SAPURA ENERGY BHD sank into the red in the financial year ended Jan 31,2020 posting net losses of RM4.56bil due to a RM3.3bil provision for impairment.
The global integrated oil and gas services and solutions provider announced on Wednesday the net losses for FY20 was in contrast with a net profit of RM207.55mil in FY ended Jan 31,2019.
Its revenue rose by 41% to RM6.45bil from RM4.57bil a year ago.
“In addition, a provision of RM439mil was recognised in anticipation of extended delays towards completion of current projects arising from the Covid-19 global pandemic and taking into consideration current market conditions, ” it said.
Sapura Energy said revenue gains were recorded on the back of increased project execution in its engineering and construction segment. Revenue was RM5.5bil in FY2020.
The business unit saw a significant increase in EPCIC works globally, including commencing construction on two major central processing platforms (CPP) for Mubadala Petroleum’s Pegaga field in Sarawak, Malaysia and the 98/2 project by ONGC India.
In the fourth quarter, it sank into the red with net losses of RM4.23bil compared with net profit of RM500.42mil a year ago.
Its revenue fell to RM1.11bil from RM1.34bil. Loss per share was 26.51 sen.
Below are more details of the FY ended Jan 31,2020 performance:
Continuing operations — Engineering and Construction
The segment reported a loss before taxation, after impairments for the current year of RM1,925.3 million which was higher by RM1,356.4 million compared to RM568.9 million in the corresponding year.
The segment revenue for the current year of RM5,511.2 million was 50.4% higher compared to the corresponding year, in line with higher activities during the current year.
Excluding the impairments, the segment recorded loss before taxation of RM663.9 million which was lower by RM543.4 million compared to loss before taxation of RM120.5 million in corresponding year due to lower project margins and lower share of profit from associates and joint ventures.
Included in the current year segment loss before taxation, after impairments is a provision for impairment on goodwill on consolidation of RM1,055.0 million (Corresponding year: RM54.3 million) a provision for impairment on property, plant and equipment of RM206.4 million (Corresponding year: RM394.1 million).
The impairments were necessary due to the prolonged recovery expected in the industry.
An additional provision of RM438.8 million was recognised in anticipation of delays and prolonged durations to current projects arising from restricted movement and lockdown measures in multiple jurisdictions brought about by the COVID-19 global pandemic, as well as taking into consideration current market conditions.
Exploration and Production
Included in the current year segment loss before taxation, after impairments is a provision for impairment on goodwill on consolidation of RM1,988.4 mil (Corresponding year: Nil), a provision for impairment on property, plant and equipment of RM34.5 million (FY2019: RM1,017.8 million). The impairments were necessary due to the prolonged recovery expected in the industry.
Included in corresponding year profit before tax is the gain on disposal of 50% equity stake in a subsidiary of RM2,663.7 million.
Excluding the impairments, the segment recorded loss before taxation of RM132.7 million, which was lower by RM80.5 million compared the segment recorded loss before taxation of RM213.2 million in FY2019 due to favourable impact from lower depreciation cost in the current year as a result of assets impairment exercise in Q4 FY2019.
The segment recorded a loss before taxation, after impairments for the current year of RM2,155.6 million which was higher by RM924.6 million compared to RM1,231.0 million in the corresponding year.
In the corresponding year, the segment recorded revenue of RM936.0 million and a profit before taxation of RM88.6 million but none in the current year subsequent to the disposal of 50% equity stake in Sapura Upstream Group in Q4 FY2019.
In the current year, the segment incurred of RM77.8 million mainly due to the write off of an unsuccessful exploration well as well as higher depletion, depreciation and amortisation of expenditure on oil and gas properties. During the year, the segment reported higher production following the start-up of the operated SK408 Larak gas field.
The segment revenue for the current year of RM941.4 million was marginally higher by 0.9% compared to the corresponding year.