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 Dear Shareholders 2010 marked a significant transformation for the Group as we translated vision into reality. We executed several acquisitions to position ourselves as an integrated offshore and marine ("O&M") services specialist, and delivered a credible financial performance as the first fruits of this strategy. Our Transformational Bolt-on Strategy A year ago, we unveiled our strategy to transform Novena Holdings Limited and developed a blueprint for 2010 to re-align our business focus to the O&M industry. We moved rapidly, starting with the acquisition of Viking Airtech Pte Ltd ("Viking Airtech"), a heating, ventilation, air-conditioning and refrigeration systems specialist. This acquisition provided us the perfect platform to launch ourselves into the O&M industry. Following the acquisition, we renamed ourselves Viking Offshore and Marine Limited ("Viking" or "Group") - a re-branding exercise necessary to identify ourselves with our new business focus. Viking Airtech became the pillar of the Group in our "bolt-on" strategy as we endeavoured to build our competence in the mechanical, electrical and electronics engineering services and to become a leading one-stop integrated solutions provider to our customers. During the course of the year, we bolted-on complementary capabilities with the acquisition of Promoter Hydraulics Pte Ltd, one of Singapore's leading suppliers of winches and power packs, followed by Marshal Systems Pte Ltd, a leading integrator for telecommunication systems, fire and gas detection systems, and control and instrumentation systems. We also have a 19.8% interest in Marine Accomm Pte Ltd, an accommodation fit-out specialist for the O&M sector. These companies are renowned specialist companies in their respective fields. Bringing them under the Viking umbrella provides the Group a much more compelling proposition to prospective customers seeking a single solution to their needs. The Group is now able to cross-sell to a larger customer base, deepen its penetration in the existing markets and venture into new markets. Financial Performance – First Fruits of Our Strategy At the same time, as we built our business proposition, we remained focused on delivering financial performance. I am pleased to report that the Group recorded Net Profit After Tax of S$12.7 million and Turnover of S$79.7 million for the financial year ended 31 December 2010 ("FY2010"). These good results were driven largely by the new O&M business acquisitions and compared favourably against the prior year of S$1.0 million and S$37.6 million respectively. The results only tell one part of the story as we recognised full contributions from only one major subsidiary and partial contributions from the other two in the year-under-review. I am pleased to note that more than half of the revenue was contributed by our newly acquired O&M businesses, and almost all of the profits came from them, underlying the success of our new business model. The Group's Earnings Per Share grew from 0.21 cent in 2009 to 2.33 cents in 2010 while Net Asset Value per share grew from 11 cents to 16 cents over the comparative period. Our financial position remains healthy as a significant portion of our balance sheet includes investments in quoted securities. Growth of Shareholder Base Our efforts to raise awareness of our growth strategy, which included active engagement of the investment community, have helped increase our shareholder base from 1,500 at the end of 2009 to 2,200 at the end of 2010. Over the same period, our market capitalisation increased 34% to S$110 million as at 31 December 2010. Although more shares were issued in line with our strategy and continued market volatility, our share price remained resilient and largely unchanged year-on-year. This is testament that you have continued to show faith in the Group and are investing for the long term, for which I express my gratitude. To reward shareholders for their confidence and trust in Viking, the directors have proposed a first and final dividend of 0.3 cent per ordinary share, representing 13% of net profit. Forward Strategy – Joining the Second and Third "i" The transformation in the last 12 months marks the completion of our "Invest" phase of our 3-i strategic blueprint. We have already begun executing the rest of the strategy to "Integrate" and "Internationalise" Viking and become a significant player in the O&M industry. We have relocated all our companies under one roof at a newly acquired facility and have started integrating systems, software, people and marketing capabilities. Our internationalisation efforts include expanding our presence in China, and establishing footholds in emerging markets such as Vietnam, India and Brazil. The O&M industry is on an upturn momentum and we are increasingly seeing new orders from our existing and new customers, translating into more revenue and greater business opportunities for us. From 2011 onwards, the Group will recognise the full contributions from all our newly acquired O&M businesses. This, coupled with the brighter industry outlook, underpins my excitement and confidence for the year ahead. Appreciation It has been a challenging year with so much contributed by so many people. On behalf of the Board, I would like to thank our customers, shareholders, investors, business partners, all our employees and other stakeholders for believing in us when we developed our strategic blueprint and for their unwavering support during its execution. I seek your continued support as we chart the era of a new dawn for growth for Viking. Andy Lim M.A. (Cantab), MBA(UCLA) Chairman & Executive Director |
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