Claims service provider Stream’s independent auditors have flagged uncertainty about whether the company can continue as a going concern.

However, the company has emphasised a significant turnaround is under way following two disastrous investments, and good progress is being made.

In Stream’s annual report, auditors drew attention to a net loss of $12.74 million in the year to June 30, while current liabilities exceeded current assets by $9.75 million.

“These conditions… indicate the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern.”

But Chairman Larry Case told insuranceNEWS.com.au the worst is behind the business.

He says writing off investments in failed loss adjuster Cerno and Melbourne Technology Group accounted for $7.8 million of the loss, and UK start-up costs $2.4 million.

“Although our auditors did not qualify our accounts, they did say our ability to continue as a going concern was dependent on two things: our ability to deliver on our business plan and the continuing support of our investors.

“I am pleased to say that as a board we are comfortable we are delivering on both fronts.”

Mr Case says the underlying business was profitable in the second half – when one-off costs are excluded – and the turnaround has continued into this financial year.

“Stream continues to add new clients, has started working with IAG in New Zealand and has brought on board a number of new clients in its UK operations,” he said.

“Our revenue base has been diversified significantly and we have new clients in the pipeline.

“In short, we believe the worst is behind us and that, although there is a lot of work to do, we have indeed turned the corner.”

Mr Case says the company knows it needs to ameliorate its balance sheet, and on Friday major shareholder Jens Neiser converted an $873,000 convertible note into equity at a price of nine cents per share, “a significant premium to the 6.6 cents current price”.

Stream now intends to complete a capital-raising started in May, and will issue an update to the market later this month.