INTEGRATED marine logistics company Marco Polo Marine said that the increase in its wages, salaries and bonuses in FY2024 was “in line with the expansion plans” that the group had undertaken in recent years.
The company was responding to questions from the Securities Investor Association (Singapore), or Sias, ahead of its annual general meeting on Friday (Jan 17).
Sias had asked the company to justify its “significant increase” in wages, salaries and bonuses from S$8.2 million in FY2023 to about S$11 million in FY2024, given that total revenue declined 3 per cent, and ship repair revenue experienced a substantial drop.
Marco Polo Marine explained that a large part of the bonuses paid out in FY2024 was based on the group’s performance in FY2023, where its revenue and adjusted profit after tax increased 48 per cent and 83 per cent year on year, respectively.
It highlighted that even though revenue declined in FY2024, gross profit and adjusted net profit after tax had a year-on-year increase of 6 per cent and 4 per cent, respectively.
It also noted that one of its three docks was allocated exclusively to the commissioning service operation vessel (CSOV) construction from May to August last year, reducing the group’s capacity for revenue-generating ship repair projects.
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Sias asked the company if the completion timeline for its CSOV had shifted from the first quarter to October last year, followed by the first half of this year. It also wanted to understand the operational challenges or technical complexities that have arisen in the design and construction phases of the CSOV.
The company responded that the CSOV is now “in the final stages of completion and is slated to be ready by end-February”. It cited the shortage of skilled and experienced labour in early 2024 as a factor that led to the delay, which has since been largely resolved.
Marco Polo Marine also confirmed that construction of the CSOV “has remained within the initial budget of US$60 million”.
Sias also queried how the company would compete against Chinese shipyards given that the reopening of China yards resulted in lower demand for ship repair services.
The company replied that while demand for such services had initially declined, it has since “returned to normal”.
“In FY2024, the average utilisation of our docks for ship repair was 91 per cent compared to 84 per cent in FY2023,” it added.
Sias noted that the company announced on Jan 2 that its audited financial statements “contain certain material reclassification differences”, compared with its unaudited financial statements, with differences amounting to as much as S$6.5 million.
The company had said that these adjustments were made as the non-controlling interest balance required an adjustment to correct an arithmetic discrepancy, to which Sias asked for further details.
Marco Polo Marine explained that there was an overstatement of the group’s non-controlling interest balance against its foreign currency translation reserves in its FY2024 results announced on Nov 28, 2024. A reclassification adjustment was thus needed to correct the non-controlling interest balance.
Sias also queried what were the key strategic initiatives that would drive growth in the offshore support vessel segment.
In response, the company pointed out that governments in Asia have set “ambitious, multi-year policy targets” to meet their offshore wind energy demands.
“The sector’s potential for growth is substantial, as many of these projects are still in the early stages or have yet to begin.”
The company thus intends to expand its exposure to the offshore wind energy sector in Asia.
Shares of Marco Polo Marine were down S$0.001 or 1.8 per cent at S$0.055 as at 9.59 am, on Friday.
