Parkson Retail Asia auditors cite material uncertainty on going concern

Parkson Retail Asia department store in Ho Chi Minh City, VietnamParkson Retail Asia department store in Ho Chi Minh City, Vietnam

Parkson Retail Asia‘s independent auditors have cited a material uncertainty on whether the department store operator can continue as a going concern, according to a filing to SGX Friday. 

“The group’s operations were significantly impacted by movement restrictions and store closure caused by the Covid-19 pandemic in its key markets. 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,” the auditor has said. 

The auditor’s comments were based on the company’s financial statements for the 18 months ended 31 December. 

Parkson Retail Asia Group’s current liabilities exceed its current assets by S$102.56 million, and the group’s total liabilities exceeded total assets by S$49.26 million, the filing said.

The auditor also noted that for a subsidiary in liquidation, PT Tozy Sentosa, it was unable to obtain access to the working papers of previous auditors and all books and records are in the hands of receivers; the auditor issued a qualified opinion on the subsidiary’s results. 

Parkson Vietnam

For Parkson Vietnam, an arbitrator has awarded the landlord compensation of S$4.1 million, or VND68.9 billion, over the leased premises in Da Nang, payable within 30 days of 10 December 2021, the auditor noted. 

The amount remains unpaid, and Parkson Vietnam has only S$400,000 in cash on hand, and no other assets for realization, the auditor said, noting the Da Nang operations ceased in January 2021. 

“Pending the future plan of the operation in Saigon Tourist Plaza in Ho Chi Minh City, there is material uncertainty that this debt can be paid when demanded,” the auditor said. The Saigon Tourist Plaza is the only retail store in Vietnam in operation, the filing said.

Malaysia

The results of the Malaysia subsidiaries have been prepared on a going-concern basis, the auditor said. 

“The group has assumed that there will be no further major lockdown or movement control order that mandate store closures that will be disruptive to the business operations in Malaysia,” the auditor noted. 

In addition, the Malaysia operations have continued support from suppliers and creditors, and it has negotiated with its landlords for rental rebates, the auditor said. 

In Malaysia, Parkson Corp. has cash and bank balances of S$62.17 million as of end-December, and the ultimate holding company, Parkson Holdings, has entered a loan facility agreement for MYR50 million, or around S$16.72 million, the filing said.

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