Entertainment group mm2 Asia's independent auditor has noted a material uncertainty regarding the group's ability to continue as a going concern, the mainboard-listed firm said on Tuesday night.

This was in view of the company's net loss in the latest financial year and its liabilities exceeding assets, mm2 Asia said in an exchange filing.

The observation is part of Nexia TS Public Accounting Corporation's unmodified audit opinion in its report on the group's audited financial statements for the year ended March 31, 2021.

The auditor's opinion remains unqualified.

The news sent mm2 Asia shares tumbling yesterday, with the stock down 0.9 cent, or 11.1 per cent, at 7.2 cents.

Some 142.2 million shares were traded, making it the most active stock.

mm2 Asia advised shareholders to read the audited financial statements in full as set out in its annual report, which will be available on its website and the Singapore Exchange's portal, SGXNet, before today.

In its report, the auditor drew attention to the group's net loss of $99.5 million, compared with its net profit of $6.3 million the year before, as well as its current liabilities exceeding current assets by $119.5 million.

These conditions "indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern", said the auditor.

In the release of its unaudited accounts in May, mm2 Asia noted that the Covid-19 pandemic had severely hit its major businesses in movie-making and film distribution.

But it noted signs of a rebound and said it had a pipeline of core projects valued at $80.7 million, offering earnings visibility up to financial year 2022.

THE BUSINESS TIMES