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Auditor issues disclaimer of opinion on Viking Offshore's FY18 statements, raises going concern doubts

VIKING Offshore and Marine's (VOM) independent auditor, Ernst & Young LLP (EY), has issued a disclaimer of opinion on the group’s financial statements for the financial year ended Dec 31, 2018.

The auditor noted certain conditions and events which "may cast significant doubt on the ability of the group to continue as a going concern".

The offshore and marine system solutions provider had incurred a FY2018 net loss after tax of about S$28 million, and as at Dec 31, the group’s total borrowings was S$33.8 million, of which about S$25 million were classified as current liabilities.

Included in the S$25 million current liabilities were S$15 million worth of loans that had defaulted as at Dec 31, noted the auditor.

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It said the group’s loans and borrowings that were in default and due for repayment in the next 12 months exceeded its cash and bank balances of S$3.6 million as at Dec 31.

The group was also served with an application to the Singapore High Court by one of the group’s lenders for a winding up order to be made against VOM.

"Based on the information available to us, we have not been able to obtain sufficient audit evidence to satisfy ourselves as to the appropriateness of the use of the going concern assumption in the preparation of the financial statements," said EY.

The company said in a bourse filing that its board of directors believed the use of the going concern assumption was appropriate, citing the group will be applying for a debt moratorium and debt restructuring arrangement to address its outstanding past due loans and borrowings.

It is also in discussions and/or looking for potential investors to secure additional funding.

Furthermore, the group is taking active steps to divest certain assets to pare down borrowings, and expects to generate adequate cash flows from its operations to repay its trade-related debt obligations.

VOM's shares were unchanged at S$0.004 prior to the group calling for a trading halt on Tuesday morning.