KUALA LUMPUR (Oct 23): Candy maker Khee San Bhd (KL:KHEESAN) has received a qualified opinion with material uncertainty related to its ability to continue as a going concern in its audited financial statements for the financial year ended June 30, 2025 (FY2025), following a delay in the implementation of its Practice Note 17 (PN17) regularisation plan.
In a filing with Bursa Malaysia on Thursday, the group said its external auditor, Messrs Kreston John & Gan, issued a qualified opinion after noting accumulated losses of RM202.25 million at the group level and RM122.11 million at the company level as at end-June 2025.
The auditors also pointed out that Khee San’s current liabilities exceeded its current assets by RM121.52 million at the group level and RM13.16 million at the company level, raising significant doubt about the appropriateness of using the going concern basis for the financial statements.
“Due to the delay in the implementation of the regularisation plan, we were unable to obtain sufficient appropriate audit evidence to conclude whether it is appropriate to use the going concern assumption,” the auditor said in the report.
The company said its financial statements were nevertheless prepared on a going concern basis, with the validity of that assumption dependent on the successful implementation of its regularisation plan and continued financial support from substantial shareholders.
The same auditor had also previously flagged a material uncertainty related to the group’s ability to continue as a going concern in its FY2023 audited financial statements.
Khee San noted that its regularisation plan, which was approved by Bursa Securities on Aug 19, 2024, is expected to enable the group to generate sufficient cash flow to meet obligations and sustain operations once implemented. Bursa has granted the group an additional six months until Feb 18, 2026 to implement the plan.
The plan entails a rights issue with warrants, a scheme of arrangement with creditors, a RM137.52 million share capital reduction, and the establishment of an employee share scheme of up to 15% of its share base for eligible directors and employees.
Under the rights issue, Khee San will issue up to 960.96 million shares and 549.12 million warrants, raising between RM65 million and RM96.1 million. Of the proceeds, RM51.2 million will be used to settle amounts owed to scheme creditors.
Khee San slipped into PN17 status in November 2021 after its wholly-owned subsidiary Khee San Food Industries Sdn Bhd was placed under judicial management, following an application by Maybank Islamic Bhd.
The company said it expects to resolve the issues relating to the material uncertainty within the next financial year.
Shares in Khee San fell two sen or 7.69% to 24 sen on Thursday, valuing the group at RM32.95 million.
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