Asia-Pacific Strategic Investments Limited - Annual Report 2021

Independent Auditor’s Report To the Members of Asia-Pacific Strategic Investments Limited

Key Audit Matters (continued)

1.

Valuation and impairment of assets (continued)

(b)

Expected credit loss (“ECL”) on other receivables (continued) [Refer to Notes 3.3 and 13]

Area of focus (continued)

As the impairment assessment on other receivable involved significant management’s judgement in assessing the credit-worthiness of the receivable, the current market condition, forecasts of future economic condition and any changes in the government policies, and in consideration of the significance of other receivables in the Group, we determined this area to be a key audit matter.

How our audit addressed the area of focus

We obtained an understanding and evaluated the Group’s processes and ECL assessment for other receivables. We assessed the reasonableness of management’s judgement and assumptions applied in the ECL model such as management’s assessment of credit-worthiness of the receivables, management’s consideration of current market condition, forecasts of future economic condition and any changes to the government policies taking into consideration the potential effects of COVID-19 and management’s assessment of the impairment of the Hotel Assets and development properties of Huzhou Project to which the receivable related to.

We also reviewed and considered the adequacy of the disclosures made in the financial statements in respect of the credit risk of other receivable.

2.

Going concern assumption

Area of focus

As a result of the COVID-19 pandemic which has caused a severe impact on the hospitality and real estate industries, which are the Group’s main business operations, the Group has incurred a net loss of S$5,056,000 and recorded a net cash used in operating activities of S$5,757,000 for the financial year ended 30 June 2021.

Notwithstanding the above mentioned, the Board of Directors has assessed that the going concern basis of preparation for this set of financial statements remains appropriate after considering the following:

(i) As at 30 June 2021, the Group is in net current assets position of $2,103,000 with cash and cash equivalents of S$1,537,000 and financial assets, at fair value through profit or loss (“FVPL”) of S$2,824,000 which are readily available for use and can be realised immediately as and when required; (ii) The Group is still negotiating with the contractors to finalise the final contract sums and it is expected that the payment of accrued construction cost (included in current trade and other payables) amounting to S$3,087,000 as at 30 June 2021 will be delayed beyond 12 months from the end of the financial year;

(iii) Based on a 12–month cash flow projection, the Group will have sufficient cash flow to meet the operating requirements;

ANNUAL REPORT 2021

51