Sumatec falls into PN17, auditors question Kazakhstan venture

PETALING JAYA: Sumatec Resources Bhd has been admitted into the Practice Note 17 (PN17) category after its external auditors Grant Thornton Malaysia's disclaimer opinion on its financial statements ended December 31, 2017.
The auditors said Sumatec's ability to continue as going concern is dependent on a series of corporate exercises including a proposed acquisition of Markmore Energy (Labuan) Ltd (MELL) from its controlling stakeholder Tan Sri Halim Saad.
The proposed acquisition's objective is to obtain new source of funds to generate adequate cash flow for the development and production of the Kazakhstan-based Rakushechnoye oil and gas field owned by MELL's unit CaspiOilGas LLP, in order to achieve positive cash flow from its operating activities and also to settle its major debts and obligations.
However, the auditors said it was unable to find audit evidence in relation to the feasibility and sustainability of the plans.
Sumatec recorded a net loss of RM113.95 million and RM171.06 million at the group and company levels, respectively, as well as a negative cash flow of RM15.33 million and RM9.86 million for the financial year ended December 31,2017.
The group said in a bourse filing that it is looking into formulating a regularisation plan to address its PN17 status, which is required to be submitted to the regulator within 12 months, failing which will face suspension and delisting.
Its shares were unchanged at 6.5 sen with some 39.88 million shares done.