By SHAHEERA AZNAM SHAH / Pic By BLOOMBERG
PRESTARIANG Bhd’s independent auditor has raised concerns over the company’s ability to continue operating amid its currently negative cashflow and loss after taxation for the financial period which ended in June 2019 (FY19).
In an exchange filing yesterday, the technology company said its independent auditor, Crowe Malaysia PLT, has included a statement of material uncertainty related to a going concern in its Sept 19 independent auditors’ report on Prestariang.
“During the FY19, the group and the company recorded negative operating cashflows of RM72.25 million and RM12.37 million respectively, and loss after taxation of RM8.96 million and RM53.32 million respectively.
“These indicate that a material uncertainty exists, which may cast significant doubt on the group’s ability to continue as a going concern and whether the group has sufficient cashflows to meet their obligations as and when they fall due,” Crowe Malaysia said.
It noted that Prestariang has assessed its working capital sufficiency with the support of a cashflow projection and has concluded that the group will have sufficient working capital to meet its financial obligations.
The directors also believe no material uncertainty exists over the group’s ability to continue on a going concern basis.
“Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary if the group and the company are unable to continue as a going concern,” the auditor said.
It also highlighted the termination of the government’s Sistem Kawalan Imigresen Nasional (SKIN) project, which has resulted in a legal tussle between the government and Prestariang to recover the sums due under the project.
On April 15, 2019, the company’s subsidiary, Prestariang Skin Sdn Bhd (PSkin), filed a legal claim of RM732.86 million in relation to the termination of the SKIN project.
Prestariang said it had incurred substantial expenses in extensive technical studies and works on the project since 2014.
It had also entered into numerous third-party contracts in commencing the project.
PSkin had secured a 15-year concession on Aug 9, 2017, to manage and design a new immigration and border control system for the Immigration Department to replace the current system.
“The group’s negative operating cashflow of RM72.25 million is reported after taking into account the increase in SKIN’s trade receivable of RM175.46 million from the government.
“Without SKIN’s increase in trade receivable, the group’s operating cashflow would have been positive,” Crowe Malaysia said.
Prestariang’s share price slumped 3.96% to close at 48 sen yesterday, bringing its market capitalisation to RM232.48 million.