You are here

Furniture seller Lorenzo's auditors issue disclaimer of opinion on financials

LORENZO International's independent auditors have issued a disclaimer of opinion on the furniture seller's financial statements for the year ended Mar 31, as the company separately issued a notice on its three straight years of pre-tax losses.

Lorenzo also issued audited financials for the financial year that put its pre-tax losses at S$10.4 million for that financial year, deeper than the earlier-reported unaudited S$9.2 million loss, among other discrepancies.

Its latest six-month daily average market capitalisation was S$6.4 million as at Thursday, it said in a Singapore Exchange (SGX) announcement.

Under Singapore's listing rules, mainboard companies will be put on the financial watch-list if they record pre-tax losses in three straight years, and have an average daily market capitalisation of less than S$40 million over six months. 

sentifi.com

Market voices on:

Lorenzo is currently under the minimum trading price watch-list by the SGX, which is for mainboard companies that record a volume-weighted average share price of less than S$0.20 and an average daily market capitalisation of less than S$40 million over the last six months.

Auditor Foo Kon Tan LLP said it did not obtain enough appropriate audit evidence to provide a basis on an audit opinion and said there are material uncertainties on the group's ability to continue as a going concern, citing the group's net current liabilities of S$14.6 million and sustained net operating cash outflow of over S$594,000 as at the end of its financial year.

The company had projected profitability for the next year based on sales and related forecasts, and its ability to source for refinancing of borrowing. But the auditor said that the cash flow projection for the next 12 months resulted in a net cash outflow and the group might not be able to discharge its liabilities. 

While some directors cum shareholders provided a letter of financial undertaking to provide financial support so the group can meet its liabilities and continue operations in the next 12 months from the reporting date, Foo Kon Tan did not get enough evidence to attest to their financial capability. 

It was also unable to establish the completeness and accuracy over inventories of two units.

There was also an over-recognition of revenue and related trade receivables in the period ended Mar 31 regarding the amount due from a customer who had bought goods for S$2 million.

The auditor also said management did not perform an impairment test, which prevented the auditor from determining if it had to adjust the carrying value of amounts due from its unit as of Mar 31.

Lorenzo last closed at S$0.016.