aban offshore ltd Management discussions


Global economy

Overview: The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

Global FDI inflows – equity, reinvested earnings and other capital – declined 24% to nearly USD 1.28 trillion in 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023). (Source: OECD, WTO data) The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%)

2022 2021
World output 3.2 5.9
Advanced economies 2.5 5
Emerging and developing economies 3.8 6.3

Performance of major economies

United States: Reported GDP growth of 2.1% compared to 5.9% in 2021 China: GDP growth was 3% in 2022 compared to 8.1% in 2021 United Kingdom: GDP grew by 4.1% in 2022 compared to 7.6% in 2021 Japan: GDP grew 1.7% in 2022 compared to 1.6% in 2021 Germany: GDP grew 1.8% compared to 2.6% in 2021

[Source: PWC report, EY report, IMF data, OECD data] .

Outlook

The global economy is expected to grow 2.8% in 2023, influenced by the ongoing Russia-Ukraine conflict.

Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, the European Union, India, Japan, the UK and South Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. The energy shock in Europe did not result in a recession and significant developments, including Chinas progressive departure from its strict zero-covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth (Source: IMF).

Indian economy

Overview: Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth was 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation (Source: IMF, World Bank)

Growth of the Indian economy

  FY 20 FY 21 FY 22 FY23
Real GDP growth(%) 3.7 -6.6% 9.1 7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

  Q1FY23 Q2FY23 Q3FY23 Q4FY23
Real GDP growth (%) 13.1 6.2 4.5 6.1

(Source: Budget FY24; Economy Projections, RBI projections)

According to the India Meteorological Department, the financial year 2023 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 million metric tons (MMT) in FY 2022-23 from 107 MMT in the preceding year. Rice production at 132 million metric tons (MMT) was almost at par with the previous year. Pulses acreage grew to 31 million hectares from 28 million hectares. Due to a renewed focus, oilseed area increased by 7.31% from 102.36 lakh hectares in FY 2021-22 to 109.84 lakh hectares in FY 2022-23.

Indias auto industry grew 21% in FY23; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 million units, crossing the previous high of 3.2 million units in FY19. The commercial vehicles segment grew by 33%. Two-wheeler sales fell to a seven-year low; the three-wheeler category grew 84%.

Till the end of Q3FY23, the banking systems total gross non-performing assets (NPAs) fell to 4.5% from 6.5% a year ago. Gross NPA for FY23 was expected to be 4.2% and a further drop is predicted to be 3.8% in FY2023-24.

As Indias domestic demand remained steady amidst a global slowdown, import growth in FY23 was estimated at 16.5% to USD 714 billion as against USD 613 billion in FY22. Indias merchandise exports were up 6% to USD 447 billion. Indias total exports (merchandise and services) grew 14% to a record of USD 775 billion and is expected to touch USD 900 billion in FY2023-24. Indias current account deficit, a crucial indicator of the countrys balance of payments position, was USD 67 billion or 2% of GDP. Indias fiscal deficit was in nominal terms at ~ Rs 17.55 lakh crore, which is 6.4% of the countrys GDP for the year ending 31 March, 2023.

Indias headline foreign direct investment (FDI) numbers rose to a record USD 84.8 billion in FY 2021-22, However, during the fiscal year 2022-23, the country experienced a 16% decrease in foreign direct investment (FDI) inflows, amounting to USD 71 billion on a gross basis. This decline can be attributed to the unfavourable global economic conditions and stands as the first contraction in FDI in the past ten years.

Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of approximately USD 70 billion in FY 2022-23, primarily influenced by rising inflation and interest rates. Starting from USD 606.47 billion on April 1, 2022, reserves decreased to USD 578.44 billion by March 31, 2023. The Indian currency also weakened during this period, with the exchange rate weakening from Rs. 75.91 to a US dollar to Rs. 82.34 by 31 March, 2023, driven by a stronger dollar and an increasing current account deficit. Despite these factors, India continued to attract investable capital. The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months. Indias total industrial output for FY23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on-year as against a growth of 11.4% in FY 2021-22. India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in FY23. As of March 2023, Indias unemployment rate was 7.8%. In FY 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE 2022-23. The government is also estimated to have addressed 77% of its disinvestment target in FY23 (Rs 50,000 crore against a target of Rs 65,000 crore). The total gross collection for FY23 was Rs 18.10 lakh crore, an average of Rs 1.51 lakh a month and up 22% from FY22, Indias monthly goods and services tax (GST) collections hit the second highest ever in March 2023 to Rs. 1.6 lakh crore. For FY 2022–23, the government collected Rs 16.61 lakh crore in direct taxes, according to data from the Finance Ministry. This amount was 17.6% more than what was collected in the previous fiscal.

