SINO Grandness Food Industry’s independent auditor has issued a disclaimer of opinion relating to the canned vegetables and fruits producer’s financial statements for the financial year ended Dec 31, 2020.

The auditor, RT, flagged uncertainty over the group’s ability to continue as a going concern, as well as insufficient audit evidence to conduct an impairment assessment of its financial assets. 

In 2020, Sino Grandness recorded a net loss of 1.5 billion yuan (S$283.6 million), with its liabilities exceeding its assets by 287.6 million yuan, the auditor said. 

It noted: “These conditions indicate the existence of a material uncertainty which may cast significant doubt about the group and the company’s abilities to continue as going concerns.”

Sino Grandness had defaulted on a 157.8 million yuan loan from Soleado Holdings, even after receiving an extension to pay it back. The group had also defaulted on the repayment of bonds worth 264.9 million yuan and 485.7 million yuan which it had issued.

RT added that there was uncertainty over whether the group can meet its contractual obligations in the next 12 months.

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It said: “If the group and the company are unable to continue in operational existence for the foreseeable future, (they) may be unable to discharge their liabilities in the normal course of business.

“Adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ significantly from the amounts at which they are currently recorded in the statements of financial position.” 

Sino Grandness’ management did not prepare an impairment assessment of the group’s property, plant and equipment as well as deposits paid for non-current assets, noted the auditor.

Therefore, it was unable to “obtain sufficient appropriate audit evidence” to verify the carrying amount of these assets, said RT.

Sino Grandness had also failed to assess impairments of its trade and other receivables, and the auditor was unable to ascertain the impact on the group’s financial performance, it said.

RT was also unable to “support the existence, completeness and valuation” of Sino Grandness’ inventories, due to the timing of its appointment as the group’s auditor. 

Sino Grandness has been suspended from trading since December 2020.