- 2017.01 NUOQI
Company Name: Fujian Nuoqi Co., Ltd.Stock Code: 01353Year end: December 31, 2014
Basis for disclaimer of opinion
- Opening balances and corresponding figures
The consolidated financial statements of the Group for the year ended 31 December 2013, which forms the basis for the corresponding figures presented in the current year’s consolidated financial statements were not audited by us. There were no satisfactory audit procedures for us to ascertain the existence, accuracy, presentation and completeness of the opening balances, corresponding figures and other related disclosures (as further detail explained in the following paragraphs) shown in the current year consolidated financial statements.
- Limited accounting books and records of the Group
Due to the insufficiency of supporting documentation and explanations for accounting books and records in respect of the Group for the years ended 31 December 2014 and 2013, we were unable to carry out audit procedures to satisfy ourselves as to whether the following income and expenses for the years ended 31 December 2014 and 2013 and the assets and liabilities as at those dates, and the segment information and other related disclosure notes in relation to the Group, as included in the consolidated financial statements of the Group, have been accurately recorded and properly accounted for in the consolidated financial statements:
For the year ended 31 December 2014 2013 RMB’000 RMB’000 Income and expenses: Revenue 254,540 529,763 Cost of goods sold (162,876) (268,999) Gross profit 91,664 260,764 Other income 4,972 10,618 Selling and distribution expenses (43,640) (89,523) Administrative expenses (40,018) (50,711) Other losses (479,149) – Impairment losses on various assets (204,857) (516) (Loss)/profit before tax (671,028) 130,632 Income tax (19,043) 973 (Loss)/profit for the year (690,071) 131,605 For the year ended 31 December 2014 2013 RMB’000 RMB’000 Assets and liabilities: Deposits paid – 1,763 Deferred tax assets – 5,232 Inventories 99,570 112,905 Trade receivables 7,896 79,375 Other receivables and prepayments 257,312 152,049 Trade and bills payables (134,203) (63,000) Other payables and accruals (83,483) (80,493) Bank borrowings (6,062) – Tax payable (30,918) (25,217) Net assets 110,112 182,614
- Property, plant and equipment and prepaid land lease payments
The Group accounted for property, plant and equipment and prepaid land lease payments with carrying amounts of approximately RMB110,407,000 (2013: RMB125,751,000) and RMB46,366,000 (2013: RMB47,353,000) respectively as at 31 December 2014. The Group has incurred loss of approximately RMB720,871,000 for the year ended 31 December 2014 and its future profitability is uncertain. As such, there is an indication of impairment loss on the carrying amounts of the property, plant and equipment and prepaid land lease payments. We have not been provided with sufficient evidence to support the recoverable amounts of these assets. In addition, we were unable to ensure the existence of the property, plant and equipment with carrying amount of approximately RMB5,660,000 (2013: RMB18,106,000) as at 31 December 2014. We were unable to satisfy ourselves that the carrying amounts of the property, plant and equipment and prepaid land lease payments were fairly stated as at 31 December 2014 and 2013.
- Commitments and contingent liabilities
No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of commitments and contingent liabilities as at 31 December 2014 and 2013.
- Related party transactions and balances
No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of the related party transactions for the years ended 31 December 2014 and 2013 and the balances as at those dates as required by Hong Kong Accounting Standard 24 (Revised) “Related Party Disclosures”.Any adjustments to the figures as described from points 1 to 5 above might have a significant consequential effect on the Group’s results and cash flows for the years ended 31 December 2014 and 2013 and the financial positions of the Group as at 31 December 2014 and 2013, and the related disclosures thereof in the consolidated financial statements
Material uncertainty relating to the going concern basis
The disclosures in note 2 to the consolidated financial statements indicate the Group incurred a loss of approximately RMB720,871,000 for the year ended 31 December 2014; and net current liabilities and net liabilities of approximately RMB170,096,000 and RMB14,310,000 respectively in the consolidated financial statement of financial position of the Group as at 31 December 2014. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern. In view of the extent of the uncertainty relating to the future working capital sufficiency of the Group, we disclaim our opinion in respect of the material uncertainty relating to the going concern basis.
Disclaimer of opinion
Because of the significance of the matters as described in the basis for disclaimer of opinion paragraphs and the material uncertainty relating to the going concern basis, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the consolidated financial statements. In all other respects, in our opinion, the consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.