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United Food's new auditors flag going-concern risks

THE freshly appointed joint auditors for United Food Holdings have flagged risks to the company's ability to continue as a going concern.

The joint auditors, Foo Kon Tan and HLB Hodgson Impey Cheng, included an "emphasis of matter" in their auditors' report, United Food said in a Singapore Exchange filing on Monday evening.

The auditors said that "without qualifying our opinion, we draw attention to... the uncertainty involving the resumption of the soybean processing division which is temporarily suspended due to the slowdown in the local economy and the resultant weaker market demand of soybean products".

It noted that the group's consolidated financial statements indicated that as at Dec 31, 2015, the group had incurred net losses of about 974.22 million yuan (S$202.85 million) and negative cash flow from operating activities of about 282.44 million yuan.

The group's "ability to continue as a going concern is dependent on the sufficiency of cash resources" of 183.3 million yuan as at Dec 31, 2015, and "cash flow forecast prepared by management for the next 12 months from the end of the reporting period that adequate liquidity exists to finance the working capital requirement", the auditors said.

"If there is any adverse change on the assumption of the cash flow forecast prepared by the management, these may cast significant doubt about the group's ability to continue as a going concern."