Resources Prima Group's independent auditor, Baker Tilly, has qualified its opinion on the Indonesian coal-mining company's 2017 accounts and raised significant doubt about the company's ability to remain a going concern.
Baker Tilly said its opinion was qualified with regard to the accounts of discontinued unit Rinjani Kartanegara, which went bankrupt last year.
Rinjani underwent a scheme of arrangement in August last year and, following that loss of control, Resources Prima's management could not obtain audited financial statements for Rinjani for the period between Jan 1 and Aug 24 last year.
A reported US$14.8 million (S$20 million) loss from discontinued operations in Resources Prima's accounts were therefore based on unaudited numbers from Rinjani.
The auditor highlighted significant doubt about the company's ability to remain a going concern.
During the financial year ended Dec 31 last year, the group incurred a net loss from continuing operations and discontinued operations of US$1.06 million and US$14.79 million, respectively, Baker Tilly reported. Resources Prima also carried a total net liability of US$151,000 as of Dec 31.
"These factors and contingent liabilities indicate the existence of material uncertainties which may cast doubt about the ability to continue as going concerns," Baker Tilly said in its report.
The auditor also noted cash-flow pressures. With the folding of Rinjani, Resources Prima's remaining subsidiary is the coal-hauling business, Energy Indonesia Resources (EIR), which has a key coal-hauling service agreement with one Coalindo Adhi Nusantara (CAN).
But the average quantity of coal hauled under that agreement has turned out to be significantly less than the 100,000 tonnes a month stipulated because of ongoing heavy rainfall and the poor condition of the coal-hauling road.
Separately, Resources Prima on Wednesday evening said EIR has been advised by CAN that all coal-hauling activities will be shut down from Sept 5 to next Monday because of a full stockpile and sporadic fires within the stockpile. CAN requires time to clear the stockpile and extinguish the fires.
Resources Prima said it is in discussions with CAN on possible recourse resulting from the said disruption as well as disruptions last month. It is also exploring how EIR can be protected against such disruptions in the future and will meet CAN in this regard, the firm added.
Despite the auditor's concerns, Resources Prima's directors believe the going concern assumption is still appropriate. Key to that stance is an investment commitment that the company obtained last month from substantial shareholder Ang Liang Kim for not less than $4 million via a $2 million convertible loan and rights issue.
With the investment agreement, the company should be able to pay off debts that fall due this year.