Posted on 24 Aug 2017
Kinsteel Bhd posted a record net loss for the financial year ended June 30, 2017 (FY17) as it sank deeper in the red in the final quarter of the year, no thanks to a huge RM170.9 million impairment on its convertible securities and receivables in loss-making subsidiary Perwaja Holdings Bhd.
Its huge debt pile also incurred a large interest of RM91.2 million during the fourth quarter ended June 30, 2017 (4QFY17).
Consequently, its net loss grew near eight times to RM287.43 million from RM37.69 million a year ago, while quarterly revenue contracted nearly half to RM44.72 million from RM86.57 million.
The big impairment, Kinsteel said in a Bursa Malaysia filing, was booked after Perwaja’s proposed regularisation failed as the latter’s pact with China-based Zhiyuan International Investment & Holding Group (Hong Kong) Co Ltd in February this year was called off. Subsequently, Perwaja was delisted at end-May.
As for the huge interest on its debts, Kinsteel said this was accrued after it failed to fulfil the conditions of a debt restructuring agreement with its creditors. Following the lapse of the deal, it said the central bank-backed Corporate Debt Restructuring Committee removed the group from its purview. Kinsteel’s debt stood at RM803.35 million as at end-June.
Its dismal 4QFY17 dragged the group into a record annual net loss of RM318.75 million in FY17, some 4.5 times more than what the RM70.36 million it posted last year, while annual turnover shrank 23% to RM229.45 million from RM299 million.
Going forward, Kinsteel — controlled by tycoon Tan Sri Abu Sahid Mohamed with a 16.09% stake — said it is undertaking a debt restructuring exercise to address its liquidity issue.
“The group’s prospect is highly dependent on the successful implementation of the proposed restructuring scheme with its financial lenders and major creditors,” Kinsteel said.
“The group requires operating profitably to generate sufficient cash in the future to fulfil their obligations as and when they fall due and financial support from the lenders and shareholders,” it added.
In view of the above, it said its prospects “will continue to be challenging”.
Shares in Kinsteel, which have been listed on the Main Market since 2002, rose 0.5 sen to close at 4.5 sen yesterday, giving it a market capitalisation of RM47.22 million. From a year ago, the stock has declined 44%.
