Sapura Energy swings back to black in 4Q, FY19 on disposal gain; pays 0.5 sen special dividend

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KUALA LUMPUR (March 25): Sapura Energy Bhd returned to the black in the fourth financial quarter ended Jan 31, 2019 (4QFY19), posting a net profit of RM500.43 million compared with a net loss of RM2.29 billion a year ago.

This was boosted by a gain of RM2.66 billion from the sale of a 50% stake in its exploration and production (E&P) business, through the strategic partnership with  OMV Aktiengesellschaft (OMV AG) in November last year. Going forward in financial year ending Jan 31, 2020 (FY20), the share of profit from SapuraOMV will be recorded under continuing E&P segment.

In 4QFY19, the group had also made a provision for impairment on goodwill on consolidation of RM108.4 million and a provision for impairment of RM1.41 billion, primarily for drilling, and engineering and construction (E&C) assets.

The improved quarterly performance also lifted the group's financial results for the full year FY19, enabling it to record a net profit of RM207.55 million compared with a net loss of RM2.5 billion in the previous year.

As a result, the group has declared a special dividend of 0.5 sen per share for FY19, payable on June 24.

Meanwhile, Sapura Energy saw its quarterly revenue rise 64.5% to RM1.49 billion in 4QFY19 from RM902.7 million in 4QFY18, on higher revenue from its E&C business segment. 

It reported a loss per share of 35.43 sen for 4QFY19, as it reflected the dilution that occurred pursuant to an employee stock option. Still, the loss per share was slightly lower than the 39.95 sen loss per share recorded for 4QFY18.

For full year FY19, the group's revenue fell 9.5% to RM4.57 billion from RM5.05 billion in FY18, primarily due to the lower revenue from the E&C and drilling business segments.

In a filing with Bursa Malaysia today, Sapura Energy said in FY19, it has delivered on its strategic plans to strengthen its financial position with the completion of the rights issue and the strategic partnership with OMV for its E&P business. Through both exercises, the group raised approximately RM7.6 billion to repay its borrowings and for working capital.

“Our focus for FY19 was to strengthen our balance sheet and position the group to capitalise on the emerging opportunities. Despite the challenging year, we successfully completed two major corporate exercises, where we raised approximately RM7.6 billion. This has enabled us to reduce our net gearing to a healthy 0.6 times and provided the financial flexibility for the group to bid for and execute higher value projects, in addition to gaining a strong partner in our E&P business,” Sapura Energy president and group chief executive officer Tan Sri Shahril Shamsuddin in a separate statement today.

"We are confident that our efforts in FY19 have paved a brighter future for the group,” he added.

Sapura Energy also said the group has made a further provision of impairment of RM1.5 billion primarily on drilling and certain marine assets to reflect the current value of these assets. "Moving forward, this should enable the group to be more competitive operationally and economically," it added.

On prospects, Sapura Energy said its current orderbook of RM17.2 billion is at its highest in two years. The group is bidding for larger and higher-value projects globally, it added.

The value of cumulative new contract wins in FY19 stood at RM9.3 billion, with notable engineering, procurement, construction, installation and commissioning (EPCIC) awards in its core markets, including the Pegaga gas development by Mubalada Petroleum, KG-DWN 98/2 NELP block by Oil and Natural Gas Corp Ltd and Hokchi Field Development in the Gulf of Mexico.

"In FY20, the group will remain focused on growing and executing the orderbook as well as delivering strong operational performance," said Sapura Energy.

"The group is aggressively pursuing new opportunities in the Middle East, Africa, Asia Pacific, Europe, the Caspian and the Americas. The expanding orderbook is expected to further boost asset utilisation, thus contributing to improving the financial performance.

"With the increasing activities, stronger balance sheet and encouraging potential growth prospects, the board is confident that the group is strongly positioned to grow and increase shareholder value," it added.

Sapura Energy shares closed down 0.5 sen or 1.45% at 34 sen in morning session today, with 57.02 million shares done, bringing a market capitalisation of RM5.43 billion.