Gunung net profit falls

> Earnings plunge 87% in Q2 due to lower contract revenue, one-off expenses for bonus issue

PETALING JAYA: Gunung Capital Bhd’s net profit for the second quarter ended June 30, 2015 (Q2) plunged 87.04% to RM564,000 from RM4.35 million a year ago due to lower contract revenue and one-off expenses relating to the bonus issue of ordinary shares and warrants in Q2.

In a filing with Bursa Malaysia yesterday, the group said its group operating profit for Q2 was also affected by the lower contract revenue as well as the costs incurred due to under utilisation of its fleet of vehicles.

“Operating profit was down 76% against corresponding quarter last year, to RM1,71 million,” it said.

Revenue in Q2 fell 62.34% to RM8.84 million from RM23.48 million a year ago mainly due to the deferment of the National Service Programme for 2015.

The group said the deferment significantly affects its contract revenues for the financial year ending Dec 31, 2015 (FY15).

Gunung Capital had received the letter of award and acceptance from the Defence Ministry on Dec 26 last year for the provision of transport (bus) services to the National Service Programme.

The service contract is valued at RM164.95 million and runs from Dec 26, 2014 till Dec 25, 2017.

For the six months ended June 30, 2015, net profit fell 81.25% to RM1.63 million from RM8.72 million a year ago while revenue fell 52.37% to RM22.00 million from RM46.18 million a year ago.

The group attributed the drop in revenue and 71% drop in operating profit for the period to the deferment of the National Service Programme and the subsequent costs incurred.

Due to the deferment, the group expects revenue and net profit for FY15 to be substantially lower than that in FY14.

“The deferment of the National Service Programme for year 2015 will continue to substantially reduce group revenue from the service contract awarded on Dec 26, 2014. During FY15, the National Service Programme will only require the bare minimum of transportation assets to meet their requirements,” it said.

It expects income from the service contract, which ends in 2017, to underpin its prospective earnings in year 2016 and 2017.

“The government has highlighted that the National Service Programme will commence again in year 2016 with an increased trainee capacity when compared with years prior to 2015,” it added.

In the meantime, it will continue with efforts to secure additional contracts in chartering land-based transportation assets and specialty vehicles as well as to improve the overall operating efficiency in the transport division.