MAINBOARD-LISTED building and construction services provider King Wan Corp will be able to fulfil its payment obligations in the next 12 months, the board told the Singapore Exchange (SGX) on Thursday, after being queried on its financial position.

 

The directors' cash flow forecast is for an average monthly cash balance of about S$5 million to be maintained for the period, to meet the group' s operating requirements.

 

Bourse operator SGX had flagged loss-making company' s upcoming bills payables and bank borrowings of S$34.3 million, as well as its cash and bank balance of " only S$8.2 million" , to ask how the company plans to meet its significant payment obligations.

 

In reply, King Wan attributed its net comprehensive loss in FY2020 to a fair-value loss in equity securities, which did not affect its cash flow and the contributions from its core mechanical and electrical (M& E) engineering services business.

 

Citing continued support from banks, the board said that 87 per cent of ongoing M& E projects have resumed work, and that it is confident that the business segment " is on track to resume operations for all ongoing construction projects by November 2020" .

 

This is even as King Wan had trade receivables of S$5.3 million, contract assets of S$25.3 million and undrawn bank credit facilities of S$15.1 million as at March 31, plus a S$5.0 million temporary bridging loan (TBL) drawn down in May, the board added.

 

" The group is able to utilise operating cash in-flows, undrawn bank credit facilities and TBL to repay its indebtedness as and when they fall due," it said.

 

On the breach of debt covenants with " a few financial institutions" at end-March, the board noted that letters of indulgence or waiver have been obtained and the debt covenants were breached as the net fair-value loss reduced the group' s net assets.

 

" This had no significant impact on the operations of the group and will not result in the group facing a cash flow problem," the board added.

 

" The group is not in default for any outstanding loans. The financial institutions did not accelerate the maturity dates of the loans or recall any outstanding loans."