HSS Engineering Q4 losses after impairment of RM119.4m

In a filing with Bursa Malaysia, Country View said that the acquisition

KUALA LUMPUR: HSS Engineers Bhd swung into the red in the fourth quarter ended Dec 31, 2018 and also for the financial year after an  impairment on goodwill of RM119.4mil in the final quarter.

It announced on Thursday its net loss in Q4 was RM119.53mil compared with net profit of RM6.05mil. Revenue increased 13.6% to RM46.79mil from RM41.16mil a year ago. Loss per share was 25.71 sen compared with earnings per share of 1.74 sen.

HSS said the result of the annual impairment test on goodwill showed that recoverable amount of the cash generating unit was lower than its carrying amount.

Hence, an impairment loss was recognised which was reduced against the carrying amount of goodwill. While at initial recognition, it was RM282.09mil, the impairment of RM119.53mil reduced the value to RM162.67mil.

However, HSS Engineers was confident this would improved gradually premised on the encouraging prospect in water industry.

According to the notes to the accounts, it said its newly acquired subsidiary, SMHB Engineering Sdn Bhd had started to contribute revenue to the group and this resulted in an increase in engineering design revenue by RM6.9mil. 

However, the increase was offset by the decrease in revenue contributed by high speed rail-reference design consultant 05 project.

“In addition, the suspension of East Coast Rail Line (ECRL) preliminary design has also contributed to the decrease in engineering design revenue,” it explained.

In FY18, HSS reported net loss of RM102.60mil compared with net profit of RM15.03mil in FY18. Revenue was higher at RM189.71mil compared with RM145.66mil.
 
Its engineering design revenue increased by RM11.7mil mainly due to the major on-going projects which included the proposed Tun Razak Exchange (TRX) external roads, West Coast Expressway and ECRL detailed design up to the date of suspension notice. 

SMHB Engineering, which started to contribute revenue, increased  engineering design revenue by RM20.3mil.

“Despite the market challenges, the group has recorded higher core profit after tax of RM16.8mil in FY18   as compared to RM15mil in previous year,” it said.

HSS Engineers order book at end-Dec 31, 2018 was RM546.09mil.