Y Ventures: Independent auditor issues qualified opinion on JustNile inventories

SINGAPORE - The independent auditor of Catalist-listed e-commerce firm Y Ventures has given a qualified opinion over the inventories of the group's in-house home products brand JustNile.

In an independent auditors report out on Monday (April 15), auditing firm Baker Tilly TFW said it was "unable to obtain sufficient appropriate audit evidence" to ascertain the accuracy, existence and valuation of the carrying value of inventories, said to be US$168,118, in JustNile Pte Ltd.

Thus, it is unable to determine whether any adjustments are required to the carrying value of inventories, sales and cost of sales for the group's fiscal 2018 financial results.

With regards to the material uncertainly related to the company's ability to continue as a going concern on the back of its fiscal 2018 losses, the auditor gave an unqualified opinion.

Y Ventures had a net loss and total comprehensive loss of US$4.0 million each for fiscal 2018, while net cash used in operating activities was also at US$2,414,621. The group also reported accumulated losses of US$3.0 million, while the company reported US$6.4 million in accumulated losses as at Dec 31, 2018. Baker Tilly said there was materialy uncertainty that may "cast significant doubt" on the group and company's ability to continue as a going concern.

Y Ventures' board said the group would have sufficient cash from the drawdown of credit lines available from certain major suppliers. This includes extended credit terms of three to six months, as well as cash generated from operations and other potential fund raising actions to fund continuing operations and repay debts due in the next 12 months of the reporting date.

Moreover, major shareholders Low Yik Sen and Low Yik Jin have signed a deed of undertaking to "unconditionally provide continuous financial assistance" to the group, up to US$1 million to carry on business in the next 12 months, said the board.

Baker Tilly TFW also drew attention to Y Venture's appointment of independent reviewer Deloitte and Touche Enterprise Risk Services to assess lapses in its internal controls and the impact of adjustments to prior years' financial statements.

Deloitte was appointed in March in consultation with the Singapore Exchange Regulation (SGX RegCo) and Y Ventures sponsor RHT Capital, following a series of SGX queries regarding accounting mistakes the group announced on Jan 21. This saw the group restating its half-year financials for the six months ended June 30, 2018, to a net loss of US$977,556 from a previously reported net profit of US$131,186.

It was announced that the scope of the review was to scrutinise the "adequacy and effectiveness" of the group's internal controls for the financial period of Jan 1, 2014 to Dec 31, 2018. Deloitte was also to specify any misstatements in the group's financial statements in prior years as a result of the internal control lapses, and investigate circumstances and responsible parties involved in the lapses and misstatements, along with possible regulatory breaches.

Shares of Y Ventures last closed at 17 cents, down 0.5 cent on Tuesday as at 9.37am.

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