KUALA LUMPUR (March 18): Financially-troubled Sapura Energy Bhd saw its net loss in the fourth quarter ended Jan 31, 2022 (4QFY22) widen to a staggering RM6.61 billion compared to a loss of RM216.03 million a year prior, largely due to impairment on goodwill worth RM3.29 billion and impairment on property, plant and equipment worth RM2.1 billion.
Losses per share swelled further to 41.4 sen from 1.35 sen previously.
In a Bursa Malaysia filing on Friday (March 18), the oil and gas (O&G) service provider said its quarterly revenue dropped significantly by 68.61% to RM453.14 million from RM1.44 billion in the previous year, primarily due to lower percentage of completion recognised in the current quarter resulting from recognition of foreseeable losses and higher project costs in the engineering and construction (E&C) business segment.
For the full year ended on Jan 31 (FY22), the group recorded a net loss to the tune of RM8.9 billion — its highest ever — from a net loss of RM160.87 million in the prior year as it realised impairment on goodwill and property, plant and equipment worth RM5.39 billion collectively.
Meanwhile, annual revenue fell by 22.84% to RM4.13 billion from RM5.35 billion in FY21 due to lower contribution from its E&C, and operation and maintenance (O&M) segments.
On a quarterly basis, the group’s net loss widened from a loss of RM669.34 million reported in the immediate preceding quarter (3QFY22) while revenue dropped significantly from RM1.45 billion.
Sapura to review business direction, commence negotiations with clients
The group highlighted FY22 has been challenging for the O&G company.
The unprecedented liquidity crunch confronting the group was a consequence of challenging project performance and unsustainable debt servicing cost, it said.
“While the market recovery in the latter part of the year has brought improved performance from our drilling segment, our E&C and O&M businesses continued to face execution challenges mainly due to disruption from Covid-19 and lack of access to adequate working capital facilities.
“Our situation was further compounded by some operational underperformance in certain project,” it shared.
Sapura Energy added, as previously announced, the group reviewed its business direction and examined the performance of all existing contracts, which has led to the group recognising a hefty financial loss, including significant impairment charges in 4QFY22.
It also said the group has commenced negotiation with its clients on some of its underperforming contracts to seek amicable solutions in order to recover or limit the losses.
“With the support from our stakeholders, the board aims to overcome the financial and operational challenges in FY23.
“Sapura Energy is determined to continue playing a contributory role in the energy sector amidst the current global uncertainties, by bringing its people and assets to unlock values together with, and for, our business partners.
“A key step in our reset programme is the successful application for a proposed scheme of arrangement and a restraining order from the High Court on March 10, 2022. This will allow the group to address the unsustainable debt and the amounts owed to trade creditors,” it elaborated.
The group is also seeking new sources of funding to finance its business plan as it restructure its business and streamline its operations.
At noon break, shares in Sapura Energy settled unchanged at 3.5 sen, valuing the O&G company at RM559.27 million.