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EMS Energy's auditors BDO have issued a disclaimer of opinion on the company's consolidated financial statements for FY2016 stemming from a lack of appropriate audit evidence.
The auditor flagged going concern doubts and completeness of liabilities, impairment of property, plant and equipment, impairment of available-for-sale financial assets, specifically investments in unquoted equity shares, and valuation of financial derivative liabilities.
In response to the audit report, EMS says the group's financial position will be "substantially improved" upon successful completion of its High Court-approved schemes of arrangement.
The company is also looking to raise funds through a placement or rights issue, and further liabilities will be cleared when subsidiary Koastal Industries is liquidated.
BDO highlighted that all bank facilities to the company have been withdrawn and that the company has no revenue-generating activities in Singapore as both its subsidiaries, Koastal Industries and EMS Energy Solutions, have ceased operations.
BDO's audit report showed the group incurred a loss of around S$120 million for the financial year ended Dec 31, 2016, rising from major customer contract terminations and letters of demands from creditors and borrowers.