Auditor: Material uncertainty may cast doubt on Perisai Petroleum as going concern

PETALING JAYA: Practice Note 17 (PN 17) company Perisai Petroleum Teknologi Bhd’s external auditor, Messrs Baker Tilly AC, has issued a statement of “material uncertainty related to going concern” in respect of the group’s audited financial statements ended June 30, 2017.
Messrs Baker Tilly highlighted that Perisai incurred a net loss of RM606.95 million and RM308.62 million at the group and company level respectively for the financial period ended June 30, 2017, with its current liabilities exceeding current assets by RM1.34 billion and RM729.54 million.
Hence, the auditor said, the financial conditions as well as other issues indicate that a material uncertainty exists that may cast significant doubt about the group’s and the company’s ability to continue as a going concern.
For instance, Perisai may need to make impairment on the plant and equipment and investments in its joint ventures, given the persistently weak oil prices adversely affecting the demand and charter rates of the group’s oil and gas operating assets.
“The directors have performed an impairment assessment to estimate the recoverable amount of these assets with reference to the valuation performed by an external independent valuer.”
Besides that, Perisai provided corporate guarantee to the lenders of its subsidiaries and joint ventures, including the payment obligations under the Medium-Term Notes Programme. During the financial period, it has recognised an expense of RM88.75 million in respect of the financial guarantee contracts provided to the subsidiaries arising from the remeasurement of the financial guarantee contracts.
Perisai noted that it is in the midst of formalising a restructuring and regularisation plan with its consultants to address its net current liabilities positions and PN17 status.
“The group is pursuing all avenues available to recover the receivables,” it said.
Perisai’s share price closed unchanged at 4.5 sen today on 1.14 million shares done. Year-to-date the stock has lost 47% of its value.