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Vallianz in the red with US$128.2m fiscal 2019 loss on non-cash impairment expenses

CATALIST-LISTED Vallianz Holdings incurred a net loss of US$128.2 million for the fiscal year ended March 31, 2019, compared to a profit of US$16.7 million a year ago.

This was due to exceptional items of US$133.3 million – mainly because of impairments of an associate company and plant, property and equipment amounting to US$120.9 million. There was also a one-off compensation of US$12.4 million for late delivery of vessels and cancellation of project.

Vallianz said these expenses came to light after it completed an in-depth evaluation of its vessels and the recoverability of investment in the associate company amid the “challenges and slow recovery” in the offshore and marine market.

Loss per share was 23.03 US cents for the year, compared to earnings per share of 6.95 US cents for FY2018.

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However, excluding these exceptional items, the group posted an operating profit of US$4.7 million for FY2019, “despite the difficult market conditions faced by companies in the offshore support vessel sector”, it said on Thursday.

Gross profit margin narrowed to 17.9 per cent during the year from 24 per cent for FY2018, because of a shift in revenue mix and lower charter rates for certain contract extensions with a key national oil company in the Middle East.

Vallianz also incurred higher personnel costs for onshore support as it expanded its management bandwidth and grew its vessel operations in the Middle East. Other income fell 78.3 per cent to US$1.7 million, on an absence of gain from the disposal of fixed assets.

The group’s full-year revenue kept largely steady at around US$184.5 million, inching up from US$184.3 million for FY2018.

Revenue from the group’s core chartering and brokerage services business grew 9.4 per cent from a year ago to US$167.1 million.

This was lifted by the full-year contribution from new vessel charter contracts that started in FY2018, as well as the start of new vessel charters in FY2019 with the Middle East national oil company.

But it was offset by revenue from vessel management services tumbling 45.1 per cent to US$17.4 million for the year due to fewer vessel management projects.

As a result, the chartering and brokerage services contributed a higher 91 per cent to group revenue for FY2019, up from 83 per cent for the previous year, while the remaining 9 per cent came from vessel management services.

Ling Yong Wah, chief executive of Vallianz, said: “The business environment for the offshore support vessel sector is expected to stay challenging due to intense competitive pressures and depressed charter rates which could be further exacerbated by escalating global trade tensions and continuing political uncertainties in the Middle East.”

Therefore, the group is adopting a cautious view of its prospects for the current financial year ending March 31, 2020.

Vallianz shares closed flat at 14 Singapore cents on Thursday.