Per capita income almost doubled in nine years to Rs 172,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was 2,320 USD (March 2023), close to the magic figure of USD 2500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3% in FY 2022-23.

Outlook: There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and an appreciable decline in consumer price index inflation to less than 5% in April 2023. India is expected to grow around 6-6.5% (as per various sources) in FY2024, catalysed in no small measure by the governments 35% capital expenditure. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation could trend down. Private sector investments could revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead, moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in FY 2022-23 was 10,993 kilometers; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year. The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP growth of 7.2%; America and Europe are experiencing their highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in various sectors and emerge as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates. India is less exposed to Chinese economic weakness, with much less direct trade with China than many Asian peers.

Broad-based credit growth, improving capacity utilisation, governments thrust on capital spending and infrastructure should bolster investment activity. According to our surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions and slowing external demand. (Source: IMF data, RBI data, Union budget 2023-24 data, CRISIL report, Ministry of Trade & Commerce, NSO data)

Union Budget FY 2023-24 provisions

The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to Rs. 10 lakh crores, equivalent to 3.3% of GDP and almost three times the 2019-20 outlay, through various projects like PM Gati-shakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of Rs. 5.94 lakh crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly Rs. 20,000 crores was made for the PM Gati-Shakti National Master Plan to catalyse the infrastructure sector. An outlay of Rs. 1.97 lakh crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services

Global crude oil sector overview

The global crude oil market size was pegged at USD 2747.78 billion in 2022. The Russia-Ukraine war disrupted global economic recovery from the COVID-19 pandemic, resulting in economic sanctions, a surge in commodity prices, supply chain disruptions and inflation across goods and services. The demand for crude oil was estimated at 99.4 million barrels per day in 2022. Crude oil prices increased in the first half of 2022 due to Russias full-scale invasion of Ukraine. The combination of Russias invasion of Ukraine with low global crude oil inventories lifted the crude oil price to the highest inflation-adjusted price since 2014. Crude oil prices generally decreased from June 8 till the remainder of 2022 as concerns about possible economic recession reduced demand. Asia-Pacific emerged as the largest contributor to the growth of the global crude oil market in 2022. The Organization of Petroleum Exporting Countries (OPEC) and its partners like Russia reduced crude oil production by 100,000 barrels per day from October 2022. As of 2022, OPEC produces about 40 % of the worlds crude oil and OPEC oil exports represent about 60 % of the total petroleum traded internationally. the growth in U.S. crude oil production is expected to reach record levels of 12.6 million barrels per day in 2023. (Source: Statista, Business Research Company, EIA).

Outlook

Global oil demand is expected to rise to a record 101.7 million barrels per day in 2023. The global crude oil market is expected to grow at a CAGR of 5.7% to USD 2904.09 billion in 2023 and USD 3481.5 billion in 2027, catalysed by a growing demand for fossil fuels especially in China and India following enhanced price stability. Global crude oil prices are expected to remain range-bound in 2023 but could increase towards the second half of 2023 as the effects of Chinas easing Covid restrictions percolate, coupled with Indias consistent appetite for Russian crude. (Source: IEA)

Indian crude oil sector overview

The Indian oil and gas industry is placed among its eight core industries. Indias economic growth is closely related to its energy demand as the need for oil and gas is expected to increase corresponding to increased GDP. India is the third largest consumer and importer of crude oil, accounting for 4.6% of the worlds total consumption. Indias crude oil production stood at 28.2 million tons in FY 2022-23 which was lower compared to 29.3 million tons produced in FY 2021-22. The countrys crude oil production declined due to aging fields where a natural production decline set in. Indian oil companies invested in technologies to maintain output and boost recovery. With demand returning, India consumed a total of 222.30 million tons of petroleum products in FY 2022-23, 10.2% higher year-on-year (YoY).

