Mary Chia's independent auditor flags material uncertainty, though opinion is unmodified

CATALIST-LISTED Mary Chia Holdings said on Monday that its independent auditor has included in its report a material uncertainty related to the company's ability to continue as a going concern - though the auditor's opinion is not modified in respect of this.

In a Singapore Exchange filing, the beauty and wellness company said that its directors are of the view that it is appropriate for the group's audited financial statements to be prepared and presented on a going-concern basis.

In its report on Mary Chia's audited financial statements for the year ended March 31, independent auditor Foo Kon Tan LLP drew attention to a note in the financial statements, regarding the firm's losses and liabilities.

The group recorded a S$9.633 million loss and a S$9.628 million total comprehensive loss for the year, with net operating cash outflows of S$1.3 million. As at March 31, the group's current liabilities exceeded its current assets by S$8.22 million, and it had a S$11 million deficit in equity.

The company's current liabilities exceeded its current assets by S$2.47 million, with a deficit in equity of S$2.46 million.

The auditor wrote: "These factors indicate the existence of a material uncertainty which may cast significant doubt on the group's ability to continue as going concern. Our opinion is not modified in respect of this matter."

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On Monday, Mary Chia said its directors were of the view that the group can continue as a going concern, as it "continues to be prudent with its cash flow planning and to take active measures to streamline its business and reduce costs", and "continues to be focused on new sales initiative via social media platforms to drive revenue with lower upfront costs".

It added that controlling shareholder Suki Sushi has given an undertaking to provide financial support to the group for the 12 months following the date of the independent auditor's report, to operate without any curtailment of operations.

The director and the former director have also provided an undertaking not to demand repayment of the unsecured and non-interest bearing amounts of S$1.494 million and S$2.118 million due from the group respectively, within the next 36 months from March 31, 2017 or until the cash flows of the group permits, whichever is later.

Mary Chia is also actively exploring potential corporate fund-raising exercises.

The company said in its SGX filing: "Further, the Board is of the opinion that sufficient information has been disclosed for trading of the company's securities to continue in an orderly manner and confirmed that all material disclosures have been provided for trading of the company's shares to continue."

Mary Chia shares closed unchanged at 17 Singapore cents on Monday before the news.