EMAS Offshore takes impairment on Perisai shares; posts Q4 loss of US$98.5m

HIGHER cost of sales, coupled with a US$56 million impairment charge, eroded results for offshore services provider EMAS Offshore Limited (EMAS) for its fourth quarter.

The firm also warned that still-developing events surrounding associate company Perisai Petroleum Teknologi Berhad means that further adjustments might have to be made at a later date.

EMAS sank into the red, posting a net loss of US$98.5 million, from net profit of US$36.3 million in the previous year, the group said in a Singapore Exchange filing on Sunday evening.

For the three months ended Aug 31, revenue slid 4 per cent to US$52.2 million from the year-ago period. The drop in revenue was due to general weakness in the offshore industry, it said.

The group took a US$56 million charge on its shares in Perisai, and wrote off US$12.2 million deposits paid for vessels under construction.

It recorded a loss per share of 0.22 US cent in the quarter, from earnings per share of 0.08 US cent in the previous year.

For the full year, EMAS recorded a net loss of US$265.3 million from a profit of US$199.5 million in FY2015, as revenue fell 32 per cent to US$167.6 million.

The market environment is expected to remain "extremely challenging", the firm said. Nevertheless, its CEO Adarash Kumar said that the firm is starting to see signs of stabilisation in utilisation rates, though daily charter rates are expected to remain depressed for a "considerable period of time".

EMAS added that it has reached in-principle agreements with the substantial majority of its principal bankers on the refinancing of its financial obligations.

The group is also now in the process of finalising agreements to provide additional working capital facilities, with these expected to be concluded before the end of first quarter FY2017.

"Due to the weakness in the oil and gas sector as well as the oversupply in the offshore oil and gas support industry, the group may need to make further impairments which have yet to be determined," it warned. "The group is undertaking a comprehensive impairment assessment based on various factors and events and will make the relevant disclosures as required."