iCreate auditors raise concern about revenue generation
Published:Wednesday | September 8, 2021 | 12:05 AM
iCreate Limited’s auditors have raised concerns about the company’s expanding deficits, in its newly released audited report for year ending December 2020, months after it was due.
Although iCreate, operator of a training institute, narrowed its losses from $46 million to $29 million, audit firm Crichton Mullings & Associates said its losses continue to mount while revenue generation is insufficient for the company’s needs. Its working capital position improved but remained in deficit at $22.98 million, while its accumulated losses jumped from $61 million to nearly $90 million.
“From inception, the company has not achieved the level of revenues projected and required to sustain its operations. This indicates the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern,” the auditors said.
Calls to CEO Tyrone Wilson were met with a message that incoming calls are restricted. Chairman Arlene Martin said Wilson was abroad and would be the best person to speak about iCreate’s plans for sustainability in light of the audit warning, and promised to pass on the interview request to him.
EXPANDED OPERATIONS
After iCreate went public and listed on the Jamaican stock market in early 2019, the company expanded operations in July of that year to Montego Bay, but was forced to close the branch by April 2020 as a cost-saving measure amid a fall-off in business under the pandemic.
The company’s auditors also raised concerns about the iCreate’s finances in their previous audit report for FY2019.
In February 2020, iCreate was thrown a lifeline through a $24-million bond arranged by Sagicor Investments Jamaica that Wilson said at the time would fund the company’s working capital needs.
But, despite year-on-year increases in revenue, from $46 million to $58 million, the company has not been able to keep up with costs, leading to an operating loss of $13.6 million.
In addition to the $24 million loan from Sagicor, iCreate also took on a three-month loan of $4 million on which it paid monthly interest of four per cent, and another short-term loan of $3.9 million for 21 months at 36 per cent per annum.
The company also has mounting payables, that is, liabilities that are due for payment in the short term, which moved from $23.2 million to nearly $30 million.