KUALA LUMPUR: Bursa Malaysia-listed China Ouhua Winery Holdings
Ltd says it is unable to ascertain the completion date of transfer of a land title of some land and buildings in Yantai City, China which it had acquired more than 10 years ago.
The acquisition, for which it signed the sales and purchase agreement in December 2013, had seen the company paying 90% of the purchase price of 132 million yuan or valued at RM70.4mil then for the said properties.
It consists of 40 acres of land together with buildings that measure some 1.26 ha and ancillary facilities.
The company said in its Bursa filing that the land title ownership had yet to be transferred to its subsidiary Yantai Fazenda Ouhua Winery Co Ltd.
“China Ouhua has made multiple contacts with the relevant local government departments to facilitate the transfer, and local government departments are in support of the transfer and will prioritise the transfer matters,” it said.
“Currently, the transfer is still pending for finalisation of the valuation, the company would then be required to make the necessary payment of taxes and fees related to application for real estate certificate based on the valuation,” it added.
Upon the requisite payment, the company said the real estate certificate will be issued by the Real Estate Registration Centre.
“There was no confirmation given by any of the government officer on the completion date of the application. Thus, the board is unable to ascertain the completion date of the transfer,” China Ouhua said.
The company will proactively follow up with the relevant government authorities of the China government to ensure the land title ownership is transferred to Yantai Ouhua eventually, it said.
Meanwhile, the company had also seen its external auditors Messrs UHY Lee Seng Chan & Co expressing their qualified opinion with material uncertainty related to going concern in its audited financial statements for its financial year ended Dec 31, 2023.
“As disclosed in Note 5 to the financial statements, included in trade and other receivables are refundable deposits of 118.8 million yuan representing 90% of the total purchase price of 132 million yuan which the group had paid to the local government of Yantai City under an SPA entered into on Dec 17, 2013,” the external auditors said.
“Pursuant to the SPA, in the event that the transaction is not completed, the local government will refund the refundable deposits of 118.8 million yuan to the group. As at the date of this report, the procedures in relation to the transaction are still pending completion,” it added.
The external auditors further said it has not been able to obtain sufficient appropriate audit evidence to satisfy themselves with respect to the extent of recoverability and valuation of the said refundable deposits in the event the transaction is not completed.
“Consequently, we are unable to determine whether any adjustments to the carrying amount of the refundable deposits as at Dec 31, 2023 are necessary,” it said.
The external auditors also noted that a material uncertainty exists which may cast doubt on the group’s ability to continue as a going concern following its net loss of 7.4 million yuan and an operating cash outflow of 3.2 million yuan for financial year 2023.
