 'Regardless of oil prices, national oil companies will need to keep drilling to remain self-sufficient while maintaining their exports.'

Ezra's subsea order book stood at US$276 million spread over five contracts as at April 2011, including projects for Norway's Statoil in the North Sea and Noble Energy in the Mediterranean. It does not have any projects in Asia. Growth in the company's order book to nearly US$1 billion is likely to be split equally between Asia, the North Sea and West Africa, and the US Gulf Coast, Mr Lee said.

Global capital expenditure on subsea projects is expected to grow by almost 34 per cent to US$19.6 billion in 2011, according to energy research firm Infield Systems\. \-- Reuters

(Not Vested)

[Musicwhiz]

Ezra's Q3 net profit falls 75%

By JASMINE NG

Ezra Holdings posted a 75 per cent fall in net profit for the third quarter ended May 31, 2011, hurt by higher financial expenses.

Net profit fell to US$6.65 million from US$26.34 million a year ago.

Revenue for three months rose 51 per cent to US$164.79 million, up from US$108.84 million a year ago.

Ezra said the decrease in net profit was largely due to costs from the integration of AMC, higher overheads and higher financial expenses incurred for its expansion programme.

For the nine months period, net profit fell by 49 per cent to US$27.92 million from US$55.12 million a year ago.

Revenue for the nine months rose 39 per cent to US$339.56 million, up from US$244.29 million.

No dividend was declared for the financial period.

Ezra said it is 'cautiously optimistic' that the outlook on the oil and gas industries will be positive in the next year.

(Not Vested)

[Musicwhiz]

Business Times - 15 Jul 2011

Ezra's subsea order books swell; Q3 profit dives 75%

Aker Marine helps company's revenue hit record US$165m

EZRA Holdings' newly added subsea division held both good news and bad for shareholders.

On the one hand, Ezra's subsea capabilities through its Aker Marine Contractors (AMC) have beefed up its subsea order books. It yesterday announced three letters of awards worth US$85 million for providing subsea services to oil majors, national and independent oil and gas companies across Asia-Pacific.

Yet, the decision to acquire AMC has weighed on its finances.

Ezra posted a 75 per cent slide in net profit for its third quarter ended May 31 to US$6.6 million from US$26.3 million. It attributed the slimmer profits to 'costs from the integration of AMC, higher overheads as well as higher financial expenses in respect of the group's expansion programme'.

At the same time, AMC has helped spur Ezra's quarterly topline to a record US$164.8 million, an increase of 51 per cent from US$108.8 million.

Subsea services from the AMC acquisition added US$37.9 million to the revenue increase, the most out of the three business segments.

Revenue contribution from offshore support services rose US$7.2 million while marine services rang up US$10.9 million more business.

Denting profits for the third quarter were higher finance expenses. This more than doubled to US$6.9 million from US$3.1 million, due to an increase in 'bank term loans and bills payables, issuance of guaranteed notes and convertible bonds to finance the group's expansion plans'.

Ezra announced that it had used US$65.4 million of the US$70 million term loan extended by DBS and HSBC in August 2010.

Ezra has used about 71 per cent or $107.8 million of the $150.9 million proceeds from its rights issue.

Lionel Lee, managing director of Ezra Holdings, said its subsea order books are now over US$300 million.

'This is set to expand further as the subsea construction sector grows in response to depleting shallow fields and increased energy demands from nations such as China and India,' he said.

Ezra yesterday closed at $1.485, down 1.5 cents. It called a halt to trading prior to the release of its financial results.

------------------------------------
Business Times - 15 Jul 2011

Ezra's associate firm EOC eyes second listing in Asia

Oil & gas engineering services company to study Singapore, HK or Taiwan as options

By REPORTS BY LYNN KAN

AN associate company of Ezra Holdings, EOC, is eyeing a second listing in Asia and will consider Singapore, Hong Kong or Taiwan as options.

EOC, an oil and gas engineering services company, has been listed on the Oslo Bors since October 2007.

Energy-hungry Asia-Pacific has tugged at EOC to look for visibility in this part of the world.

As such, a second listing looks attractive to EOC which is 'keen to expand and diversify our shareholder base, as well as tap into new capital markets', said Lim Kwee Keong, EOC's chief executive officer.

The eventual location will be decided based on 'access to the market, liquidity in each market and opportunities for us to use this platform in addition to what we already have in Oslo, for the company's future growth plans', CFO Chan Eng Yew told BT.

EOC will maintain its listing status in Norway as its public float there has helped seize new opportunities in 'crucial segments' in the North Sea, South America and West Africa.

Mr Chan said that new opportunities for the company lie in the floating production, storage and offloading (FPSO) unit market.

'There is renewed interest and a revival in the demand for FPSOs. EOC has the expertise and the resources to participate in this renewed demand,' he said.

Separately, EOC announced that it is in the black for the third quarter ended May 31, with US$3.2 million net profit compared to a loss of US$3.4 million in the comparable period a year ago.

Third-quarter topline jumped nearly three-fold to US$51.7 million from US$18.5 million last year.

EOC successfully broke into the African market last month.

Its accommodation and construction barge, Lewek Chancellor, won a contract worth about US$20 million from a French oil major to provide accommodation and support services for a maintenance project in offshore Africa.

The charter period is for a primary period of eight months, with options to extend by four months and 12 months after that.