The board of directors of Capital World Limited announced that the Independent Auditor, Moore Stephens LLP, included an “Emphasis of Matter” in respect of a material uncertainty related to going concern in the Independent Auditor’s Report on the audited financial statements of the Group and the Company for the financial year ended 30 June 2024.
Material Uncertainty Related to Going Concern:
The financial statements indicate that the Group incurred a net loss before income tax of RM79,271,000 and net cash flows used in operating activities of RM53,440,000 during the financial year ended 30 June 2024. As of that date, the Group’s net current assets include inventory properties of RM109,892,000 and non-current assets held for sale amounting to RM203,893,000. The Group’s ability to continue as a going concern is dependent on the successful completion of the sale of these properties.
In the preparation of the financial statements, the directors believe that the use of the going concern assumption is appropriate, taking into consideration:
(i) The Group received a letter from the purchaser requesting a waiver of conditions in the sale and purchase agreement (SPA), which the Group agreed to. The SPA became unconditional with this waiver, and deposits received from the purchaser amount to RM93 million, about 25% of the total purchase price.
(ii) The Group has entered into a non-binding term sheet with a third party to sell development rights and beneficial ownership of certain properties under construction, which will provide additional cash flow over the next 12 months.
(iii) The Board believes the Group will have sufficient working capital to meet its obligations based on a cash flow forecast for the next 12 months.
If the Group is unable to continue as a going concern, adjustments may need to be made to reflect that assets may need to be realized outside the normal course of business and at amounts different from current recorded values. Further liabilities may also arise, and non-current assets and liabilities may need to be reclassified as current.
No such adjustments have been made in these financial statements.
Shareholders are advised to read the announcement carefully and consult with professional advisors if they have any doubts about actions to take.
