mm2 Asia's auditor notes material uncertainty over ability to continue as going concern

This was in view of mm2 Asia's latest financial year's net loss and its liabilities exceeding assets.
This was in view of mm2 Asia's latest financial year's net loss and its liabilities exceeding assets.PHOTO: MM2 ENTERTAINMENT

SINGAPORE (THE BUSINESS TIMES) - 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 (July 13).

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 on Wednesday, with the stock down 1.1 cents or 13.4 per cent to seven cents as at midday. Some 119.83 million shares were traded, making it the morning's 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 July 15.

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.

mm2 Asia shares closed up 0.2 cent or 2.53 per cent at 8.1 cents on Tuesday before the announcement.