It
posted a net loss of RM193.08 million in the fourth quarter ended Dec
31, 2016 (4QFY16), dragged down by surprise impairments of RM176
million. In contrast, the group posted a net profit of RM7.3 million in
the corresponding quarter last year.
It
starts further impairments in 2016, in order to start on a clean slate.
However
its gearings remain high. As at Dec 2016 its cash and short term
investment stood at RM386.11 million, total debt stood at RM1.19
billion. Book value per share stood at RM1.15.
This
round of impairments was due to cost overruns of RM112 million and
provisions of doubtful debts of RM64 million. Both are one off.
The RM64 million in provisions for doubtful debts was lumped into the group’s operational and administrative expenses,
which swelled RM83.45 million or 64.9% year-on-year (y-o-y) to RM128.69
million. It still looking to get the payment, and when do it will be
reflected positively in its books.
The cost overruns were reflected in the group’s lower revenue
— down RM149.4 million or 30.3% y-o-y to RM340.97 million. Instead of
booking an expense, the cost overruns were recognised in the accounts as
a downward adjustment to revenue.
The
cost overruns stem from an eight-to-nine month delay in securing
financing for a project. The delay incurred penalties, increased cost of
materials and reduced utilisation at the fabrication yard.
Nonetheless,
investors had earlier expect that the group completed the bulk of its
impairments in the 3QFY16 results. Recall, Eversendai recorded a one-off
write-down of RM110 million for its failed venture into the
Singapore-listed Technics Oil & Gas Ltd.
Combined,
the impairments totalled RM286 million for FY16, resulting in a net
loss of RM257.5 million for the year or 33.27 sen per share.
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