Triyards hit with $53m in impairment charges

Engineering and fabrication shipyard Triyards Holdings has made a $53.38m allowance for impairment charges for the nine months ended 31 May for its financial year 2017, due to reassessment of certain assets value and its exposure to its bankrupt ultimate holding company Ezra Holdings.

For its third financial quarter ended 31 May 2017, Singapore-listed Triyards provided $45.08m for impairment of assets due to the sluggish state of the offshore oil and gas sector.

During the second quarter of its financial year 2017, Triyards had provided $8.3m for the allowance of doubtful receivables from Ezra Holdings which has filed for bankruptcy in March this year.

This brings Triyards’ total allowance for impairment of assets to $53.38m in the nine months ended 31 May 2017. This compares to zero impairment charges taken in the previous corresponding period.

Triyards pointed out that the marine, shipping as well as oil and gas industries continue to be in a prolonged depressed and uncertain business environment. "This coupled with its related/affiliated entities of Ezra which either face a potential going concern issue or have filed for Chapter 11 bankruptcy, the group foresees that in next 12 months it will be extremely challenging in terms of business environment which would result in margin compression as well as difficulty in gaining access to new sources of liquidity," the company said.

In view of the above, the group has undertaken an exercise to rationalise and reassess the carrying value of certain assets. These assets were acquired or developed by the group previously with plans and intentions to deploy for new projects or business ventures.

Chan Eng Yew, ceo of Triyards, said: “On the operational side, the group continues to focus on its diversification strategy to build up the pipeline as well as improve project execution and cost efficiency."

Over the past 24 months, Triyards has been diversifying its clientele base and expanding its product offerings beyond the oil and gas related sector, resulting in new product lines being added to its orderbook such as chemical tanker, scientific research vessel, windfarm crew transfer vessel and LNG-powered aluminium catamaran.

Posted 24 July 2017

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Lee Hong Liang

Asia Correspondent