SunMoon Food's auditor notes material uncertainty over ability to continue as a going concern

THE independent auditor of fruits and seafood distributor SunMoon Food Co has noted a material uncertainty regarding the group's ability to continue as a going concern.

The opinion from Nexia TS Public Accounting Corporation highlighted that as a group, SunMoon Food Co and its subsidiaries' cash flows in operating activities amounted to about S$890,000 for the financial year ended March 31, 2021. As at that date, the company's liabilities exceeded its assets by S$472,000.

These indicate a material uncertainty which may "cast significant doubt" on the ability of both the group and company to continue as going concerns, said the independent auditor's report released on Thursday.

Other key audit matters it identified include impairment assessment of the company's investments in subsidiaries and expected credit losses of trade receivables.

As at March 31, 2021, SunMoon Food Co's investments in subsidiaries included quasi capital loans amounting to S$9.4 million.

The group's total trade receivables then was S$11.3 million, which accounted for around 67 per cent of its total assets.

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Another independent auditor had expressed a qualified opinion on the group's financial statements for FY2020 due to its inability to obtain sufficient appropriate audit evidence regarding recoverability of trade receivables from related parties, as well as the nature and appropriateness of the carrying amount of advances to these parties.

In a separate statement, SunMoon Food Co said that according to its management's 18-month cash flow forecast from April 2021 to September 2022, the group will have sufficient net positive cash flow to satisfy its working capital requirements and meet its obligations as and when they fall due.

SunMoon Food Co had requested a voluntary suspension in trading of its shares last October. They last traded at 3.1 Singapore cents on Oct 12, 2020.