Page 14 reminded me of some outstanding risks.
Contingent liabilities and Contingent Assets.
The supplier of the hire purchase contracts in Malawi has brought a legal claim for penalties as part of the cancellation of the arrangement against the subsidiary company Malcoal Mining Limited. The company is defending the claim but the contingent liability may be up to US$628,000. The claim was still pending at 31 December 2017.
Tancoal Energy Limited in Tanzania is defending a legal claim brought by NBC bank for recovery of money paid under a letter of credit arrangement in 2013. The company is defending the claim but the contingent liability may be up to US$470,000. NBC without authority withdrew US$230,000 from a Tancoal bank account during the year to apply against the contingent liability, Tancoal has brought a claim against NBC for the money to be returned.
The Tanzania Minerals and Audit Agency (TMAA) has made a claim to Tancoal for US$160,000 for royalty that it has deemed payable on the transport portion of invoices to customers raised in 2014. The company has lodged an appeal against the claim and it is still outstanding at 31 December 2017. Other than the above, the Directors are not aware of any contingent liabilities or contingent assets at 31 December 2017.
Also -
Material Uncertainty Related to Going Concern We draw attention to Note 1(b) in the financial report, which indicates that the group incurred a net loss of $1,388,000 during the half-year ended 31 December 2017 and as at that date the group’s current liabilities exceeded its current assets by $14,335,000. As stated in Note 1(b), these events or conditions, along with other matters as set forth in Note 1(b), indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter.
I can see the potential but can we hang on?
I hope so.
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