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Singapore eDevelopment's auditor draws attention to group's ability to continue as a going concern
SINGAPORE eDevelopment's audit report on its financial statements for the year ended Dec 31, 2016, by its independent auditor Ernst & Young LLP contained an emphasis of matter.
The independent auditor drew attention to Note 2.1 in the financial statements which stated certain conditions which indicate a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern.
The ability of the group to continue as a going concern is dependent on the continued financial support from Hengfai Business Development, a substantial shareholder of the Company.
If Singapore eDevelopment is unable to continue in operational existence for the foreseeable future, it may be unable to discharge its liabilities in the normal course of business. Adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which may differ significantly from the amounts at which they are recorded in the balance sheet. In addition, the group may have to reclassify non-current assets and liabilities as current assets and liabilities.
In response, the board said that the group will be able to continue as a going concern by raising additional funds through the exercise of warrants issued pursuant to the 2016 rights cum warrants issue, the exercise of warrants issued pursuant to 2017 conversion of the HBD loan, the placement of new shares, extension of certain loans maturing within the next 12 months, and generating positive cash flows from its operations.
In addition, the group has also obtained a confirmation from Hengfai that it will provide its irrevocable financial and other support for the next 12 months.