CME auditors highlight material uncertainty in FY20 financial statements

TheEdge Fri, Oct 30, 2020 06:23pm - 3 years View Original


KUALA LUMPUR (Oct 30): CME Group Bhd’s external auditors have included an emphasis of matter, drawing attention to a material uncertainty related to going concern in the group’s financial statements for the year ending June 30, 2020 (FY20).

Messrs Kreston John & Gan pointed out that CME had, in a note in its financial statements, said the group and the company had incurred accumulated losses of RM69.35 million and RM69.61 million respectively during FY20, and that their current liabilities had exceeded current assets by RM31.3 million and RM52.19 million respectively.

The auditors said this indicates the “existence of a material uncertainty which may cast significant doubt about the group and the company’s ability to continue as going concerns”.

“Our opinion is not modified in respect of this matter,” said the auditors, indicating that the information in the financial statements is materially correct.

In the Independent Auditors’ Report, the auditors had highlighted the carrying amount of the group’s property, plant and equipment, investment properties and land held for development, amounting to RM28.23 million, RM32.61 million and RM11.93 million as a key audit matter.

These represented 99% of the group’s total non-current assets as at June 30, 2020.

“We focused on this area due to complexities in determining the fair value of the property, plant and equipment, investment properties and inventories, which involved significant estimates and judgements in determining the appropriate valuation methodologies and estimating the underlying assumption to be applied,” said the auditors.

In relation to this, the board of CME said that the group has implemented certain measures which are currently in progress, which include measures to strengthen the production team performance, to manage the cost of existing projects to maintain the profitability and to monitor progress to ensure the projects are completed within the contract period.

The group is also exploring new product ranges and potential business opportunities and is actively participating in projects tendering to increase the opportunities of securing new projects.

It is also obtaining financial support from financial institutions for existing and upcoming projects and has sufficient banking facilities available, should the need arise.

“Based on the above, the directors of the company are in the opinion that the financial position of the group would be further strengthened to address any significant doubt on the group’s and the company’s ability in their use of going concern assumption, and accordingly, realise their assets and discharge their liabilities in the normal course of business,” said CME.

CME’s share price closed unchanged at five sen, giving it a market capitalisation of RM43.26 million.

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