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clock Created with Sketch. 10/07/24
21:20
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Originally posted by Wazz101:
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In looking at the Going Concern issue, auditors will look at the Balance Sheet and particularly the level of current liabilities versus current assets. If CL exceed CA, they ask the obvious question; how are you going to pay for that? - as regards your short term liabilities exceed your assets. In KCN's case, the fact that the THB loan was due within 1 year contributed to the problem and the qualification last year. I think the renegotiated loan was rolled to September this year, so will still be a payable within 1 year as regards the financial statements for the year ended 30 june 2024. Therefore it will still be a current liability ( unless they renegotiate it to Sept 25 before the signing of the financial Statements hint hint - in which case it is due more that 12 months away and not included in your current liabilities) So the options to pay the current liabilities ( where they exceed current assets) , and it is up to management to outline a plan, are generally through revenue/ profit or to draw on an existing facility. LY there were too many variables and assumptions about getting license / plant 1 up and running, so we got the qualification. This year should be quite straightforward, with plant no1 back in production and generating revenue, for management to mount a credible case to pay the liabilities due etc. Though i am not privy to the actual cash flows and working capital numbers, you can at least project increased production through the period as well as a potential loan from TMB ( cant remember if this the bank they alluded to a month or two back) I am expecting the lack of a qualification to be a positive coming out of year end and contribute to KCN's improving outlook and marketability, though it is a moot point if anyone pays any attention or not. it used to be 40% of investors thought a qualified audit report was superior to an unqualified report! - so there you go! good luck, Wazz
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Have to say that's pretty much as I understand it Wazz. Understandably in today's litigious world every one wants to protect their ar$3, none more so than auditors! Having said that as far as all Financial statements are concerned its ultimately they who sign off on the documents are those who are first to feel the heat.
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