Hiap Seng Engineering reported Wednesday its fiscal second quarter net loss narrowed to S$8.51 million from a loss of S$22.30 million in the year-ago period on lower operating costs.
Turnover for the quarter ended 30 September rose 35.2 percent on-year to S$36.20 million on higher revenue recognition, the company said in a filing to SGX.
The company’s gross loss included a provision for liquidated damages and claims of around S$4 million, which are currently under negotiation with the customer, Hiap Seng said.
Administrative costs fell 8.8 percent on-year in the quarter to S$4.63 million, the filing said.
The company posted an other gain of S$600,000 for the quarter, compared with a year-ago other loss of S$300,000, mainly from an increase in the currency exchange gain.
For the fiscal first half, Hiap Seng reported a net loss of S$10.61 million, narrowing from a year-ago net loss of S$23.70 million.
Hiap Seng said its current liabilities, including borrowings from banks of S$32.2 million, exceeded current assets by S$30.1 million as of end-September. That included around S$9.9 million of contract liabilities which have been invoiced to customers but not yet recognized as revenue, the company said.
“In view of the current situation, the group is embarking on a restructuring and realignment exercise including the disposal of some of its assets. This exercise is expected to free up cash, which is needed as working capital for existing projects, as well as for repayment to existing
creditors,” Hiap Seng said. “The group has also undergone various costs-cutting measures such as reduction of its headcount and streamlining of its operating processes to improve efficiency and effectiveness.”
In its outlook, the company noted signs of improvement in the oil and gas industry’s process sector, which was likley to translate into higher capital expenditure by major customers.
But it added, “the group continues to face a challenging operating environment with intense competition. The group has lost some new projects due to the fierce competition and its current financial position.”
Hiap Seng said its orderbook was at S$90 million, with around 80 percent to be recognized as revenue in fiscal 2020, with the remainder to be recognized by 30 June 2020.