Concerns raised over Alam Maritim’s accounts

Doubt about its ability to continue as a going concern

“Moving forward, we shall continue to transform the business with an asset-light strategy in mind.” Alam Maritim Resources Bhd

PETALING JAYA: Alam Maritim Resources Bhd’s independent auditor Messrs Al Jafree Salihin Kuzaimi PLT (MAJ) has expressed an unqualified opinion with material uncertainty related to the company as a going concern.

This relates to the financial statements of the group for the financial year ended Dec 31, 2020 (FY20), a statement issued to the Bursa Malaysia yesterday said.

“We draw attention to Note 2.1 of the financial statements which indicates that the group had incurred a loss for the FY20 of Rm119.83mil and its current liabilities exceeded its current assets by Rm20.25mil as at Dec 31, 2020,” MAJ said.

“These conditions indicate, along with other matters set forth in Note 2.1, the existence of a material uncertainty which may cause significant doubt about the ability of the group to continue as a going concern,” it added.

However, the independent auditors also noted that the group is currently undergoing a restructuring scheme that is targeted to be completed in 2022.

“Our opinion is not modified in respect of this matter. In our opinion, the financial statements give a true and fair view of the financial position of the group as at Dec 31, 2020, in accordance with Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards and the requirements of the Companies Act, 2016,” MAJ said.

MAJ noted that its audit was in line with the approved auditing standards and the International Standards on Auditing.

“We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion,” it said.

Commenting on this development, Alam Maritim’s board said it was in the midst of formulating a restructuring scheme on its borrowings.

“We have submitted an application for assistance from the Corporate Debt Restructuring Committee of Bank Negara to mediate between the group, certain subsidiaries, joint-venture companies and associated companies and their respective financiers,” Alam Maritim said.

“Moving forward, we shall continue to transform the business with an asset-light strategy in mind. In line with this approach, we have sought to dispose of various ageing vessels and surplus vessels that have little probability of securing or servicing contracts,” it added.

Alam Maritim also said it expects its financial position and liquidity to improve within the next 18 months, and this going concern issue will then be addressed accordingly.

The group also noted that none of the key audit matters that had been disclosed in the independent auditors’ report relates to the latest going concern matters that have just been highlighted.

MAJ said that among the more significant key audit matters that was highlighted by the independent auditor were the impairment of the group’s property, vessels and equipment.

“The prolonged periods of certain vessels being idle were impairment indicators assessed by the management. An assessment was performed in accordance with the requirements of MFRS 136: Impairment of assets,” it said.

“As at Dec 31, 2020, the carrying value of (the) vessels is Rm169.89mil, representing 77% of the group’s property, vessels and equipment and 36% of total assets.

“The recoverable amounts for vessels that are laid up are determined based on fair value less costs to sell (FVLCTS), and for assets identified for continuing use, these are determined based on value-in-use,” it added.

An impairment loss of Rm35.27mil for the vessels was recognised during the financial year and MAJ said it had focused on this area.

Its audit steps and procedures included evaluating and validating Alam Maritim’s assessments for impairment indicators for the vessels based on the financial results during the year.

Pertaining to Alam Maritim’s vessels with impairment indicators, MAJ had, among other steps, discussed with management on the basis of the expected selling price and checked the estimated selling price with valuations that were performed by independent valuers and offers received from potential buyers, where available.