Indias crude import bill expanded to USD 158 billion in FY 2022-23 from USD 121 billion in the previous year. The growth in crude oil imports was on account of a supply squeeze by a producers cartel. According to OPEC, Indias demand for oil products is expected to rise from 4.77 million barrels per day in FY 2022 to 5.14 million barrels per day in FY 2023. (Source: Economic Times, IBEF) Outlook: Energy demand in India is anticipated to grow faster than all major economies globally on the back of robust economic growth. Indias crude oil consumption is expected to grow at a CAGR of 5.14% to 500 million tons by 2040 from 222.30 million tons in FY 2023. Indias oil consumption is expected to increase from 5.14 million barrels per day in FY 2023 to 7.2 million barrels per day in 2030. India aims to double its oil refining capacity to 450-500 million tons by 2030 (Source: IEA)

Global drilling and offshore rigs industry

The global offshore drilling rigs market is estimated to grow at a CAGR of 6.6% from USD 81.22 billion in 2022 to USD 127.72 billion in 2029. Growth in the number of exploratory wells coupled with improved viability of deep water and ultra-deep water due to technological innovation is expected to drive the global drilling and offshore rigs industry. The Middle East remained the largest region in the offshore drilling rigs market in 2022. The Middle East and Africa are expected to be the fastest-growing regions between 2022 and 2029. According to RYSTAD Energy, offshore drilling activity was expected to increase year-on-year by 10% in both 2021 and 2022. This is expected to increase the number of offshore wells drilled to nearly 2,500 in 2021 and surpass 2,700 in 2022. The global deep-water and ultra-deep-water drilling market is expected to grow at a CAGR of 9% between 2023 and 2028 aided by the advancements in offshore pressure management technology and various government initiatives. This is expected to drive the growth of the global drilling and offshore rigs industry.

The floating rigs segment is expected to have lucrative growth between 2021 and 2028 due to rising shallow and deep-water explorations and an increase in the number of investments from operators, especially for deep and ultra-deep-water activities. It is among the most important segments of oil field production chain as it provides services and equipment to oil explorers, producers and facilitates the transportation of crude oil and natural gas. (Source: market-watch.com, globenewswire)

Global jack-up rig market

At a compounded annual growth rate(CAGR) of 5.24% during the forecast period of 2021-2026, the global jack-up rig market is expected to experience significant growth, estimated to reach USD 3.43 billion by 2026. Consumption of oil and gas is expected to remain stable due to rising industrialization in India and China. The APAC region is expected to account for roughly 40% of this growth. Global consumption of oil and gas energy has resulted in high demand for these products, driving up the market growth during the forecasted period. (Source: technavio.com)

Growth drivers

A traditional upcycle is taking shape:

There is a noticeable traditional upswing occurring in the jack-up market. In recent quarters, there has been a consistent rise in the demand for jack-ups, leading to a marketed utilization rate of over 90% for premium jack-ups. Historically, such high utilization rates have given drilling contractors the ability to dictate pricing terms..

Overcoming the fragmentation challenge: The jack-up market has grappled with fragmented ownership and a dearth of pricing discipline for a considerable amount of time. This has been largely due to the fact that local contractors are fully engaged, resulting in a small number of global contractors having control over the bulk of available supply. However, there appears to be a favorable trend emerging in the industry that shows a distinct relationship between margins and utilisation.

Utilisation and day rates trending higher: The modern jack-up market is experiencing higher levels of activity, resulting in increased utilisation and day rates. Modern rigs are highly sought after and remain the preferred option for many contractors. Additionally, there is a noticeable spread in day rates between jobs secured by local contractors and international contractors, with leading-edge day rates for premium jack-ups ranging between USD 110,000 and 130,000 across most regions. Ongoing tenders have also tested even higher day rates highlighting the upward trend in pricing discipline in the industry.

Broad-based recovery: Although the Middle East was the primary focus of the markets recovery in 2022, positive trends are apparent in several other regions such as West Africa, Malaysia, India, Mexico and the North Sea.

