ASIATIC Group said on Wednesday that independent auditor Ernst & Young has included a disclaimer of opinion in the group' s audited financial statements for the financial year ended March 31, 2020 (FY2020), in respect of the material uncertainty on the group' s ability to continue as a going concern.

 

For the year ended March 31, the group incurred a net loss after tax of S$13.5 million. As at March 31, the group' s current liabilities (which includes loans and borrowings of S$21.8 million) exceeded its current assets by S$20.5 million.

 

Ernst & Young wrote: " A subsidiary of the group did not meet its financial covenants on certain banking facilities, and subsequent to year-end a supplier of a subsidiary of the group had written to the subsidiary seeking immediate repayments for overdue balances . . . The group continues to face uncertainties as a result of the disruptions brought about by the Covid-19 pandemic and at the date of this financial statement, the sale of the group' s interests in Maju Intan Biomass Energy (MJE) is still ongoing. These conditions and events indicate the existence of material uncertainties which may cast significant doubt on the ability of the group and company to continue as a going concern."

 

Nonetheless, Asiatic' s board said that it is of the opinion that the group is able to continue as a going concern, as it has commenced discussions with the bank to waive the financial covenant that was not met, and is confident of obtaining this waiver.

 

The group is also currently in negotiations with the supplier on a repayment plan, it said, adding: " The board is confident that the group will continue to receive financial support from the banks and generate positive cash flows from its operations."

 

The group also expects to get some relief from the series of fiscal measures introduced by the Singapore government in response to Covid-19.

 

It added that it had entered into a sale and purchase agreement on March 19 with Hualang Renewable Energy for the sale of the group' s interest in MJE, and the sale is expected to occur before March 31, 2021. Once the sale is complete, the group will be discharged from the corporate guarantees it had provided to financial institutions in support of MJE and is no longer expected to provide further funding to MJE.

 

" Therefore, taking the above into consideration, the board is of the opinion that the group will be able to fulfil its obligations for the next 12 months," Asiatic said.