SINGAPORE - Ernst & Young LLP as independent auditor to Catalist-listed Singapore eDevelopment Ltd has drawn attention to certain conditions which indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern.
In its report on the audit of the financial statements of Singapore eDevelopment Limited and its subsidiaries for the year ended Dec 31, 2016, Ernst & Young stated that the group's ability to remain in business is dependent on the continued financial support from Hengfai Business Development, a substantial shareholder of the company.
In response, the group's board of directors said in a filing with the Singapore Exchange on Monday (April 3) that it believes the group will be able to continue operating due to the raising of additional funds. The company plans to do so through the exercising of warrants, issuing new shares, extending loans set to mature in the next 12 months, and the generation of positive cashflows from its operations.
In addition, the company has obtained a confirmation that Hengfai Business Development will provide "irrevocable financial and other support" to the group for the next 12 months.
Ernst & Young also warned that if the group is unable to remain in business, it may be unable to discharge its liabilities in the normal course of business.
To pay the money it owes, "assets may need to be realised other than in the normal course of business and at amounts which may differ significantly from the amounts at which they are recorded in the balance sheet," it said.
In addition, the group may have to reclassify non-current assets and liabilities as current assets and liabilities - in other words, it may be forced to realise long-term investments and pay its long-term financial obligations in the near future.