Ezra - EOC Awarded AIS Status by Singapore Ministry of Transport

While surfing EOCL's website for more information on the company, I chanced upon the latest news release from EOCL (which is now a 48.9% associated company of Ezra). Apparently, Ezra has not deemed it necessary to have a press release to announce the news that one of its associated companies has been awarded the AIS Status by the Singapore Ministry of Transport (SMOT). According to the press release by EOCL, the Approved International Shipping Enterprise (AIS) status award will take effect from August 1, 2007 (FY 2008) for an initial period of 10 years, subject to a review at the end of the fifth year.

With this award, EOCL's subsidiaries (which include most of its vessels as each vessel has a company incorporated in the vessel's name for tracking of vessel costs and revenues) will enjoy tax exemption on a wide range of shipping income. This also includes income from the soon-to-be-delivered FPSO in FY 2008 and will be a great boon of the company as revenues from the FPSO are expected to be significantly higher than their current vessel fleet, thus necessarily incurring more income taxes. In addition, the award also includes tax exemption on gains from ship sales into YA 2009 (i.e. FY 2008) and hedging gains into YA 2010 (i.e. FY 2008 and FY 2009).

As the CEO of EOCL Mr. Lim Kwee Keong said, this award effectively recognizes Ezra and EOCL as major international shipping vessel operators and acts as a seal of quality for the Group. The SMOT had established the AIS scheme as part of its goal to develop Singapore as an International Maritime Centre, and only established shipping companies with worldwide networks (as Ezra Group has built up over the years) and a good track record are eligible to apply for this award.

Queries for Ezra FY 2007 AGM on Dec 24, 2007

I have come up with a brief list of queries to address the Management during the AGM on December 24, 2007 (Monday):-

1) What is Ezion's future role for the Ezra Group of companies ? Will it have anything to do with the chartering of oil rigs for use by Ezra in expanding its revenue stream ? Will this constitute a separate business unit ?

2) Oilfield and Well Engineering Services - The AR mentions this, so please elaborate more. Ezra will charter 2 oil rigs for delivery in FY 2009, but what has this got to do with their core operations ? Will this tie in with HCM Logistics and will it be part of the planned fabrication business ?

3) Ezra has leased a piece of land of GFA 88,726 square metres in Dong Xuyen IZ, Vung Tau province in Vietnam on a 39-year lease. The principle activities are ship building and ship repair. Kindly give details of this new proposed yard. Will Ezra Group be using this new facility to build and repair their own vessels instead of relying on third-parties ? Will this help to reduce costs and improve margins for the Group ?

4) How will the 4 MSFV on order be financed and will they be injected into Ezra proper or into EOCL ? Also, will the option for the remaining 6 MFSV be exercised, and if so, where will the funding for these vessels come from ?

5) Please elaborate on the training base which was reportedly set up by Ezra Group in Vietnam to train personnel due to a lack of human resource for the oil and has sector. This was also reported in a recent issue of The Edge Singapore.

6) More details on the AIS Status award for EOCL.

7) How hedging is performed by Ezra Group in order to avoid the fiasco which occurred with Semb Marine and Labroy Marine.

I will be coming up with a more comprehensive list of questions during the coming week, as there are only about 7 days left till the AGM and I am still reading through the AR in detail.