National oil companies becoming more in_uential: Over the last two decades, the growing significance of national oil companies ("NOCs") has been a noteworthy trend in the jack-up market. In 2000, NOCs accounted for approximately 30% of total jack-up demand. However, this figure increased to around 75% in 2022, driven by a substantial rise in offshore production from NOC-dominated Middle Eastern countries, coupled with a significant decline in jack-up demand in the United States and the Gulf of Mexico.

Capitalizing on consolidated ownership: Ownership among international drilling contractors is highly consolidated in the jack-up market. This concentrated ownership allows for higher day rates supported by strong industry discipline. As activity in the market rises, international contractors can step in to meet demand at better day rates than those achieved by local suppliers. Meanwhile, international contractors can benefit from selling rigs to local contractors. (Source: DNB)

SWOT analysis

Strengths

Large reserves of oil and natural gas. Established infrastructure for extraction, transportation and refining.

Technological advancements in exploration and drilling techniques.

Demand growth is expected to exceed supply growth in 2023

OECD possesses a low level of spare stocks and capacity with a high replacement time. This sudden supply-demand disparity is expected to keep oil prices elevated.

Weaknesses

Volatile market prices for oil and gas. Environmental impact and concerns over climate change.

Reliance on government policies and regulations.

Limited access to new reserves due to geographical constraints.

Declining demand for fossil fuels in some regions

Opportunities

Exploration and development of new oil and gas reserves.

Growth potential in emerging markets. Expansion into downstream activities like petrochemicals.

Reopening of the Chinese economy is expected to result in growing oil demand, absorbing all of OPEC+s spare production capacity.

Threats

Competition from alternative energy sources.

Shift towards renewable energy and low-carbon economies.

Increased government regulations and taxes on carbon emissions.

Geopolitical tensions and conflicts affecting oil supply.

Fluctuations in global oil demand and oversupply.

Oil prices stabilised at a low level as leading oil companies resort to reduce spending and postpone development projects. Reduced appetite from national oil companies in the Middle East to increase offshore activity.

Our performance over the year

Financial performance

The Company generated revenues worth Rs. 3967.27 million in FY 2022-23 compared to the previous years revenue of Rs. 10,694.69 million. At the close of FY

2022-23, the companys rigs were operating under a balanced mix of long-term and short-term contracts. The Companys EBITDA decreased from Rs. 1,125,37 million during FY 2021-22 to Rs. (359.72) million during FY 2022-23. The Company reported a net loss of Rs. 27,842.98 million in FY 2022-23 compared with a net loss of Rs. 26,897.27 million in FY 2021-22

Ratio

FY 2022-23

FY 2021-22

  Standalone Consolidated Standalone Consolidated
Debtors turnover 0.25 1.07 0.25 1.25
Inventory turnover 0.05 0.57 0.03 0.36
Interest coverage (2.04) (0.16) (0.53) (1.03)
Current Ratio 0.27 0.03 0.63 0.04
Debt to equity -ve -ve -ve -ve
Operating profit margin % (185.49) (45.11) (51.22) (188.03)
Net profit margin % (148.16) (701.82) (128.85) (449.53)
Return on net worth N/A N/A N/A N/A

Reasons for the difference

Debtors turnover, consolidated

Turnover in the last year decreased approximately 1.51 times and average debtors decreased by approximately Rs.1057.36 million during the financial year FY 2022-23

Interest coverage, standalone

Negative EBIT has increased 3.35 times due to the impairment of receivables increased by Rs. 584.79 million, decrease in revenues of Rs.53.60 million and increase in exchange difference by Rs.176.76 million.

Interest coverage, consolidated

Interest expense increased by approximately Rs.129.43 million and negative EBIT decreased by 6.3 times mainly due to a drop-in impairment of Property, Plant and Equipment by R.9965.13 million, Inventory written down by Rs.588.25 million and employee benefit expenses by Rs.549.72 million.

Current ratio, Consolidated

Current assets decreased by approximately Rs.1953.94 million due to trade receivables and inventory reduction. Current liabilities have increased by approximately 15,556.82 million in the current year compared to the last year due to one more year of interest accruals on all borrowings marginally offset by the repayment of borrowings.

