- The auditor pointed to the group's and the company's accumulated losses of RM53.35 million and RM77.65 million respectively in FY2022. As at end-June, the group's and the company’s current liabilities exceeded their current assets by RM109.63 million and RM31.75 million respectively.
KUALA LUMPUR (May 26): Piling and engineering firm Top Builders Capital Bhd's external auditor Kreston John & Gan has flagged significant doubts over the group's future in an audit of its financial statements for the financial year ended June 30, 2022 (FY2022).
In its independent auditors' report filed with Bursa Malaysia on Friday (May 26), Kreston John & Gan said it was unable to obtain sufficient appropriate audit evidence regarding the feasibility of Top Builders' plan to regularise its financial condition by June 29. This provided a basis for a disclaimer of opinion. Top Builders had slipped into Practice Note 17 status on Dec 30, 2021.
The auditor pointed to the group's and the company's accumulated losses of RM53.35 million and RM77.65 million respectively in FY2022. As at end-June, the group's and the company’s current liabilities exceeded their current assets by RM109.63 million and RM31.75 million respectively.
"Consequently, we are unable to evaluate the appropriateness of management’s use of the going concern basis of accounting for the group and the company. As a result, we were unable to form an opinion as to whether the use of the going concern assumption in the preparation of the accompanying financial statements of the group and of the company is appropriate," it added.
Kreston John & Gan also said it was unable to ascertain the accuracy of the adjustment of scheme of arrangements (SOAs) of the group and the company amounting to RM206.51 million and RM14.48 million respectively.
"We have not acted as auditors for one of the subsidiary companies, MM2 Building System Sdn Bhd (MM2B). The financial statements of MM2B for FY2021 and FY2022 have not been audited by other firms of auditors. In view of the matter, we were unable to obtain sufficient appropriate audit evidence to determine the fairness of financial statements of MM2B, which were used to prepared the consolidated financial statements of the company for FY2022," it added.
Kreston John & Gan said it was also unable to verify other payables and accruals amounting to RM23.77 million and RM1.11 million in the financial statements of the group and the company respectively as no relevant supporting documents were provided for our review.
It also noted that the legal documents of the group and the company, which were provided for the auditor's review, were not complete and duly updated. "We were also unable to obtain solicitors’ opinion in relation to the outcome of all the material litigations. Accordingly, we were unable to determine whether potential adjustments are necessary, if any, and related information that may require disclosure in these financial statements."
Separately, Top Builders said its board of directors accepts and acknowledges the auditor’s disclaimers mentioned. "As the shortcomings and shortfalls happened during the previous management and owners, the new management team will rectify and improve any shortcomings and will periodically be highlighted and reported in the coming quarterly announcement as required," it added.
Trading of Top Builders shares was suspended from Nov 8, 2022. The group's shares last traded at two sen. Its market capitalisation stood at RM14.12 million.