UNITED FOOD HOLDINGS LIMITED UNITED FOOD HOLDINGS LIMITED
(Incorporated in Bermuda as an exempted company limited by shares) (Company Registration No. 28925)
RESPONSES TO QUERIES FROM SINGAPORE EXCHANGE SECURITIES TRADING LIMITED IN RELATION TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2021
- Responses to questions raised pursuant to the Company's announcements dated 5 July 2021 and 16 August 2021
Unless otherwise expressly defined herein, all capitalized terms in this announcement shall bear the same meanings ascribed to them under the Company's announcements dated 5 July 2021 and 16 August 2021.
The board of directors (the "Board") of United Food Holdings Limited (the "Company", and collectively with its subsidiaries, the "Group") refers to the Company's announcement dated 5 July 2021 in relation to the Unaudited Financial Statements for the financial year ended 31 March 2021 and announcement dated 16 August 2021 in relation to the Unaudited Financial Statements for the financial period ended 30 June 2021 (the "1QFY2022 Financial Results").
The Board wishes to provide its responses to the following questions raised by the Singapore Exchange Securities Trading Limited (the "SGX-ST"):-
SGX-ST Query 1
The Company's replacement announcement dated 16 August 2021 supersedes the earlier announcement made on 14 August 2021 (Announcement Reference No. SG210814OTHRTKFO) relating to the Unaudited Financial Statements for the period ended 30 June 2021. Please disclose the amended items in the replacement announcement dated 16 August 2021.
Company's response:
The amendment was made on the place of incorporation of the Company appeared on page 1 of the 1QFY2022 Financial Results. The place of incorporation should be in Bermuda.
SGX-ST Query 2
Page 2: Cost of Sales: RMB194,000
Explain why this increased only 100%, while Revenue increased 260.6%.
Company's response:
The revenue was primarily generated from management service fee of the Group's Additives Related Segment. However, the increase in cost of sales was mainly attributed from the employees' salaries and travel reimbursements which were not increased in tandem with the revenue.
SGX-ST Query 3
Page 2: Administrative Expenses: RMB1,912,000
Provide a breakdown of and explain the material expenses, noting that Administrative expenses rose to RMB1,912,000 for the 3 months ended 30 June 2021 compared to RMB1,871,000 for the 3 months ended 30 June 2020. Also elaborate on why and how the Company incurred such a significant amount of Administrative expenses for the 3 months ended 30 June 2021, which amounted to almost four times the RMB512,000 Revenue generated.
Company's response:
The administrative expenses increased by RMB41,000 represented 2% increment from RMB1,871,000 to RMB1,912,000, it was within the threshold of the management expenses. Such expenses consisted of fixed
operating costs, employees' salaries, depreciation costs and others. Due to COVID-19, the Group recorded a revenue of RMB512,000 for the period ended 30 June 2021. Nevertheless, the Group has continued its operations and thus the operating costs were more than the revenue.
SGX-ST Query 4
Page 2: Finance expenses: RMB278,000
Explain the 37.2% decrease from the 3 months ended 30 June 2020.
Company's response:
The financial expenses were mainly derived from CDPR. As CDPR did not produce in large volume amidst the COVID-19 situation, the Group incurred lesser bank expenses resulted in a decrease in finance expenses of RMB165,000 in this quarter.
SGX-ST Query 5
Page 3: Exchange differences on translation of financial statements of foreign operation: RMB637,000
Provide details and reasons for the significant loss on translation, quantifying to support the reasons for the significant loss amount of RMB637,000, when compared to the Revenue of RMB512,000 and net loss of RMB2,165,000.
Company's response:
The Group and its subsidiaries adopt different currencies for their financial reporting. Certain overseas subsidiaries adopts HKD while RMB is used for the presentation currency of the Group. The exchange difference was arising from the translation currency exchange when all financial numbers are to be consolidated and recognised as other comprehensive income in the Group's financial reporting in accordance with the IAS21 requirements in China.
SGX-ST Query 6
Page 4: Trade and other receivables: RMB126,114,000
Provide a breakdown of Trade and other receivables amounting to RMB126,114,000 and RMB135,626,000 as at 30 June 2021 and 31 March 2021 respectively, indicating also the identity of the major debtors and the nature of the transactions from which these debts arose.
Company's response:
Trade receivables | 20210331 | 20210630 | Nature | Ageing schedule |
RMB | RM B | |||
Really Time's trade receivables | 10,356,000 | 9,976,000 | Normal trading | More than 12 months |
Sundry | 246,000 | 393,000 | Normal trading | Within 4-6 months |
Other receivables | ||||
Nong fu | 35,000,000 | fully repaid | refundable deposit | |
SST | 35,000,000 | 35,000,000 | refundable deposit | Within 3 months |
惠州中凡机电设备 | 49,152,000 | 75,152,000 | Operating deposit | 4-6 months |
SGX-ST Query 7
Page 4: Trade and other receivables: RMB126,114,000
Provide an update on the repayment of RMB35 million payment to SST made in March 2021, and discovered by the independent directors on 14 April 2021 during discussion with the Auditors. Quantify the total payments and repayments by SST to the Group to-date.
