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Astaka explains why its shares should not be suspended
THE board of Catalist-listed property developer Astaka Holdings on Friday said that it is of the opinion that the company's securities should not be suspended, because it "believes the group has the ability to continue as a going concern".
This was despite the fact that its audited financial statements for the fiscal year ended June 30, 2019 showed the group incurring a net loss of RM113.7 million (S$37.5 million). The statements also showed the group recording development properties amounting to RM400.7 million, representing the completed properties held for sale and future phases of land to be developed.
"Due to the slowdown in the property market in Malaysia, the group may not be able to generate sufficient operating cash flows for the next 12 months to cover its operating costs and settle its current liabilities," it said.
"Notwithstanding the above, the financial statements have been prepared on a going concern basis. To support the financial statements having been prepared on going concern basis and to ensure the adequacy of funds required to meet the group's obligations and working capital needs, the group has prepared an 18-month consolidated cash flow forecast from July 1, 2019."
In preparing this forecast, the group made some key assumptions, such as the fact that it had reached a settlement agreement with the main contractor of a project last October to settle the remaining outstanding balances of RM74.4 million, inclusive of interests, in instalments until June 30, 2020.
Following the execution of the settlement agreement, the main contractor has issued a letter of withdrawal to the group confirming the withdrawal of its claim of RM125.3 million and all demands and claims that it had made against the group.
Astaka also assumed that it was able to sell its completed properties and launch the new projects as planned during the forecast period.
"The above matters represent a material uncertainty that may cast a significant doubt on the ability of the group and the company to continue as a going concern and therefore, the group and the company may not be able to realise their assets and discharge their liabilities in the normal course of business," it said.
But it added that it took into consideration that the company's controlling shareholder has undertaken to provide the necessary financial support to the group to enable it to continue its operations and pay its debts as and when they fall due, and the directors believe that the group will be able to continue operations in the foreseeable future.
It also believes that the preparation of the accompanying consolidated financial statements on a going concern basis is appropriate.
According to Bloomberg data, Astaka is 66.55 per cent held by its executive chairman, Daing A Malek Daing A Rahaman, who is also a royal court member. Astaka shares have been suspended since September.