Abterra's auditors resign over non-resolution of outstanding audit matters

MINERAL and resources company Abterra Limited announced on Tuesday morning that its auditors, Mazar LLP, had given notice of resignation on Apr 3 over the "non-resolution" of outstanding audit matters.

Mazar had applied to the Accounting and Corporate Regulatory Authority to seek consent to resign as Abterra's auditors over outstanding audit matters pertaining to coal trader Tianjin Bolangxin International Trading Ltd (BLX), a subsidiary in which Abterra indirectly owns 51 per cent.

The outstanding audit matters, which Abterra says it was trying to resolve with Mazar prior to their resignation, include certain trade transactions of about 211 million yuan (S$44.09 million), prepayments amounting to around 53.7 million yuan and receivables of 9.5 million yuan.

Other payables amounting to approximately 35.4 million yuan and inventories amounting to 104 million yuan were also part of the audit matters.

In addition, the auditors had also raised questions over potential related party transactions and interested person transactions (IPTs), on which Abterra says it was trying to provide information when the auditors tendered their notice.

The company has engaged legal advisers to review and advise on the transactions relating to the potential IPTs, it said.

Abterra highlighted in its exchange filing that the outstanding audit matters and questions raised by the auditors "pertain to BLX and were due, in part, to transactions entered into and matters occurring before (the acquisition date of) Aug 18, 2017" which were "not within the company's control".

"The company's management will review the operational and internal processes of BLX, to streamline such processes to be in line with that of the group and to implement stronger control procedures," it said.

As a result of its auditors resigning, the company will not be able to hold its annual general meeting on Apr 27, 2018, and intends to apply for a waiver and time extension of up to Aug 31, 2018 to hold its AGM for the 2017 fiscal year.

Abterra added separately that its board was of the opinion that the company was able to continue as a going concern as its business was ongoing, credit facilities were available and it has the ability to generate sufficient cash flows to satisfy working capital requirements, among other things.