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China Taisan Technology faces going concern issue: auditors
THE auditors of China Taisan Technology Group have flagged material conditions that cast a significant doubt over the group's ability to continue as a going concern.
The listed group said in an announcement released after trading hours on Monday that the independent auditors of the company from RT LLP have issued a disclaimer of opinion with respect to the group's audited financial statements for the financial year ended Dec 31, 2016.
"We are unable to assess the appropriateness of the management's use of going concern assumption in the preparation of the financial statements," the auditors said.
They identified several red flags from China Taisan's full-year financial statement.
The group posted a net loss of over 128.7 million yuan (S$26 million) and net operating cash outflows in excess of 13.6 million yuan.
It had just over two million yuan of cash and cash equivalents compared to over 76.2 million yuan of current liabilities on hand.
"These conditions indicated the existence of a material uncertainty which may cast a significant doubt over the group's ability to continue as a going concern," the auditors said.
The auditors also noted that the group has written off value-added tax receivables in excess of 1.6 million yuan on the basis that these amounts cannot be recovered from the tax authorities.
They said that they were unable to obtain sufficient appropriate audit evidence to ascertain the appropriateness of the write-offs.