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Kim Heng widens Q2 loss on higher depreciation of fixed assets

SECOND-QUARTER net loss after tax for Kim Heng Offshore & Marine Holdings almost doubled on significantly higher other operating expenses due to higher depreciation of its fixed assets.

The oilfield services group posted a net loss of S$2.79 million for the three months ended June 30 2017, up 97 per cent from Q2 FY16 net loss of S$1.42 million.

Revenue was S$7.41 million, 4 per cent lower compared to the year-ago period.

This was offset by a 34 per cent increase in other income to S$296,000.

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Despite having trimmed most expenses in its books, the group was dragged deeper into the red in Q2 as its other operating expenses took a 162 per cent hike to S$999,000, owing to higher depreciation of property, plant and equipment consequent to a revaluation of its land and buildings.

First half net cash from operating activities was negative S$326,000, compared to a positive S$2.25 million.

The group's debt to equity ratio, standing at 0.3, remains relatively low compared to the more highly geared balance sheets of cash-strapped entities in the troubled offshore and marine sector.

Kim Heng took advantage of its lower gearing and access to unused IPO (initial public offering) proceeds to acquire three anchor handling tug supply vessels at bargain prices. These vessels were auctioned at a bank sale after their previous owner, Swiber Holdings, applied to be placed under judicial management.