KUALA LUMPUR: UMW Oil & Gas Bhd swung into the red in the financial year ended Dec 31, 2015 due to whopping losses in the fourth quarter after an asset value write-down and goodwill written off amounting to RM337.5mil.
The company said on Tuesday the losses were also due to a one-off five-yearly asset write off, primarily resulted in the 2015 financial performance.
FY15 net losses were RM362.30mil compared with net profit of RM251.99mil in FY14. Its revenue fell 17.2% to RM839.52mil from RM1.014bil.
“The group registered a loss before tax of RM349.39mil for FY15 as opposed to the profit before tax of RM284.15mil in FY14,” it said.
In the fourth quarter, UMW O&G posted net losses of RM409.13mil versus net profit of RM71.96mil a year ago. Revenue shrank to RM130.96mil from RM326.23mil. Loss per share was 18.92 sen compared with earnings per share of 3.33 sen.
It attributed the losses in Q4 FY15 to asset and goodwill impairment losses of RM337.7 million, five-yearly asset write off of RM12.6 million and translation loss arising from the weakening of US dollar against the Ringgit, mainly contributed to the negative results in the fourth quarter of 2015
Commenting on the FY15 results, the company said the weaker performance was due to lower revenue from both the drilling services and the oilfield services segments. Overseas operations contributed approximately 49.8% of the group revenue for FY15.
Drilling services segment
The drilling services segment contributed revenue of RM802.3million or 95.6% of the total revenue of RM839.5mil for FY152015, down 17.2% from the RM968.6mil in 2014.
It said the fall in revenue was due to reduced time charter rates as well as low utilisation of some of the assets in the group.
The shortfall was however, mitigated by additional revenue contributions from three new assets, UMW NAGA 6, UMW NAGA 8 and UMW NAGA 7, which commenced operations in the months of October 2014, September 2015 and November 2015, respectively.
It also recorded translation gains from the appreciation of US dollar against the Ringgit.
UMW O&G’s drilling services segment incurred a loss of RM386.5min for FY15 compared to RM272.8mil profit before tax in 2014.
The loss was mainly due to lower time charter rates; lower utilisation rates achieved by some of the assets in the group due to five-yearly special periodical survey or idling in between contracts.
Other factors were pre-operating expenses of two new rigs which started in September and November 2015; and the asset and goodwill impairment loss of RM344.1 million as well as asset write off from the five-yearly special periodical survey.
Oilfield services segment
For FY15, the oilfield services segment contributed revenue of RM37.2mil or 4.4% of the total revenue of RM839.5mil, down RM9.1mil or 19.7% over the RM46.3mil in 2014.
Low demand for OCTG threading and repair services recorded by the Group’s operations in Labuan, Thailand and China, mainly contributed to the revenue decrease.
The oilfield services segment recorded a loss before tax of RM4mil for FY15, down RM12.8mil over the RM8.8mil profit in 2014.
UMW O&G cited lower profit contributions from the group’s operations in Labuan, Thailand and China as well as impairment of goodwill amounting to RM6.2mil, accounted for the reduction.
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