SARAWAK Cable Bhd has been flagged by its external auditors over the cable manufacturer’s ability to continue to do business.
Messrs Ernst & Young PLT (EY) issued a modified unqualified audit opinion with emphasis of matter on material uncertainty relating to going concern, in respect of Sarawak Cable’s audited financial statements for the financial year ended Dec 31, 2019, according to Sarawak Cable’s bourse filing today.
They drew attention to the group and company incurring a net loss of RM86.6 mil (2018: RM38.8 mil) and RM104.2 mil (2018: RM34.7 mil) respectively during the year ended Dec 31, 2019 and, as of that date, the group and company’s current liabilities exceeded their current assets by RM169.9 mil (2018: RM184.7 mil) and RM229.1 mil (2018: RM144.1 mil) respectively.
EY also raised a few concerns such as revenue from long-term transmission lines construction contracts; impairment assessment of property, plant and equipment – helicopters and impairment assessment of concessions financial assets.
The auditors said a significant portion of the group’s and company’s revenue was derived from contracts with customers to build transmission lines and such contracts generally span over more than one accounting period.
Sarawak Cable was also in the process of formulating a proposed debt-restructuring scheme to deal with the financial conditions of the group, EY said.
“Should the going concern basis for the preparation of the financial statements be no longer appropriate, adjustments to the amounts and classification of assets and liabilities may be necessary. Our opinion is not modified in respect of this matter,” the auditors said.
On June 26, 2020, Sarawak Cable said it posted a net profit of RM550,000 for the first quarter ended March 31, 2020, against a net loss of RM5.69 mil a year earlier, mainly due to unrealised gain on foreign exchange.
This was despite the group achieving a lower revenue of RM152.69 mil versus RM181.76 mil.
Sarawak Cable said it will finalise its debt-restructuring scheme before the financial year ending Dec 31, 2020 and will continue to operate as a going concern.
The counter’s shares dipped 6.9% to 27 sen after the midday break, valuing the company at RM85.6 mil. – July 16, 2020
