Hong Kong-listed NewOcean Energy Holdings Limited (NewOcean) on Tuesday (30 March) published a profit warning regarding its results from the financial year ended 31 December 2020 (FY 2020).
According to the notice, NewOcean’s board of directors wish to inform shareholders and potential investors that, based on the preliminary assessment of the latest unaudited financial information, the group is expected to record a consolidated net loss of approximately HKD 2.37 billion (USD 304.8 million) for FY 2020 compared to a consolidated net profit of HKD 607 million FY 2019.
Due to the global pandemic of COVID-19, the slump in global oil prices NewOcean said its business operations have been seriously affected especially the oil bunkering business in Hong Kong and Singapore and the electronic business in the People’s Republic of China.
As a consequence, the gross profit margin derived from its oil bunkering business and electronic business has been substantially reduced or turned into gross loss margin as compared to Year 2019.
Additionally, the continued weak energy demand throughout 2020 due to pandemic-related lockdowns, the NewOcean said it also experienced undue delay in trade receivables collection, inventory being sold under purchase costs and contracting of sales volume in different business units.
“In certain cases, the buyers used various pretext (and in a particular case, also as a result of wrongful interference) to avoid their payment obligations and the group had to resort to litigation to recover the amounts due and incurred substantial legal and other costs and expenses,” explained NewOcean.
“The group has been vigorously pursuing the trade debtors and expects to fully recover all overdue payments together with compensation for our losses and damages.”
The group adds that additional impairment losses on trade receivables, other receivables, inventories, goodwill, intangible assets and property, plant and equipment, etc. amounted to approximately HKD 2 billion.
In January, Manifold Times reported NewOcean had planned to restructure its debt through a series of schemes to be approved by creditors; but the meeting was adjourned.
The proposed resolution to adjourn was approved by a unanimous vote from scheme creditors and NewOcean said it would further apply to the Hong Kong Court and the Bermuda Court for direction.
Related: NewOcean proposal to adjourn court scheme meeting approved by creditors
Related: NewOcean creditors meeting application granted by Supreme Court of Bermuda
Related: NewOcean planning creditors meeting, foundation of debt restructuring plan laid out
Related: NewOcean records USD 174 million 1H 2020 loss; Singapore bunkering business remains
Related: NewOcean Energy publishes profit warning to shareholders ahead of 1H 2020 results
Photo credit: NewOcean Energy
Published: 31 March, 2021
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