Making room for renewable energy

ACROMEC, which designs and maintains laboratories and sterile facilities, had an interesting proposition when it sought an initial public offer (IPO) in Singapore in 2016.

Boasting a stellar client list which included Singapore General Hospital, A*Star, and Proctor & Gamble, the homegrown builder of clean rooms sought funds to make further inroads into the rapidly growing healthcare, biomedical, electronics, and research and academia sectors.

But a series of unfortunate events put a brake to its growth. Acromec, which enjoyed a compound annual growth rate of 14.5 per cent in its net profits in the years leading to its IPO, plunged into the red after its debut on the Singapore Exchange. Losses for 2016 were attributed to IPO expenses. In the fiscal year ended Sept 30, 2017, it suffered a double whammy of execution challenges in major projects and "bad luck" in its brownfield projects. It also wanted to penetrate the growing pharmaceutical segment to establish a track record to secure projects from well-known pharmaceutical MNCs. But instead, it faced stiff competitive pricing and cost overruns as a new player. As a result, despite stable revenue of S$43.5 million, it sank deeper into the red, with a net loss of S$4.6 million, compared to a net loss of S$577,000 in FY2016. It ended FY2017 with cash and cash equivalents of S$10.2 million.