KUALA LUMPUR (March 28): Sarawak Cable Bhd (KL:SCABLE) said its external auditor has expressed a disclaimer of opinion on the Practice Note 17 (PN17) company’s audited financial statements for the financial period ended Nov 30, 2024 (FY2024), citing multiple material uncertainties that cast significant doubt on its ability to continue as a going concern.
This marks the third time that Sarawak Cable’s financial statements have been flagged by its auditor, following similar disclaimers of opinion for FY2022 and FY2023.
The FY2024 period covers an 18-month period following the company's move to change its financial year end from May 31 to November 30.
In a bourse filing on Friday, the financially distressed power cable and wire firm said its external auditor, Baker Tilly Monteiro Heng PLT, was unable to obtain sufficient appropriate audit evidence to support various items in the financial statements for FY2024, leading to the disclaimer of opinion.
Key concerns raised include uncertainties surrounding the accuracy of the cost of the company's inventories, the recoverability of and expected credit losses on trade and other receivables, the accuracy of bank balances and borrowings, as well as the completeness of trade and other payables, income and expenses, and revenue.
"In accordance with the requirement of the Companies Act 2016 in Malaysia, we report that in our opinion, the accounting and other records for the matter as described in the Basis for Disclaimer of Opinion section have not been properly kept by the company in accordance with the provision of the Companies Act 2016 in Malaysia.
"In our opinion, we have not obtained all the information and explanations that we required," Baker Tilly said.
The auditor noted that Sarawak Cable has formulated a plan to regularise its financial conditions, which includes a proposed asset revaluation, a share capital reduction, an issuance of new shares to raise funds for capital and settlement of creditors outstanding debts, and a scheme of arrangement with its creditors.
Baker Tilly also noted that Sarawak Cable's directors had said that the ability of the company to continue as going concerns was dependent on the successful implementation of its regularisation plan, the ability of subsidiaries to generate sufficient cash flows to meet its financial obligations, and the continuing support from its bankers and creditors.
"We have not been provided with the cash flow forecast incorporating the effects arising from the proposed regularisation plan to assess the ability of the group and of the company to continue as going concerns.
"Accordingly, we are unable to obtain sufficient appropriate audit evidence to support the validity of the assumption adopted by the directors in preparing the financial statements on a going concern basis," Baker Tilly said.
Sarawak Cable fell into PN17 status in September 2022 after the external auditor questioned its viability as a going concern. The company appointed Malacca Securities Sdn Bhd as its principal adviser to prepare a plan to regularise its condition, but has yet to submit the plan to Bursa Malaysia.
Instead, the company has since obtained three extensions from Bursa to submit the plan, with the latest extension granted till March 31. A week ago, the company submitted an application, seeking a further extension of time.
Shares of Sarawak Cable closed 0.5 sen or 5.88% lower at eight sen on Friday, giving the group a market capitalisation of RM31.9 million.
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