AGV GROUP LIMITED
(Company Registration No. 201536566H)
(Incorporated in the Republic of Singapore on 2 October 2015)
EMPHASIS OF MATTER BY INDEPENDENT AUDITORS OF THE COMPANY ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2020
Pursuant to Rule 704(4) of the Listing Manual - Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited (the "SGX-ST"), the Board of Directors (the "Board") of AGV Group Limited (the "Company", and together with its subsidiaries, the "Group") wishes to announce that the Company's independent auditors, Mazars LLP, has, without qualifying their audit opinion, included an emphasis of matter related to the Group's ability to continue as a going concern in their report (the "Independent Auditors' Report") on the audited financial statements of the Group for FY2020 (the "Audited Financial Statements").
The Independent Auditors' Report is attached to this announcement for shareholders' reference. The Independent Auditors' Report and the Audited Financial Statements will form part of the Company's Annual Report for FY2020 (the "2020 Annual Report"), which will be released on SGXNET in due course. Shareholders are advised to read the Independent Auditors' Report and the 2020 Annual Report in their entirety.
The Board is of the opinion that the Group will be able to continue as a going concern on the basis of the following:
- ability of the Group to generate sufficient cash flows from their operations;
- continued financial support from the Group's individual, corporate and institutional lenders, as well as vendors, as applicable;
- financial support from the chairman of the Group; and
- potential new injections of capital.
Further, the Board is of the opinion that sufficient information has been disclosed, and confirmed that all material disclosures have been provided for the trading of the Company's securities to continue in an orderly manner.
Shareholders and other investors are reminded to exercise caution while dealing in the shares of the Company. In the event that shareholders and other investors are in doubt when dealing in the shares of the Company, they should consult their stockbrokers, bank managers, solicitors, accountants or other professional advisers
BY ORDER OF THE BOARD
Chua Wei Kee
Executive Chairman
8 January 2021
This announcement has been prepared by the Company and its contents have been reviewed by the Company's Sponsor, Hong Leong Finance Limited. It has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made, or reports contained in this announcement.
The contact person for the Sponsor is Mr Kaeson Chui, Vice President, at 16 Raffles Quay, #01-05 Hong Leong Building, Singapore 048581, Telephone (65) 6415 9886.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
AGV GROUP LIMITED
Report on the Audit of Financial Statements
Opinion
We have audited the financial statements of AGV Group Limited (the "Company") and its subsidiaries (the "Group") which comprise the statements of financial position of the Group and of the Company as at 30 September 2020, the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, as set out on pages 11 to 69.
In our opinion, the accompanying financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the "Act") and Singapore Financial Reporting Standards (International) ("SFRS(I)s") so as to give a true and fair view of the financial position of the Group and of the Company as at 30 September 2020 and of the financial performance, changes in equity and cash flows of the Group for the financial year ended on that date.
Material Uncertainty Related to Going Concern
As at 30 September 2020, the Group reported net liabilities of S$3,520,000 and net current liabilities of S$1,048,000. The Group also reported net loss of S$2,781,000 and operating cash outflows of S$124,000 for the financial year then ended. Meanwhile, as described in Note 2.2, as the COVID-19 situation continues to impact the world, the economic outlook remains volatile and it remains uncertain on how the Group might be impacted. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the ability of the Group to continue as a going concern. Our opinion is not modified in respect of this matter.
Basis for Opinion
We conducted our audit in accordance with Singapore Standards on Auditing ("SSA"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority ("ACRA") Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (the "ACRA code") together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
AGV GROUP LIMITED
Overview
Audit Approach
We designed a risk-based audit approach in identifying and assessing the risks of material misstatement at both the financial statement and assertion levels.
Materiality
As in all our audits, we exercised our professional judgement in determining our materiality, which was also affected by our perception of the financial information needs of the users of the financial statements, being the magnitude of misstatement in the financial statements that makes it probable for a reasonably knowledgeable person to change or be influenced in his economic decision.
