Acma sounds profit warning for Q4 after global oil decline hits key associate

SINGAPORE - Acma has warned of a net loss for the fourth quarter ended Dec 31, mainly due to impairment provision on its investment in associated company, Neftech.

The associate's principal business is developing and marketing its own proprietary cavitation and nano-additives to achieve fuel savings for shipping.

As fuel cost represented the single largest operating cost component for the shipping industry, a high fuel cost environment is conducive for Neftech's business prospects.

There has been a significant decline in global fuel prices with the price of CST 380, the most commonly used fuel for the shipping industry, dropping from about US$591 per metric ton at the end of September 2014 to about US$306 per metric ton as at the end of January 2015.

This significant fall will have a material adverse impact on Neftech's commercial prospects as the value of potential fuel savings using Neftech's product offerings will be correspondingly reduced, said Acma.

"As there is no certainty of any significant rebound in fuel price in either the short or medium term, the board is of the view that an impairment provision will be required in respect of the carrying value of the group's investment in Neftech," it added.

The quantum of the impairment will be finalised on further discussion and consultation with the auditors.

Further details will be disclosed when the group announces its fourth quarter and full year financial statements on March 1.

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