KUALA LUMPUR (April 30): The external auditor of Mentiga Corp Bhd, which is involved in oil palm plantation and timber trading, has flagged that the loss-making group's current liabilities have significantly surpassed its group's current assets, based on its financial statements for the year ended Dec 31, 2023.

The external auditor, Messrs Al Jafree Salihin Kuzaimi PLT, noted that the group and company had incurred a net loss of RM12.65 million and RM10.26 million for the period, respectively, while current liabilities exceeded its current liabilities by RM27.16 million at the group level, and by RM23.15 million at the company level.

"These conditions indicate the existence of an uncertainty which cast doubt about the group and the company's ability to continue as a going concern," the auditor said in its audit report, which was released by Mentiga via a bourse filing on Tuesday.

In response, Mentiga said it has made efforts to improve its financial position, one of which was to improve its cash flow position by downsizing or ceasing the operations of certain unproductive oil palm plantation areas at its Sungai Lembing Estate in Kuantan. 

It subsequently either formed joint ventures or outsourced these estate operations, with the lease rental income received from such efforts having been used to partially settle bank borrowings and payables, Mentiga said.

Mentiga is also planning to monetise some assets. "The sales proceeds will be used to pare down outstanding payables to turnaround the group’s net current liabilities position," it said.

As at end-2023, the group’s total borrowings amounted to RM28.84 million (2022: RM30.6 million) of which RM3.09 million (2022: RM4.46 million) were classified as current liabilities.

The group expects cash flows from the oil palm plantation segment will be sufficient to address its borrowings with fixed repayment terms. "The group has [also] secured to extend the financing period and rescheduling the monthly payment of the financing facility for the development and working capital of oil palm plantation at Ulu Lepar estate. The financing facility has been approved by the bank due to the group not defaulting on any repayment," Mentiga said.

In the meantime, Mentiga said oil palm activity is expected to continue to be a significant contributor to its future profitability and cash flow.

As such, it said it had implemented a mechanisation initiative to harvest fresh fruit bunches (FFB) and secured a sufficient number of workers to increase FFB production. By end-2023, the group had 2,973ha planted area, with the age of its palm trees averaging to five to 15 years.

With the implementation of these initiatives and the group's favourable oil palm maturity profile, Mentiga said it is aiming to achieve 31,274 tonne FFB production for 2024, up 50% from 2023's actual production.

Mentiga shares closed four sen or 6.2% lower at 61 sen on Tuesday, valuing the company at RM42.7 million.