Maybulk warns of substantial FY15 loss on provisions

PETALING JAYA: Malaysian Bulk Carriers Bhd (Maybulk) has warned of a substantial loss for the fourth quarter of 2015 (4Q15) and the financial year ended Dec 31, 2015 (FY15) due to several provisions made.
In a filing with Bursa Malaysia last Friday, Maybulk said the anticipated substantial loss is mainly attributable to provisions for onerous contracts and impairment of investment in associate company PACC Offshore Services Holdings Ltd (POSH).
"The dry bulk market continues to be weak and it is uncertain when the market will recover. The group has reviewed its non-cancellable operating lease contracts for the chartered-in vessels and based on a preliminary assessment, the charter-in costs are higher than the current and likely market rates. Hence a provision for onerous contracts has to be made," it said.
Meanwhile, the current state of crude oil prices has adversely affecting the global offshore marine industry in which POSH operates in.
"The group carried out a preliminary assessment of its investment in POSH and is of the view that the fair value of the investment in POSH is likely to be lower than the carrying value and an impairment loss provision has to be made.
"While the amount of the impairment is yet to be determined, it is expected that this will have a significant adverse impact on the financial results of the group for 4Q15 and FY15," it added.
Maybulk said the announcement is based on the preliminary assessments carried out by the group due to the development of the market situations in which the group and its associate operate. These assessments have not been reviewed or audited by the external auditors.
"Details of the group's financial performance for 4Q15 and FY15 will be disclosed when the company announces its unaudited consolidated financial results for the relevant periods. Shareholders and investors are advised to exercise caution when dealing in the shares of the company."