NauticAWT's auditor flags material uncertainty, doubts ability to continue as going concern

CATALIST-LISTED NauticAWT's independent auditor Deloitte & Touche has, without modifying its opinion, flagged a material uncertainty related to the going concern of the oil and gas engineering group, as its current liabilities exceeded its current assets by US$4.6 million even as the group recorded a loss of about US$5 million for the financial year ended Dec 31, 2018.

NauticAWT, in a regulatory filing on Friday, announced that Deloitte & Touche, in the audit report for the group's financial statements for the fiscal year ended Dec 31, drew attention to the question of NauticAWT as a going concern. This is because the group's current liabilities exceeded its current assets by US$4,624,661 as at Dec 31, 2018.

It also posted a loss of US$4,983,375 for the financial year. Further, the group was in a capital deficiency position of US$3.1 million and breached its financial covenants on bank loans of US$205,197 as at Dec 31, 2018.

Deloitte & Touche wrote: "The going concern assumption of the group is dependent on the group being able to secure additional funding through a placement exercise for new shares of the company, obtain continued support from its existing banks, and secure new contracts from customers. The above conditions indicate the existence of a material uncertainty which may cast significant doubt on the group's and the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter."

Despite these, the group is satisfied that the use of the going concern assumption in the preparation and presentation of the financial statements is appropriate as its management is currently in negotiations to secure financial support and new business deals, and believes that these will take place.