AUDITORS for Catalist-listed SinoCloud Group have flagged risks to the ability of the group to continue as a going concern.
Noting that the group recorded a net loss of HK$112.5 million (S$19.5 million) and incurred negative cashflow of HK$16.6 million for the year ended March 31, 2016, the auditors, RT LLP, said that its ability to turn profitable again is largely dependent on a rise in profit contribution from the Internet data business of Guiyang Tech and an increase in positive future contribution by the group's associate China Satellite Group, acquired in 2013.
RT LLP also had concerns over further impairment of China Satellite Mobile Communication Group, and the recoverability of convertible loan receivables and interest-free advances and deposits.
The board said in response that the group continues to tighten cost controls over operating expenses, and that its Internet data centre, which reported a profit after tax since January this year, is expected to contribute profit to the group.
SinoCloud Group is also looking for alternative funding options, including equity and debt financing to strengthen its cash position as well as for future developments, it added.
Based on these, the board believes that it will continue as a going concern.