The major Malaysian dry bulk shipper said that it expected to record “a substantial loss” for the fourth quarter ended 31 December 2015, and for the full year in 2015.
The projected loss, based on the preliminary assessments and without an auditor’s review, was due mainly to a provision for onerous contracts and a provision for impairment of investment in PACC Offshore Services Holdings Ltd (POSH), a 21.23%-owned associate involved in providing offshore marine support services.
On the first provision, Maybulk noted that the dry bulk market continued to be weak and it was uncertain when the market would 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 explained.As for the provision related to its investment in POSH, the company said the current depressed state of crude oil prices had adversely impacted the global offshore marine industry in which POSH operates in.
Maybulk said: “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 4Q2015 and FY2015.”
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