Further to the shareholders’ approval at the Extraordinary General Meeting convened on 21 June 2017, Daya Materials Berhad (“DMB” or the “Group”) has today completed the disposal of its offshore subsea construction vessel, Siem Daya 1 (“SD1”) via the disposal of the Group’s wholly-owned subsidiary, Daya Global 1 Pte Ltd (“DG1PL”) to Siem OCV Pte Ltd (“Siem OCV”), an indirect wholly-owned subsidiary of Siem Industries Inc for a total consideration of USD$100 million (equivalent to approximately RM418.5 million).
The disposal of SD1 marks the Group’s exit from its offshore subsea business and is a strategic move for DMB to strengthen the financial position of the Group as the disposal will significantly reduce the Group’s debts by approximately 62% or RM406.9 million from RM660.0 million (as at 31 December 2016) to RM253.1 million, resulting in a significant reduction in its gearing level, as well as enhancing its financial position.
The completion of this disposal will also relieve the Group’s interest expense of approximately RM19 million per annum. Further, all vessel-related operating expenses and depreciation will be eliminated completely, whereby during the last financial year 2016, these expenses amounted to RM35 million.
“This is the beginning of our turnaround plan and we are both optimistic and excited about the Group’s future. Our exit from the offshore subsea business will allow us to focus on our core and profitable businesses and our financial results will no longer be dragged down by this loss-making business. We are now channelling the Group’s resources into infrastructure, especially rail-related projects and are in the midst of negotiating with the relevant parties to secure contracts relating to rail engineering. The successful completion of those negotiations and implementation of those contracts will contribute positively to the Group’s earnings over the next few years. In line with our strategy, our wholly-owned subsidiary Daya OCI Sdn Bhd had on 15 September 2017, entered into a Memorandum of Understanding with Mimos Semiconductor Sdn Bhd, a wholly-owned subsidiary of MIMOS Berhad to collaborate in the provision of a crowd management and passenger system, comprising of information technology data transfer, security information capabilities, monitoring, management and recording of mass people and materials movement for rail or non-rail services systems. Going forward, we foresee the Group’s earnings drivers to be coming from the infrastructure, construction and downstream oil and gas segments. We will be looking to further strengthen our position in the construction sector which has been a profitable segment of the Group. We are also expecting our downstream oil and gas business to continue to perform well given its positive contribution to the Group’s profitability, on the back of our established performance track record and market presence.” said Group Chief Executive Officer, Datuk T. S. Lim.
