KUALA LUMPUR (April 28): Landmarks Bhd said its external auditor has raised concerns about the group's ability to operate as a going concern in its audited financial statements for the year ended Dec 31, 2022  (FY2022).

The auditor, KPMG PLT, noted that financial statements indicated that the group incurred net losses of RM43.3 million while the company incurred net losses of RM3.2 million for FY2022.

"As of that date, the group’s and the company’s current liabilities exceeded their current assets by RM48.6 million and RM80.5 million respectively," the auditor noted in its report filed with Bursa Malaysia by Landmarks.

This, along with other events and conditions, indicate that material uncertainties exist that may cast significant doubt on the ability of the group and the company to continue as going concerns, said KPMG.

The auditor said Landmarks, in preparing its financial statements, assumed that the disposal or liquidation of all the assets in its wholly-owned subsidiary, Andaman Resort Sdn Bhd (ARSB), will be sufficient to cover the term loan and interest amount demanded by the lender and also other liabilities of ARSB.

"However, it is uncertain that the bank will grant further extension for ARSB to realise its assets to settle its obligation," said KPMG.

Landmarks had also assumed that the group’s inventories, which comprise mainly land held for development in Treasure Bay Bintan, Indonesia which are free of encumbrances can be subject to disposal to third parties or be used as collateral to secure financing for the purposes of funding its operations and any further financial obligations.

"However, there is no assurance the group is able to realise the above properties within the next 12 months," said KPMG.

In its filing, Landmarks — a 21.7% associate of Genting Bhd — highlighted several steps taken or proposed to be taken to address key audit matters that relate to the material uncertainty to going concern as mentioned in the auditor’s report.

It said the group is in advanced negotiations with potential investors to participate for an equity stake in ARSB, adding that the amount will be sufficient to repay Andaman Resort Sdn Bhd's existing banking facilities demanded by the bank.

This, it added, will enable the group to focus on its negotiations with insurance companies for an equitable and fair compensation following a fire incident at The Andaman.

The group said it is also in the midst of revising The Andaman's rebuilding and development concept and will approach financial institutions for development funding purposes, if necessary.

“This will enable the group to focus on its negotiations with insurance companies for an equitable and fair compensation following the fire incident,” it said.

It noted that the group is in the midst of revising its ARSB's rebuilding and development concept, and will approach financial institutions for development funding purposes, if necessary.

Landmarks also said that its inventories, comprising mainly land held for development in Treasure Bay Bintan, which are free of encumbrances, can be disposed to third parties or be used as collateral for fundraising purposes.

“In view of the above, barring unforeseen circumstances, the board and management are confident that Landmarks and Treasure Bay Bintan have adequate resources to continue as a going concern for the next 12 months,” it added.

Shares of Landmarks closed half a sen or 3.7% higher at 14 sen on Friday (April 28), giving the group a market capitalisation of RM97.37 million.