Pacific Star Development reported Friday that its independent auditors, Ernst & Young, have included a disclaimer of opinion over the going concern assumption in their report on the audited financial statements for the fiscal year ended 30 June.
The auditors noted the company’s current liabilities exceed current assets by S$15.55 million as of end-June, with the group in a net liability position of S$79.30 million.
“These factors, the continuing challenges faced by the group in selling its development properties as planned and increasing level of indebtedness give rise to material uncertainties on the ability of the group and company to continue as going concern,” the independent auditor’s report, filed to SGX, said.
While the financial statements were prepared on a going concern basis, the auditors said they were unable to obtain sufficient appropriate evidence to conclude if it was appropriate.
“The challenging property market conditions in Iskandar could adversely impact the sale of the group’s development properties and give rise to material uncertainties on the abilities of the group and company to continue as going concerns,” the auditor’s report said.
The report noted the company’s ability to continue as a going concern is dependent on selling units at Puteri Cove Residences and Quayside in Iskandar Puteri, Malaysia, and the timely repatriation of profits, but that the group is in various stages of talks with multiple parties over selling significant numbers of units.
The group has also obtained additional financing for subsidiary Pearl Discovery Development, the report said.
In a filing about material variances between its unaudited and audited financial statements, Pacific Star reported its audited results show a net loss of S$32.00 million for the 12 months ended 30 June, compared with the S$27.73 million loss posted in the unaudited results, a difference of S$4.27 million.
That was largely due to a S$4.47 million increase in other expenses in the audited results, related to an audit adjustment to impairment of the development properties, Puteri Cove Residences and Quayside, the statement said.
Shares of Pacific Star Development have been suspended from trading on SGX since March 2020.