Sealink International’s independent auditor has raised concerns about the Malaysian offshore support vessel builder’s ability to “continue as a going concern”.
Grant Thornton Malaysia PLT said Sealink incurred a net loss of MYR 20.1m ($4.55m) during the fiscal year ending 31 December 2022 and as such, its total current liabilities have exceeded its total current assets by MYR 49.9m.
“These events or conditions indicate the existence of a material uncertainty which may cast doubt about the group’s ability to continue as a going concern,” the auditor said.
“The ability of the group to continue… is dependent on attaining future profitable operations… and the continued financial support from a major corporate shareholder of the company.”
The auditor said the carrying amount of Sealink’s vessels might exceed their recoverable amounts and therefore the carrying amount had to be impaired.
“We have identified the carrying value of the group’s vessels as a key audit matter because of its significance to total assets in the consolidated financial statements,” Grant Thornton said.
It said Sealink’s estimate of any recoverable amount involved a “significant degree of judgement and assumptions” made by the group such as estimated fair value of the vessels as provided by an external valuer and estimated future cash flows for value-in-used which includes the assumptions on utilisation rates, disposal values, charter hire rates and discount rates applied”.
In response, Sealink said it had obtained an understanding of the management’s assessment of the recoverability of the vessels and evaluated the appropriateness of the methodology and approach applied.
It said it had also “evaluated and interviewed the external valuer on his competence, capabilities and objectivity and obtained an understanding of the valuation model used”.
It also said that it had compared the valuation with recent transactions of the group involving other similar vessels.
The audit opinion appeared to contrast with Sealink’s own outlook, which said 2022 had been a “year of commendable growth” with revenue surging by about 72%.
“The group successfully secured several long-term charter contracts and witnessed a surge in utilisation rates and average charter rates,” the shipbuilder said.
“The group has also successfully grown its customer base over the past year. This is evidenced by the significant growth in operational performance.”
Sealink said it expects 2023 to be “promising” and was “looking forward to secure more new charters” and that it has already “embarked on initiatives to enhance its bidding competitiveness”.
