In response to a query from SGX, Keppel Corp. said on Thursday that the write-back of a provision of around S$96 million in its full-year results was due to potential claims from a customer over a rig contract in its offshore and marine division.
“The original contract value was adjusted for cost escalations. The validity of the contract adjustments was subsequently challenged. Due to prolonged uncertainty, provisions were made by the group for the potential claims in the past, the first such provision being made more than
ten years ago,” Keppel said in a filing to SGX after the market close on Thursday.
But after an annual review of the provisions, including seeking a legal opinion, Keppel assessed there were reasonable grounds to write-back the provision in 2018, the filing said.
The company said it couldn’t identify the customer or the amount of the potential claims.
Late last month, Keppel reported full-year net profit of S$944 million, up 382 percent from S$196 million in the year earlier, due to 2017’s S$619 million one-off financial penalty and related costs from Keppel O&M’s resolution with criminal authorities in the U.S., Brazil and Singapore. Revenue for the full year was nearly flat at S$5.97 million.
The offshore and marine division posted a full-year net loss of S$109 million, narrower than the year-ago net loss of S$826 million, due to the year-earlier penalty, it said. Excluding the penalty, 2017’s net loss for the division would have been S$207 million, it said.