Ocean International risks losing status as a going concern
By LYNETTE KHOO 26 March 2009
Yet another S-chip has found itself in troubled waters.
The auditor of Ocean International Holdings has drawn attention to material uncertainty which may cast significant doubt about its ability to continue as a going concern. An S-chip is a China-based company listed in Singapore.
Ernst & Young LLP (E&Y) said yesterday that it was unable to express an opinion on the group’s financial statements for the year ended Dec 31, 2008.
One factor was the group’s net loss of 126.54 million yuan (S$28 million) for fiscal 2008.
Another was that current and total liabilities at end-2008 exceeded current and total assets by 69.43 million yuan and 93.65 million yuan respectively.
‘These factors indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern,’ E&Y said in an independent auditors’ report dated March 25.
‘The ability of the group to continue as going concern depends on the group’s bankers continuing to provide financing by renewing loans which are due within 12 months from the balance sheet date and the availability of additional external funding for its working capital needs in the next 12 months,’ it added. As at Dec 31, 2008, the company had a balance of 4.87 million yuan due from one of its subsidiaries, Rizhao Changhua Aquatic Foodstuff Co Ltd.
The auditor said it was not able to obtain sufficient audit evidence to ascertain the recoverability of the carrying amount of the balance.
E&Y said that, based on available information, it was unable to carry out necessary audit procedures to assess the appropriateness of the use of the going-concern assumption in the preparation of the financial statements.
Ocean has been placed on the Singapore Exchange (SGX) watch-list of loss-making companies since March 4, following its third fiscal year of losses and the fall of its market cap below the $40 million threshold over a specified 120 market days.
The group, which processes and distributes processed seafood products, saw its net losses widen to 126.54 million yuan for the year ended Dec 31, 2008, from net losses of 106.36 million yuan for fiscal 2007 as sales declined and finance costs surged.
In March last year, E&Y also highlighted risks that could affect the group’s going-concern status.
Without qualifying its opinion, it drew attention to, among other things, the breach of a loan covenant since fiscal 2006, which resulted in an outstanding bank loan of US$1.7 million payable on demand.
The auditor said then that Ocean had provided US$1 million and S$2 million in security deposits to the bank.
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Ocean International risks losing status as a going concern
By LYNETTE KHOO
26 March 2009
Yet another S-chip has found itself in troubled waters.
The auditor of Ocean International Holdings has drawn attention to material uncertainty which may cast significant doubt about its ability to continue as a going concern. An S-chip is a China-based company listed in Singapore.
Ernst & Young LLP (E&Y) said yesterday that it was unable to express an opinion on the group’s financial statements for the year ended Dec 31, 2008.
One factor was the group’s net loss of 126.54 million yuan (S$28 million) for fiscal 2008.
Another was that current and total liabilities at end-2008 exceeded current and total assets by 69.43 million yuan and 93.65 million yuan respectively.
‘These factors indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern,’ E&Y said in an independent auditors’ report dated March 25.
‘The ability of the group to continue as going concern depends on the group’s bankers continuing to provide financing by renewing loans which are due within 12 months from the balance sheet date and the availability of additional external funding for its working capital needs in the next 12 months,’ it added. As at Dec 31, 2008, the company had a balance of 4.87 million yuan due from one of its subsidiaries, Rizhao Changhua Aquatic Foodstuff Co Ltd.
The auditor said it was not able to obtain sufficient audit evidence to ascertain the recoverability of the carrying amount of the balance.
E&Y said that, based on available information, it was unable to carry out necessary audit procedures to assess the appropriateness of the use of the going-concern assumption in the preparation of the financial statements.
Ocean has been placed on the Singapore Exchange (SGX) watch-list of loss-making companies since March 4, following its third fiscal year of losses and the fall of its market cap below the $40 million threshold over a specified 120 market days.
The group, which processes and distributes processed seafood products, saw its net losses widen to 126.54 million yuan for the year ended Dec 31, 2008, from net losses of 106.36 million yuan for fiscal 2007 as sales declined and finance costs surged.
In March last year, E&Y also highlighted risks that could affect the group’s going-concern status.
Without qualifying its opinion, it drew attention to, among other things, the breach of a loan covenant since fiscal 2006, which resulted in an outstanding bank loan of US$1.7 million payable on demand.
The auditor said then that Ocean had provided US$1 million and S$2 million in security deposits to the bank.
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