KUALA LUMPUR: E.A Technique (M) Bhd's auditors have flagged concern over the Practice Note 17 company's ability to stay afloat.
Messrs KPMG PLT issued an unqualified audit opinion with a material uncertainty related to going concern in the Independent Auditors' Report for the financial statements for the financial year ended Dec 31, 2023
It said the group and companies' liabilities exceed their assets by RM239 million and RM255.3 million respectively.
The group and the company are expected to make repayments of RM65 million and RM71 million respectively, to the scheme creditors after the finalisation of the regularisation plan according to its scheme of arrangements.
The regularisation plan is expected to be completed in June 2024 and repay RM40.9 million of short-term borrowings to the lenders of the group and the company.
KPMG said repayments to the scheme creditors need to be completed no later than 18 months from Jan 12, 2023, i.e., by Jul 11, 2024, even in the event that the regularisation plan extends beyond this stipulated date.
It said the aforesaid events or conditions indicate the existence of material uncertainties which may cast significant doubt on the ability of the group and the company to continue as a going concern.
KPMG said the group and the company prepared the financial statements under the assumption that Bursa Malaysia Securities Bhd will approve E.A. Technique's regularisation plan and succesfully implement it.
This includes the fund-raising exercise arising from the proposed share issuance.
It also was based on the ability of the group and the company to attain profitable operations, generate sufficient cash inflows from their operations and to successfully obtain extension of the expiring contracts.
E.A. Technique first submitted the regularisation plan to Bursa Securities on April 26, 2023, and on Dec 1, 2023, resubmitted the regularisation plan for approval.
KPMG said in the event the timely implementation and approval of the regularisation plan are not successful, the group and the company may be unable to realise its assets and discharge their liabilities in the normal course of business.
Then it said, the financial statements of the group and the company may require adjustments relating to the recoverability and classification of recorded asset amounts and classification of and additional amount of liabilities, that would otherwise be required.