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Hiap Seng posts Q1 net loss of S$2.1m, proposes rights issue

ENGINEERING group Hiap Seng Engineering, currently on the Singapore Exchange's watch-list, saw net losses widen for the first quarter as operating costs grew. 

Net loss for the three months to June 30 came in at S$2.1 million, compared with S$1.4 million in the preceding year. 

This translates to a loss per share of 0.69 Singapore cent, against a restated loss per share of 0.46 cent previously. 

The drag came from higher operating costs, which surged 23.5 per cent on year to S$40.9 million, outstripping the growth in revenue. Revenue alone was up 21.6 per cent to S$43.4 million.

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"Operating conditions have been tough, marked by worries about slowing global growth, dampened investor confidence and trade tensions," said executive chairman Frankie Tan in a statement on Wednesday. 

The group's current liabilities, including bank borrowings, of S$28 million have also exceeded current assets by S$20.9 million. Part of the current liabilities are contract liabilities of S$9.1 million which are invoiced to customers but yet to be recognised as revenue. 

On Wednesday, Hiap Seng separately also announced a one-for-two rights issue of up to 151,875,000 new shares at five Singapore cents per share.

That would help it raise some S$7.6 million in working capital, if shareholders approve the issue at the group's annual general meeting on Aug 30. 

"We would like to take the opportunity to thank our shareholders for their continuous support throughout these years. Apart from the rights issue, we are currently in active discussions with potential investors to seek ways to strengthen the financial position and capital base of the group," said Mr Tan.

"With the support from banks and shareholders, we believe that we will be able to tide through these tough times."