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Hyflux sinks into the red with S$116.4m full-year loss on weak electricity prices in Singapore

CONTINUED weak electricity prices across Singapore's power market dragged Hyflux into the red for the full year ended Dec 31, 2017.

Net loss for FY2017 was S$116.4 million compared to a restated profit of S$3.8 million for FY2016.

Loss per share for FY2017 was 21.79 Singapore cents compared to 7.63 Singapore cents for FY2016.

Its Tuaspring Integrated Water and Power Project registered net loss of S$81.9 million for FY2017 as Singapore wholesale electricity prices clear at levels below fuel costs.

Excluding Tuaspring, FY2017 revenue was S$353.6 million, 57 per cent lower than FY2016 while full-year loss was S$34.5 million. This was mainly due to lower revenue from engineering, procurement and construction activities, in line with the respective planned construction phases of the major projects in TuasOne waste-to-energy project in Singapore and the Qurayyat independent water project in Oman.

Not helping the full-year bottom line were higher other expenses of S$104.9 million, up 45 per cent year-on-year, mainly on costs incurred for certain projects and provision for doubtful receivables.

Depreciation, amortisation and impairment of S$28.9 million surged 61 per cent year-on-year due to an impairment of the carrying cost of an investment in an associate.

Projects from the municipal segment continued to account for the bulk or 82 per cent of the group's revenue.

Singapore and the Middle East North Africa region continued to be the group's key markets, accounting for 64 per cent and 25 per cent of total revenue respectively.

The group booked a net gain of S$40.2 million and received sales proceeds of S$95 million on concluding the sale and partial leaseback of its Tuas factory in the fourth quarter.

Its total cash balance was S$314.2 million as at Dec 31, 2017, excluding another S$77.2 million of cash reported as asset held for sale. Net gearing was 1.2 times.

Net asset value per share was 14.1 Singapore cents as at the end of FY2017, down from 45 Singapore cents a year ago.

The group's shareholders' equity decreased by S$500,000 to S$1 billion as at the end of FY2017 after the redemption of perpetual capital securities of S$295 million in January 2017 and losses incurred from operations for the year.

Hyflux noted that an oversupply of gas in Singapore has resulted in depressed electricity prices sold by power generation companies to the national grid.

The group expects to continue to record losses in 2018 unless the Singapore power market shows improvement.