The auditors of Guangzhao Industrial Forest Biotechnology Group have steered clear of expressing an opinion on the group’s 2008 financial statements, citing a host of material uncertainties which could cast serious doubts on its going-concern status.
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No opinion on Guangzhao accounts, say auditors
By ONG BOON KIAT
3 April 2009
The auditors of Guangzhao Industrial Forest Biotechnology Group have steered clear of expressing an opinion on the group’s 2008 financial statements, citing a host of material uncertainties which could cast serious doubts on its going-concern status.
First, Moore Stephens said it was not provided with information and documentation to support management’s assessment of the amount of assets recoverable on two sites in Shanxi, China. The group has said it has land-use rights and land development costs with carrying amounts of 7.6 million yuan (S$1.7 million) and 35.9 million yuan respectively in relation to these assets.
Second, Moore Stephens could not independently confirm with counter-parties the validity of certain revised agreements made by the group with landlords in Jiangxi.
Third, it could not confirm the validity and collectivity of trade receivables amounting to 20.2 million yuan, relating to the sale of harvested timber.
Fourth, it drew attention to the group’s net loss, its net liabilities and its negative operating cash flow.
Also, the going-concern status hinges on various factors such as talks over a convertible note covenant breach.
Guangzhao reported a net loss of 223.2 million yuan for the financial year ended Dec 31, 2008. The group’s current liabilities exceeded its current assets by 48.7 million yuan at end-2008. It also reported negative operating cash flow of 48.7 million yuan.
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