Parkson Retail Asia gets support from holding company amid going concern issue

Parkson Retail Asia department store in Johor Bahru, MalaysiaParkson Retail Asia department store in Johor Bahru, Malaysia

Parkson Retail Asia said Monday it received an undertaking from Parkson Holdings Bhd. for continued financial support for 12 months amid auditor concerns over whether the department store operator can continue as a going concern.

The independent auditor had highlighted that Parkson Retail Asia posted a net loss of S$34.61 million for the year ended 30 June and current liabilities exceeded current assets by S$61.34 million, the department store operator said in a filing to SGX.

“These conditions indicate the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern,” Parkson Retail Asia said.

“The ability of the group to continue as a going concern is dependent on the continued financial support from the ultimate holding company, Parkson Holdings Bhd. and the group generating sufficient cash flows from its operations,” it added.

The audited financial statements for the year ended 30 June 2018 contained a similar emphasis from the auditor, the statement said.

Despite the auditor’s statement of material uncertainty, the directors view it as appropriate to prepare the financial statements on a going concern basis due to Parkson Holdings’ support, the filing said.

In a separate filing, Parkson Retail Asia provided notice to SGX of three consecutive years of pre-tax losses and that its latest six-month average daily market capitalization was S$17.72 million.

The department store operator noted that SGX will place a company on the watch-list if it posts three straight years of losses and has a market capitalization under S$40 million over the past six months.

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