AnaeCo is still staying alive despite financial woes
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Despite its auditor flagging financial issues, waste technology play AnaeCo says its business can continue as a going concern with $3.7 million cash expected in the bank once a transaction has been finalised.
Perth-based AnaeCo lost $5.8 million last year while its liabilities exceeded assets by $20.3 million, according to auditor Ernst & Young.
Ernst & Young had been unable to find evidence to remove significant doubt around AnaeCo’s ability to continue as a going concern within 12 months.
Based on this, the ASX asked AnaeCo to confirm whether its 2017 Annual Report was a fair view of its financial position — and whether directors considered the company to be a going concern.
AnaeCo said the company would continue — and referred to a transaction last year where private firm Xiaoqing Environmental Protection Technology Co Ltd (XEPT) bought the major portion of a loan owed by AnaeCo to Monadelphous Group Limited (MND).
Under the deal, XEPT and MND would convert their loans to equity in AnaeCo, resulting in the company being debt-free with free $3.7 million cash.
That deal — originally due last December — has been extended twice. It is now expected to be finished this month.
Because the deal remained current, funding requirements would continue to be met through the MND loan, AnaeCo said in a statement.
“We have no evidence that either MND as seller or XEPT as buyer, does not intend to complete the transaction,” AnaeCo said.
MND will hold 30 per cent in AnaeCo once deal is completed.
AnaeCo has borrowed significant amounts from MND since 2012 to complete its Stage 2 DiCOMTM System Project in Shenton Park, Western Australia.
ASX suspended AnaeCo’s shares from trading until the company complied with listing rules regarding its financial condition.
Prior to suspension, AnaeCo shares at 0.3c.