Ascent Bridge Limited Faces Major Revenue Decline, Auditor Disclaimer, and Governance Issues: Key Takeaways for Investors

Summary of Key Financial and Operational Developments

Ascent Bridge Limited, a Singapore-based distributor of premium Baijiu spirits, has released its response to shareholder queries regarding its Annual Report for the financial year ended 31 March 2025. The company’s disclosures reveal several significant developments that have direct implications for shareholders and could drive share price volatility in the near term.

1. Sharp Revenue Decline Despite Portfolio Expansion

• Revenue for FY2025 dropped by nearly 45% to S\$2.06 million (from S\$3.73 million in FY2024), despite the expansion of the Baijiu portfolio from one to three SKUs (Moutai Bulao, JiuGui, Lang Jiu) and an increase in the duty-free footprint to 17 countries and 25 cities in the duty-paid segment.
• Management attributes this contraction mainly to reduced demand in key Asian duty-paid markets (Hong Kong, Macau, Cambodia, Korea, Vietnam).
• Net loss narrowed to S\$2.98 million from S\$4.67 million in the previous year, reflecting cost-cutting efforts, but still remains significant.

2. Profitability and Cost Management Remain Major Concerns

• Employee compensation exceeded revenue for a second consecutive year. Although salary expenses were reduced by S\$1.61 million in FY2025 through headcount cuts, further restructuring is ongoing to align costs with revenues.
• The company aims to reach operational breakeven and sustainable profitability through cost optimisation, global market expansion (targeting Africa, South America, and Europe in the next two years), and new product launches.
• Key performance indicators (KPIs) include revenue growth, breakeven milestones, SKU launches, and market presence, overseen by the joint chairmen and management team.

3. Auditor Issues Disclaimer of Opinion—Serious Red Flag for Investors

• The independent auditors issued a disclaimer of opinion on both the company and group financial statements for FY2025—one of the strongest warning signals in auditing.
• Reasons include: inability to verify opening balances; insufficient evidence for impairment assessments (PPE, right-of-use assets, intangibles, derivatives); expected credit loss assessments (amounts due from related parties, deposits, prepayments); and concerns over going concern status.
• Auditors also flagged lack of historical business performance and insufficient supportable information for certain valuations, notably a put option revalued up to S\$10.36 million (from S\$7.87 million).
• The disclaimer of opinion indicates significant uncertainty about the true financial position and future viability of Ascent Bridge.

4. Outstanding Receivables and Deposits—Potential Credit Risk

• As at 31 March 2025, substantial amounts remain outstanding:
  • S\$2.84 million due from a related party (CIGL)
  • S\$5.0 million in refundable deposits for business acquisitions
  • S\$1.5 million in prepayments to vendors
  • S\$1.07 million in refundable deposits to suppliers
• Despite the prolonged non-recovery, management and the Audit & Risk Committee (ARC) have not recognised any expected credit losses, but commit to ongoing monitoring. However, the inability to recover or utilise these funds remains a material risk.

5. Corporate Governance and Board Composition Issues

• The ARC includes an executive director (contrary to listing rules and the Code of Corporate Governance), though the board claims this has not impaired its effectiveness. Investors should note the deviation from best practices in board independence.
• ARC facilitated the audit but unresolved information gaps remain, particularly around recoverability of assets and fair value assessments.

6. Leadership Uncertainty and Takeover Activity

• Resignation of Mr Sun Quan, joint executive chairman and CEO, was deferred in August 2025 due to compliance with the Singapore Code on Take-overs and Mergers. No restrictions on his executive powers have been imposed, and operations reportedly remain undisrupted.
• On 12 August 2025, Montelion announced a mandatory unconditional general offer for Ascent Bridge shares. The board has appointed Asian Corporate Advisors Pte. Ltd. as independent financial adviser (IFA) to guide independent directors and provide recommendations to shareholders.
• Mr Sun Quan abstained from the IFA selection process.

7. Chang Chang Business Model Viability in Question

• Revenue from the Chang Chang card segment was only S\$1,000 in FY2025. Management continues to “evaluate” its viability and scalability, but has not provided compelling evidence of commercial potential. Synergies with other businesses are being explored but remain unsubstantiated.

Potentially Price-Sensitive and Material Issues

• Auditor’s disclaimer of opinion is a major red flag, undermining confidence in the reliability of the company’s reported financials and its going concern status.
• Ongoing losses, high cost structure, and slow revenue growth raise doubts about the company’s ability to achieve profitability in the near term.
• Large outstanding receivables and deposits may represent significant credit risk if not recovered.
• Ongoing board composition issues and leadership uncertainty could affect investor confidence and complicate the company’s response to the takeover offer.
• Pending takeover offer by Montelion and the appointment of an IFA introduces the possibility of a change in control or strategic direction.

Conclusion

Investors should approach Ascent Bridge Limited with heightened caution. The combination of a sharp revenue drop, persistent losses, a disclaimer of opinion from auditors, unresolved governance and receivables risks, and uncertainty around both leadership and business model viability raises serious questions about the company’s future prospects and share value stability. The ongoing takeover offer adds a further layer of uncertainty.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions.

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