KPMG reports significant uncertainty over Marine & General’s ability to continue operating
KUALA LUMPUR (September 30): The external auditor of Marine & General Bhd (M&G) has issued an unqualified opinion with significant uncertainty related to its ability to continue operating.
In a stock market filing Thursday, MM. KPMG PLT drew attention to the shipping logistics service provider’s net loss of RM 218.88 million for the year ended April 30, 2021 (FY21), when the current liabilities of the group and the company exceeded its current amount. assets of RM18.64 million and RM 56.48 million respectively.
“These events and conditions, as well as other matters as described in note 1 (b), indicate that there are significant uncertainties which may cast significant doubt on the ability of the group and the company to continue as a going concern. “said the auditor.
The main audit subjects are the depreciation of vessels, the accounting for debt restructuring and the depreciation of investments in subsidiaries.
M&G said it had already started the process of settling net current liabilities by negotiating a financing repayment moratorium with its lenders for a period of up to nine months, which would allow the group to reduce its current liabilities by 31 million ringgit and to help the group to fulfill its other obligations and projects for the next fiscal year.
He added that he will continue to focus on cost optimization and rigorous cash flow management, while maintaining safety and quality services to stay competitive.
For the first quarter ended July 31, 2021 (1QFY22), M & G’s net loss widened to RM17.17 million from RM14.97 million a year earlier, due to lower finance costs and depreciation of ships.
Quarterly revenue fell 19.3% to RM44.66 million from RM 55.29 million. The group noted that this drop was in line with the lower operating level for the quarter under review, as the oil and gas industry remained weak due to the contraction in demand for oil caused by the continuing Covid pandemic. -19.
As a result, oil companies have reduced their drilling activities, which consequently affected the demand for offshore support vessel services operated by the upstream division.
M & G’s upstream division revenue fell 21.7% to RM 30.2 million from RM 38.55 million the previous year. The revenue of its downstream division decreased 13.6% to RM14.46 million from RM16.73 million previously.
âThe decline in demand for oil and its derivatives has also negatively affected the demand for services from oil tankers operated by the group’s downstream division.
âAs a result, the fleet utilization for the upstream division and the downstream division deteriorated to 59% and 66% from their respective levels in the previous year. The upstream division remained the main contributor to revenue, generating 68% of the group’s revenue, while the downstream division generated the balance 32%, âthe group said in a statement.
Looking ahead, M&G said the ongoing Covid-19 pandemic remains a key risk to its outlook for FY22, but the group’s board of directors expects the pandemic-induced restrictions be gradually lifted by 2022, which would allow the resumption of economic activities.
âUnder these conditions, the Board of Directors remains cautious about the outlook for the current financial year. In the longer term, the board will strive to ensure that the two divisions remain competitive, âExecutive Chairman Datuk Mohammed Azlan Hashim said in a separate statement.
In addition to this, the company also announced that it had triggered the prescribed criteria of Practice Note 17 (PN-17), after M & G’s equity on a consolidated basis fell to 25% or less of its registered capital, or below 40 million ringgit. , based on M & G’s unaudited interim financial results for 1QFY22.
“Regarding the triggering of PN-17, M&G will not be classified as a PN-17, in accordance with the relief measures implemented by Bursa Malaysia, under which the companies concerned will be exempted from complying with PN obligations. -17 for a period of 18 months.
M&G shares closed at 11.5 sen on Thursday, resulting in a market cap of RM83.25 million. The stock has fallen 32.35% since the start of the year.