Can Scomi Engineering keep going?

scomiKUALA LUMPUR: Scomi Engineering Bhd (SEB)’s independent auditor KPMG PLT cast doubt as to whether SEB can continue as a going concern.

The Edge reported SEB as telling Bursa Malaysia that KPMG had drawn attention to SEB and its subsidiaries’ financial statements for the financial year ended March 31, 2017, with regard to SEB’s dispute with, and legal proceedings against, Prasarana Malaysia Bhd over the RM494 million Kuala Lumpur Monorail Expansion contract.

KPMG said the SEB group had outstanding revolving credits and bank overdraft totalling RM213.2 million owing to the project lenders that were classified as current liabilities.

“These events or conditions along with other matters indicate that a material uncertainty exists that may cast significant doubt on the ability of the group and of the company to continue as going concerns. Our opinion is not modified in respect of this matter,” KPMG said in its auditor’s report.

According to The Edge, in its report, KPMG said the action against Prasarana and the appeal hearing on the litigation matter of the project are currently in progress with the hearing dates scheduled for July 31, and Aug 28, 2017, respectively.

“Therefore, the ultimate outcome of these and related recoveries of amounts owing on this project cannot presently be determined. In relation to this, the group has yet to secure further extension from the lenders who have provided project financing for the project,” it added.

In response, SEB said it had started to pursue all avenues available to recover the claims relating to Prasarana.

The Edge reported SEB as saying it was also looking at various fundraising exercises, with regard to the use of its technology in new markets via synergistic ventures that could take about six months for closure.

SEB’s management said it would continue to bid for new projects in both the monorail and commercial vehicles segments.

These measures, it said, should should address the going concern issue.

“SEB will continue to focus on cost optimisation programmes and continuous product improvements and developments to remain competitive in each of the sectors it is involved in,” The Edge quoted SEB as saying.

SEB shares were not traded yesterday. It last closed at 27 sen for a market capitalisation of RM92.3 million.

SEB posted an unaudited net loss of RM19.76 million for FY17 compared with a loss of RM1.84 million in the preceding year.