KUALA LUMPUR (Nov 5): GETS Global Bhd's external auditor Messrs PKF has flagged the existence of material uncertainty in its financial statements for the financial period ended June 30, 2018 (FP18) that may cast significant doubt on the group’s ability to continue as a going concern.

In a filing with Bursa Malaysia today, the transportation services company said its auditor had drawn attention to the group's net loss of RM12.25 million in FP18 and that its current liabilities exceeded its current assets by RM20.57 million.

As a result, the auditor also expressed its unmodified opinion on the results for FP18.

Key audit matters raised by PKF include that of its property, plant and equipment balances which amounted to RM71.24 million as at June 30, 2018, of which express buses and city buses represented 31% of the total.

However, the express bus service has reported significant losses during the year of RM9.51 million, therefore indicating that the express buses may be impaired.

PKF also noted that the group's trade receivables are stated at their original value less appropriate impairment for estimated irrecoverable amounts. As at June 30, 2018, trade receivables, net of impairment, amounted to RM13.62 million, which represented 59% of the group’s current assets.

"This area has been identified as a key audit matter as the impairment of trade receivables is assessed and calculated for each individual debtor balance with reference to historical collection trends and other risk characteristics and involves management’s judgement and estimate on appropriate parameters and assumptions to determine recoverability," it said.

The auditor also pointed out that GETS Global's inventory balances as at June 30, 2018 amounted to RM14.19 million, representing 14% of total assets. Inventories constitute mainly raw material, work-inprogress, fuel and spare parts, new coaches and used coaches. 

"Net realisable value (NRV) is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make the sale.

"However, changes to the assumptions could result in a material change in the carrying amounts of inventories and the associated movements recorded in the statements of profit or loss and other comprehensive income.

"There is therefore a risk that the estimates of net realisable values exceed future selling prices, resulting in more losses when inventories are sold. The determination of the estimated NRV of these inventories is critically dependent upon the group’s expectations of future selling prices," it added.

On Feb 28, GETS Global, formerly known as KBES Bhd, had announced that it was changing its financial year from Dec 31 to June 30. As such, the current financial year covers a period of 18 months from Jan 1, 2017 to June 30, 2018.

Shares of Gets Global were untraded today. It last closed at 14 sen on Friday, for a market value of RM18.27 million.