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Disclaimer of opinion by independent auditor on Ayondo's FY2018 financial statements

THE independent auditor for fintech group Ayondo has issued a disclaimer of opinion on the Catalist-listed firm's FY2018 financial statements.

Ernst & Young (EY) explained that it has not been able to obtain sufficient and appropriate audit evidence to conclude whether or not it was correct for Ayondo to use the assumption of a going concern in preparing the statements. It noted that Ayondo's current liabilities and total liabilities exceeded its current assets and total assets by CHF 8.258 million (S$11.337 million) and CHF 8.279 million respectively as at Dec 31, 2018.

Also, Ayondo posted a net loss of CHF 50.24 million and had a negative operating cash flow of CHF 5.95 million for FY 2018.

In its regulatory filing on May 25, Ayondo announced the disclaimer of opinion by EY. However, it also provided the justification for using the going-concern assumption.

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The company stated that it should be able to successfully dispose of a 99.91 per cent stake in its indirect United Kingdom subsidiary Ayondo Markets, given that it has already secured irrevocable undertakings from shareholders who hold an aggregate of approximately 55.49 per cent of the total number of issued shares of the company to vote in favour of the proposed disposal.

Also, its restructuring and fundraising plans are underway, Ayondo said.

EY could not ascertain as well if it was appropriate for Ayondo to split an information technology (IT) platform cost into an expense - of CHF 448,000 - and an asset - of CHF 832,000. The company made an amortisation charge of CHF 71,000 on the capitalised intangible asset and fully impaired the remaining CHF 761,000 subsequently. As limited information was available,  the independent auditor was unable to express an opinion on Ayondo's treatment of the platform cost.

The company did not address this in its May 25 announcement.

Trading in Ayondo shares has been suspended since Feb 1.