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Rigas Kugu Buvetava posts audited loss of EUR 308,200 for 2017, auditors issue qualified opinion

BC, Riga, 22.06.2018.Print version
The Latvian shipyard Rigas Kugu Buvetava reported audited turnover of EUR 12.853 million for 2017, down 38.1% from 2016, and its audited loss was EUR 308,216 in contrast to a profit the year before, according to the annual financial statements submitted to the Nasdaq Riga stock exchange, and the company's auditors issued a qualified opinion about those statements, cites LETA.

According to the management report enclosed to the financial statements, last year the company's revenue from shipbuilding was EUR 2.431 million, a double reduction from 2016, and revenue from ship repairs was EUR 10.315 million or 33.5% less year-on-year.


Rigas Kugu Buvetava continues its investment program to modernize the production facilities in order to increase its competitiveness, and EUR 2.5 million were invested to this end in 2017.


"Assessing the current market situation and the options of the Company, the Board of the Company will continue the work to improve financial flow, increase the amount of the ships to be repaired, improve marketing activities, optimize resources for eliminating costs of sales by re-organizing internal structure units and attracting professional employees," the management of the shipyard said.


It was noted that on May 28, 2018, the Riga Vidzeme District Court decided to accept the application of the legal protection proceedings submitted by Rigas Kugu Buvetava and initiated a civil proceeding, setting July 30, 2018, as the deadline for drafting and coordination of the plan of measures of the legal protection proceedings with creditors


The company's auditors, Nexia Audit Advice, issued a qualified opinion, stating that they were appointed as auditors of Rigas Kugu Buvetava financial statements for 2017 only in April 2018, therefore they did not observe the counting of raw materials, base materials and consumables included in inventories at December 31, 2017. "Consequently, we were unable to determine whether any adjustments were necessary to the value of inventories as at December 31, 2017, and the elements making up the profit and loss statement, statement of changes in equity for the year 2017 and net cash generated from operating activities in the statement of cash flows for the year 2017," the auditors said.


"In 2017, the Company was operating at a loss and its cash flows from operating activities for the year 2017 were negative, In addition, the Company's further economic performance was significantly worse than expected and there have been significant changes that have adversely affected the Company, affecting the size and type of the Company's operating activity," the auditors said.


"The Company's management has performed an impairment test for fixed assets and has not detected impairment as at December 31. 2017. We were unable to ascertain the validity of the management's assumptions in predicting future cash flows, so we were unable to satisfy ourselves by other audit procedures concerning the possible impairment amount that might have been found necessary at December 31, 2017," the auditors said.


They pointed out that during the reporting year, Rigas Kugu Buvetava had paid for a number of supplies of goods and services, as well as other payables, which were due in the reporting year or in previous years. Moreover, at the end of 2017, the company's current liabilities exceeded its current assets by EUR 3.651 million.


Future activity of the Company depends on the Company's ability to reconcile the legal protection plan, as well as to cover liabilities to credit institutions and other creditors within the specified time limits, observing all conditions of the specified plan. These events and circumstances, along with other matters as set forth in Note 38, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern, The financial statements are based on going concern assumption and do not include any adjustments that might be required if the going concern assumption was not appropriate. Our opinion is not modified in respect of this matter.


According to the notes to the financial statements, the capability of the Company to continue its activities depends on the financial performance in forthcoming periods and from the management's ability to ensure the Company's profitable operations and to cover short-term liabilities as well as depending on the ability of the Company to reconcile the legal protection plan, as well as to cover liabilities to credit institutions and other creditors within the specified time limits, observing all conditions of the plan specified but the financial statements of the Company were prepared on the basis of the going concern assumption.


As reported, Rigas Kugu Buvetava shipyard closed 2016 with EUR 20.758 million in turnover and earned a profit of EUR 169,807.


Rigas Kugu Buvetava's largest shareholder is Remars-Riga which belongs to Eiroholding group.


Shares in Rigas Kugu Buvetava are quoted on the Secondary List of the Nasdaq Riga stock exchange.






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