Azgard-9’s financial position casts a significant doubt over its ‘going concern’ status

September 30, 2019 (MLN): Azgard Nine has released its financial results for the year ended June 30, 2019, wherein it’s Profit after taxation has been stated at Rs. 305 million (EPS: 0.67), i.e. 55% higher than last year.

The company’s revenue surged by 26% during the year, whereas cost of sales increased by 25%. This resulted in a positive change of 34% in gross profits.

Despite an increase in the non-core expenses by 283% as well as finance cost by 32%, the company’s profit before tax during the year were 67% higher than that of last year. Similarly, an expansion in the income tax expense by 91% failed to cause a decline in net earnings.  

Within the same document, the Company stated that it has reassessed its relationship with Montebello S.R.R (MBL), i.e. a previously a 100% owned subsidiary. Based on advice from the legal counsel, the Company has concluded that as result of bankruptcy proceedings and management of the liquidation process of MBL by the Court appointed trustee, it has ceased to exercise control over activities of MBL.

Furthermore, the management has concluded that the Company does not have power to direct the relevant activities of MBL.

Resultantly, effective from the financial year ended June 30, 2018, the Company has ceased recognizing and presenting MBL as its subsidiary. Therefore, financial statements for the financial year June 30, 2019 have not been consolidated with MBL.

During the year, the current liabilities of the Company exceeded its current assets by Rs. 12,263.61 million and its accumulated losses stand at Rs. 11,470.42 million. These conditions along with other matters indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

Copyright Mettis Link News