Astaka auditors flag going concern issue

THE independent auditors of Astaka Holdings have drawn attention to potential doubts about the company's ability to continue as a going concern, and flagged uncertainties related to the pending outcome of an independent review.

The opinion of the independent auditors from KPMG remains unqualified, the group said in a regulatory update on Monday night.

Due to Malaysia's property market slowdown which impacted the sale of Astaka's development properties, Astaka may not be able to generate sufficient operating cash flows for the next 12 months to cover operating costs and settle current liabilities. 

"This indicates that a material uncertainty exists that may cast significant doubt on the ability of the group and the company to continue as a going concern. Our opinion is not modified in respect of this matter," the auditors said in an emphasis of matter. Their audit report was on the company's financial statements for the financial year ended June 30, 2019.

Astaka had incurred a net loss of RM113.7 million (S$37.4 million) for the year ended June 30. It also recorded RM400.7 million in development properties - completed properties held for sale and future phases of land to be developed.

With this in mind, the group's FY2019 financial statements have been prepared on a going concern basis - which KPMG has deemed appropriate. This was after taking into consideration an undertaking by Astaka's controlling shareholder to provide the necessary financial support for the group to continue its operations and pay any debts which are due.

To ensure there is enough funds to meet obligations and working capital needs, Astaka has also prepared an 18-month consolidated cash flow forecast from July 1, 2019. Assumptions made in the forecast include a settlement agreement with a main contractor over outstanding balances of RM74.4 million; and the group being able to sell its completed properties and launch new projects planned during the forecast period.

KPMG also flagged uncertainties related to the pending outcome of an independent review by an external reviewer regarding the circumstances leading to an adjustment in the prior year. As the review is still ongoing and could provide new information and findings - uncertainties currently exist and may impact the financial statements, KPMG added.

Astaka shares have been suspended since September.