Hiap Tong Corp has enough resources to carry on despite virus hit to construction, says its board

CATALIST-LISTED crane provider Hiap Tong Corp has enough financial resources and banking facilities for its business and financing needs, the board told the Singapore Exchange (SGX) on Thursday.

It was responding to SGX queries on the impact of the Covid-19 pandemic on the construction sector in Singapore and Malaysia. This industry contributed about 30 per cent of Hiap Tong's lifting and haulage services revenue in FY2020.

Even with the hit to construction, Hiap Tong is still serving other the essential sectors such as the petrochemical and marine industries, the board noted.

It said: "In view of the Covid-19 pandemic, the group has proactively managed its costs and monitored its cash flow to ensure that there are sufficient financial resources available for its business needs. It has also maintained sufficient banking facilities to meet its short-term and long-term financing needs."

It added that the increase in gearing to 0.62 times as at March 31, from 0.51 times the year before, could be attributed to the adoption of new accounting standards. Otherwise, the gearing ratio would have decreased to 0.40 times, the board said.

Meanwhile, the board also said that it believes it has enough safeguards to prevent an uneven concentration of authority in just one person.

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Flagging founder Ong Teck Meng's dual roles as chief executive and chairman, as well as the fact that the other two executive directors are his relatives, the SGX had asked about the board's division of responsibilities between its leadership and management.

The directors replied that they found it "in the best interests of the group to adopt a single leadership structure as the current size and scale of the group's business and operations do not warrant a division of duties".

The audit, nomination and remuneration committees are chaired by independent directors, and a lead independent director is around "to provide leadership in situations where the chairman and CEO is conflicted" or other circumstances, the board added.