TEE International : M1Z 0%’s independent auditor, Foo Kon Tan, has issued a disclaimer of opinion relating to the group’s financial statements for the financial year ended Sep 30, 2023.

In a report posted by Tee International to the Singapore Exchange late on Tuesday (Jan 9), the auditor said that firstly it was unable to determine whether adjustments are required to the group’s FY2023 financial statements.

This stems from uncertainty over the group’s opening balances as at Oct 1, 2022, which “form the basis of determining the financial performance, changes in equity and cash flows of the group” for FY2023, it noted.

Foo Kon Tan had previously expressed a disclaimer of opinion in its independent auditor’s report dated Jan 13, 2023, in respect of the group’s FY2022 financial statements.

It said that matters contributing to the modification of its audit report for FY2022 include “limitation of scope on opening balances, insufficient information to complete the audit of the consolidated financial statements of the group, completeness of liabilities, and appropriateness of the going concern assumption”.

The auditor said that it is still unable to obtain sufficient appropriate information to determine whether any adjustments might be necessary to the amounts and disclosures shown in the group’s FY2022 financial statements. This includes the group’s closing balances as at Sep 30, 2022, and opening balances as at Oct 1, 2022.

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It added that its opinion on the FY2023 financial statements is also modified “because of the possible effect of the comparability of the FY2023 financial statements and the FY2022 financial statements”.

Secondly, Foo Kon Tan cited insufficient information to complete the audit of the group’s consolidated financial statements.

For one, it pointed out that the profit or loss for the period Oct 1, 2022, to Feb 19, 2023, of a significant subsidiary, PBT Engineering, was not audited as the subsidiary was disposed of on Feb 20, 2023.

Foo Kon Tan added that the group’s management also did not provide sufficient information for it to complete the audit on certain financial statements’ captions of PBT for FY2022.

This prevented it from determining if adjustments are needed to PBT’s financial information, which has already been incorporated into the group’s FY2022 and FY2023 financial statements.

Thirdly, the auditor said that it was unable to obtain sufficient appropriate information on the completeness of claims against Tee International.

This was because the company had provided corporate guarantees in respect of contracts of former subsidiaries in the engineering and construction segment, and a number of these contracts are still ongoing.

The company’s scheme of arrangement with unsecured creditors has also not been completed, it added.

Lastly, the auditor cited the existence of material uncertainties, which “may cast significant doubt” about the group’s and company’s ability to continue as going concerns.

Foo Kon Tan flagged factors such as the group’s FY2023 net loss of S$257,000 from continuing operations, the amount of its total and current liabilities and assets, as well as the company’s current scheme of arrangement.

The auditor noted that the group’s and the company’s ability to continue as going concerns “is dependent mainly on the successful implementation of the restructuring plan and successful outcome of the scheme of arrangement, the ability to secure financing as and when required, the profitability of future operations, and the continuing support of banks, suppliers, and other parties, and/or an injection of capital or business by a white knight”.

In view of these multiple uncertainties, it therefore said that it was unable to determine if the going concern basis of preparation of these financial statements is appropriate, as well as the adjustments that may be necessary.

In a separate bourse filing on Tuesday, Tee International reported differences between its audited and unaudited financial statements for the financial year ended Sep 30, 2023.

It attributed some of these variances to an audit adjustment for expected credit loss of the company’s inter-companies’ receivables of S$537,000, or an audit adjustment for allowance for impairment loss on investment in subsidiaries of S$3,957,000.

Both of these adjustments were eliminated at group consolidation level.

Other variances were attributed to reclassifications made for presentation purposes, while the rest were listed as immaterial adjustments.

Trading in the shares of Tee International has been suspended since June 2021.