KUALA LUMPUR (April 30): HB Global Ltd said its external auditor has issued a statement of material uncertainty related to a going concern in respect of its audited financial statements for the financial year ended Dec 31, 2017 (FY17).

The statement by Messrs UHY Lee Seng Chan & Co may cast significant doubt on HB Global's ability to continue going forward, the group said in a filing to Bursa Malaysia.

The auditor drew attention to a note to the financial statements, which shows that the group's and company's current liabilities exceeded its current assets by 21.23 million yuan and 37.98 million yuan respectively, as at Dec 31, 2017.

The auditor added that the group's current liabilities include bank loans of 80.6 million yuan that are contractually due within 12 months from the end of the reporting period.

The auditor cautioned that if the group is unable to roll over the existing loans or if alternative refinancing of the loans are unsuccessful, then the group and company may have insufficient cash to fulfil obligations at the relevant repayment dates and may impede the continuation of its remaining business comprising ready-to-serve food and frozen vegetables.

Nevertheless, the board of HB Global said the independent auditor has expressed an unqualified opinion, which is a clean opinion and not modified opinion.

"The group saw an improvement in its operating profit and will endeavour its best to negotiate terms with banks and suppliers, without needing to resort to selling its non-current assets, unless without any other viable options," said HB Global.

Barring any unforeseen circumstances, HB Global said the group is poised to perform better since the cessation of its duck farming segment and will endeavour its best to negotiate more favourable pricing with its customers and monitor its costs so as to achieve an operating gross profit environment across its various ready-to-serve and frozen vegetable products.

Shares in HB Global closed half a sen or 2.78% lower at 17.5 sen today for a market capitalisation of RM81.9 million. Over the past 12 months, the stock has more than tripled from 5.5 sen.