Vallianz sees 35.4% fall in Q4 net profit, has waiver from default for 2 of 3 Swiber-related bank loans

Catalist-listed Vallianz Holdings has been affected by the woes of its controlling shareholder Swiber Holdings, which is under judicial management.
Catalist-listed Vallianz Holdings has been affected by the woes of its controlling shareholder Swiber Holdings, which is under judicial management.PHOTO: ST FILE

SINGAPORE - Offshore-support vessel provider Vallianz Holdings reported on Monday (Feb 13) a 35.4 per cent fall in net profit to US$3.1 million for the fourth quarter ended Dec 31, 2016 , from US$4.7 million a year ago.

Catalist-listed Vallianz has been affected by the woes of its controlling shareholder Swiber Holdings, which is under judicial management.

On Monday, Vallinz said revenue from Swiber entities has declined substantially and accounted for 20.8 per cent of the group's total revenue for FY2016 compared to 34.6 per cent in FY2015.

It said this drop was in in line with its approach to streamline and realign its focus on the core chartering and brokerage business.

Total revenue for the quarter dropped 11.9 per cent to US$41.38 million from a year ago as the increase in charter revenue was more than offset by a decrease in vessel management revenue due mainly to the completion of ship management projects in Latin America in late 2015 as well as slowdown in the related services.

For the full-year, net profit fell 22.7 per cent to US$15.6 million as revenue dropped 10.1 per cent to US$209.1 million.

Vallianz said this was mainly due to lower gross profit margin as a result of the challenging business conditions in the offshore marine industry. Gross profit margin fell to 25.5 per cent in 2016, compared to 28.4 per cent in 2015. largely due to the renewal of existing contracts with a customer in Middle East in July 2015 at a lower average charter rate, which was partially offset by the group's costs controlling measures.

Vallianz's bottomline was also affected by a loss of US$1.2 million from its share of results from associate and joint ventures in 2016. This was mainly due to a loss reported by PT Vallianz Offshore Maritim, the group's 49 per cent-owned associate in Indonesia.

The group's trade and other payables increased by approximately US$97.07 million from Swiber entities to US$210.86 million as at Dec 31, 2016, from US$113.78 million on Dec 31, 2015.

The group received interest free advances of US$5.0 million from a shareholder in the fourth quarter with no fixed term for repayment. Shareholders' advances as at Dec 31, 2016, were US$102.09 million compared to US$97.09 million as at Sept 30, 2016.

Vallianz disclosed it has a negative working capital of US$38.3 million as of Dec 31, 2016, compared to US$22.7 million (excluding impact of assets held for sale) on Dec 31, 2015.

Cash and cash equivalents fell by US$27.0 million to US$14.9 million on Dec 31, 2016, from US$41.9 million a year ago.

Vallianz said it has not been served with any notices of any event of default for any of its three outstanding bank loans which have corporate guarantees from Swiber, and it has successfully obtained waivers for event of default from two of the three loans. Vallianz said it remains in active discussion with the third bank.

The company also said it has an outstanding chartering services order book worth US$950.1 million in total, comprising long term charters which include two-year extension options stretching up to 2025.

Vallianz said that to mitigate the challenges of the industry's slowdown, it will continue to adopt a cautious and prudent approach in the execution of its business plans.

The group is undertaking a review of its rightsizing initiatives as well as assessing the value of its assets given the current market conditions. It said the outcome of these evaluations may have an impact on the group's financial performance for the 15 months ending March 31, 2017, which is its new financial year end.