Scope of audit
For the audit of the current financial year's financial statements, we identified three significant components which required full scope audit of their financial information, because of their respective size and risk characteristics.
Out of the 3 significant components, 1 was audited by component auditor under our instructions and the remaining 2 were audited by us. We determined the component materiality and our level of involvement in their audit necessary for us, in our professional judgement, to obtain sufficient appropriate audit evidence as a basis for our opinion on the Group's financial statements as a whole.
Area of focus
We focused our resources and effort on areas which were assessed to have higher risks of material misstatement, including areas which involve significant judgements and estimates to be made by directors.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current financial year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
AGV GROUP LIMITED
Key Audit Matters
Impairment assessment of property, plant and equipment (refer to Note 3.2, Note 14 to the financial statements)
Key audit matter | Our audit response | ||
As at 30 September 2020, the Group recorded property, | How the matter was addressed in our | ||
plant and equipment with carrying amount of | audit | ||
S$13,307,000 (2019: S$13,197,000), which represented | |||
approximately 68% (2019: 69.4%) of the total assets. | Our | audit procedures include, but are not | |
During the current financial year, the Group noted the | limited to the following: | ||
presence of indicators of impairment of its property, plant | ∙ | Evaluated the competence, capabilities | |
and equipment due to weak operating performance of | and objectivity of the external valuers | ||
one of its Singapore subsidiaries and delayed | engaged by management; | ||
commencement of operations in its Malaysian subsidiary. | |||
Accordingly, the Group carried out a review of the | ∙ | Assessed the reasonableness of the | |
recoverable amounts of the corresponding property, | bases and key assumptions used by | ||
plant and equipment ("PPE"). | management, with | reference to | |
For its Singapore subsidiary, in determining the value-in- | information including | the historical | |
trend and performance, the latest | |||
use of the cash-generating unit to which the | budgets approved by management and | ||
corresponding PPE belongs, the Group made | industry and business outlook; | ||
judgements on certain key inputs and key assumptions, | |||
including, for example, discount rates and growth rates. | ∙ | Performed sensitivity test to determine | |
In determining the value-in-use, the Group has | the available headroom of the cash | ||
considered the expected and estimated impact of | generating unit, where a reasonably | ||
COVID-19 on the key inputs and assumptions. For its | possible change in the assumptions | ||
Malaysian subsidiary, the Group engaged professional | could cause the recoverable amount to | ||
valuers to assist them in the determination of the fair | be less than the carrying amount; | ||
value less cost of disposal of the assets in its Malaysian | In consultation with our in-house | ||
subsidiary, comprising mainly leasehold land and | ∙ | ||
building as well as plant and equipment. In determining | valuation specialist team, assessed the | ||
the recoverable value of the assets, the Group exercised | appropriateness of the methodologies | ||
judgement in determining the different valuation methods | applied and the reasonableness of the | ||
to be applied on the different types of assets and the | key inputs, adjustment factors and | ||
application of the key inputs and adjustment factors. In its | assumptions applied by the Group in | ||
calculation of the recoverable value of its leasehold land, | their determination of the fair value less | ||
the Group used the comparison method and made | cost of disposal of its property, plant | ||
adjustments in consideration of property sizes and | and equipment, as applicable; and | ||
remaining lease tenures. In its calculation of the | ∙ | Assessed the adequacy of the | |
recoverable value of its building and plant and | |||
equipment, the Group used the depreciated replacement | disclosures made by the Group on the | ||
cost method and made adjustments in consideration of | impairment of its property, plant and | ||
assumptions and estimates of physical deterioration, | equipment. | ||
functional and economic obsolescence. The independent | |||
valuation reports have highlighted estimation uncertainty | |||
arising from the COVID-19 outbreak and a higher degree | |||
of caution should be exercised when relying upon the | |||
valuation as the valuations may change significantly and | |||
unexpectedly over a short period of time. | |||
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AGV Group Ltd. published this content on 08 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 January 2021 13:29:05 UTC