Current ratio, Standalone

Current assets decreased approximately by Rs.1206.53 million due to reduction in trade receivables/impairment of trade receivables, reduction in inventory and a reduction in other financial assets due to regrouping of advance tax net of provision from current to non-current in the current year.

Operating profit margin, standalone

Negative EBIT decreased due to the impairment of receivables in the financial year 2022-22 decreasing by approximately Rs.584.79 million, decrease in revenue by Rs.53.60 million and increase in exchange difference by Rs.176.76 million.

Operating profit margin, consolidated

Negative EBIT decreased by 6.3 times due to a reduction in impairment of Plant,

Property and Equipment, Inventory write down and employee benefit expenses.

Net profit margin, standalone

Net loss margin increased by 17.58 % approximately due to an increase in impairment of PPE by Rs.44.69 million and impairment of trade receivables by Rs.584.79 million decrease in revenue by Rs.53.60 million.

Net profit margin, consolidated

Net loss margin Increased by 1.56 times approximately due to drop in revenue from operations by 1.51 times for the group.

Inventory turnover, consolidated

Average inventory decreased by Rs.965.70 million due to an inventory write-down of approximately by Rs.81.94 million in the current year and Rs.670.19 million in the financial year 2021- 22

Inventory turnover, standalone

Average inventory decreased by Rs.230.77 million approximately

Risk management

Economic risk

Price volatility may have an effect on the businesss profitability.

Mitigation: The Company protected its assets from short-term volatility through a majority of medium and long-term contracts.

Regulatory risk

A number of compliance concerns may have an effect on operations.

Mitigation: The Company developed and implemented stringent operating and safety requirements and adheres to the Quality, Health, Safety and Environment (QHSE) standards.

Competition risk

Increased competition may have an impact on the companys long-term prospects.

Mitigation: The Company enhanced competitiveness by utilising its depreciated assets and developing long-standing relationships with major international companies. The Companys diversified range of rigs helped them to meet the demands in various terrains.

Geographic risk Increased focus on

Mitigation: The Companys offshore services are

  a particular region spread across India. We are constantly exploring
  might hamper business opportunities in the Middle East and South East Asia to
  performance. diversify the risk.

Technological risk

Using outdated technology might cause organisations to relocate to more competitive firms.

Mitigation: The Company undertook continuous technological advancements to comply with global standards.

Health and safety risk

Accidents, injuries or fatalities resulting from human error, inadequate safety protocols or equipment failures, may expose the company to legal liabilities, regulatory scrutiny and reputational damage.

Mitigation: The Company implemented robust safety policies, provided rigorous training, conducted proactive risk assessments, fostered a strong safety culture, maintained adequate safety equipment and regularly inspected to ensure compliance and prevent accidents.

Asset utilisation risk

The performance of the firm might be impacted due to fluctuating crude oil prices globally.

Mitigation: The Company ensured greater revenue visibility by deploying assets across long-term contracts.

Liquidity risk

High debt levels might create a liquidity crisis.

Mitigation: The Company is engaged in deliberations to settle the payment of dues with financial institutions and stakeholders.

Human resources

The Company views its committed and motivated workforce as its greatest asset. The Company offered competitive pay, a welcoming workplace and structured incentive and recognition programmes to recognise employee success. Every employee is encouraged to realise their potential at work, according to the companys goal. The Company promoted going above the call of duty, participating in volunteer learning opportunities and coming up with innovative workplace solutions. As of the 31 March, 2023, the company had a workforce of 465 employees.

Internal control systems and their adequacy

The corporate governance code of the organizations internal control and risk management system serves as the foundation for the systems design and implementation. It is an essential component of the companys and the Groups overall organisational structure and incorporates a variety of employees who work cooperatively to carry out their individual duties. The audit committee, which is under the direction of the Board of Directors, receives reports from the internal audit department. Periodically, the companys assets are examined and thereafter, reports are delivered to the Audit Committee. Together with overseeing and assisting other committees, the Audit Committee and Board of Directors provide strategic direction and oversight to the Executive Directors and senior management.

Cautionary statement

This statement made in this section describes the companys objectives, projections, expectation and estimations which may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. The actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development