Company's response:
There was no update on the repayment of RMB35 million. Please refer to the Company's response on SGX-ST Query (3)(c) released 28 June 2021.
Please find below table on the repayment of RMB35 million to-date:
Name | In arrears | Total amount | Amount owing as | Remarks | |
Owing | at 30 June 2021 | ||||
(RMB'000) | (RMB'000) | ||||
Shenzhen | 31 March 2021 | 35,000 | 35,000 | The Company had received a | |
Shareihome | bank balance statement from | ||||
Technology | China Construction Bank on 22 | ||||
Co., | Ltd. | June 2021 provided by the | |||
("SST") | Chairman indicating that she | ||||
has sufficient resources to fulfil | |||||
the financial obligations to meet | |||||
the Company's short-term | |||||
obligations if the Company failed | |||||
to operate as a going concern | |||||
and support the Group's working | |||||
capital requirements for the next | |||||
12 months. |
SGX-ST Query 8
Page 4: Trade and other receivables: RMB126,114,000
In relation to the debts owing by Really Time Trading Limited, provide details on the status of the operations of Really Time and the steps taken by the directors and the Audit Committee ("AC") to ensure that Really Time has procedures to repay the amounts promised to be repaid in 4Q2021. Also disclose the safeguards put in place by the Board and the AC for the collection, and quantify the amounts due and security obtained for these amounts due.
Company's response:
Please refer to the Company's response on SGX-ST Query 3 for Really Time Trading Limited ("RTTL") released on 5 July 2021. The status remains unchanged and the Company did not obtain any security for the amounts due. The Company will provide update on the receipt of payment from time to time.
SGX-ST Query 9
Page 7: Change in trade and other receivables: RMB25,488,000
Reconcile and explain how trade and other receivables increased by approximately RMB25 million despite the Company disclosing under Recoverability of deposits and termination of short-term investment, full receipt by the Company of RMB25.0 million deposit paid to 唐山市胜润生物科技有限 公司 ("Tangshan") as of 31 March 2021, RMB35.0 million deposit paid to 深圳农畉食品开发集团有限 公司 ("Nongfu") fully received as of 30 June 2021 and RMB40.0 million short-term investment with
惠州市康维健生物科技有限公司 ("Kangweijian") fully received as of 31 March 2021, with Revenue generated of only RMB512,000.
Company's response:
The increase in trade and other receivables was mainly due to the receipt of repayment from Nongfu. As such, it has no impact to the revenue generated during the quarter.
No Amount Comments
- 126,114,000 AR balance at 30/06/2021
- 135,626,000 AR balance at 31/03/2021
C=A-B-9,512,000 AR balance changed from 31/03/2021-30/06/2
-
35,000,000 cash received from Nonfu during this period
E=C+D 25,488,000 Change in trade and other receivables
SGX-ST Query 10
Page 12: Borrowings
The unsecured balance comprised RMB0.69 million as the contingent consideration and RMB3.79 million is the balance in other payables to shareholder. Please explain this contingent consideration and the conditions that will have to be satisfied for this to be payable. In relation to the RMB3.79 million, please elaborate where was this interested person payable, the transactions which resulted in the amount due of RMB3.79 million and how this was calculated, and where this interested person transaction was disclosed in the balance sheet. Also, quantify the amount of payables due to shareholder, the identify and role of the shareholder in the Company, the use of proceeds, when it was extended to the Company, the terms of the payables and when this is due and payable.
Company's response:
Please refer to the Company's response on SGX-ST Query 8 released on 15 June 2021 and response on SGX-ST Query 7(b) released 28 June 2021 respectively regarding contingent consideration. The balance in other payables to shareholder of RMB3.79million comprised of loan payables to the controlling shareholder, Golden Ever International Property Management Limited for RMB0.135million and Ms. Zeng Miao Yun, director and minority shareholder of RTTL for RM3.65million. Both loans from the shareholders did not have repayment terms and were interest free.
As the loans were of interest free, the transactions were not considered interested person transactions under Chapter 9 of the Listing Manual of the SGX-ST.
SGX-ST Query 11
Page 13: Trade and other receivables: RMB126,114,000
Explain the decline from RMB135,626,000 to RMB126,114,000.
Company's response:
With great effort from the Management in following up long outstanding receivables from the respective parties, the receivables have progressively reduced. Please refer to the response on SGX-ST Query 9 above for more details.
SGX-ST Query 12
Page 14: Opening Balance: Discontinued operations and Disposal group classified as held for sale.What is this disposal group and status of the disposal? When was the agreement signed and what are the terms of the agreement? Management expects this issue to be resolved for the year ended 31 March 2021. Has this been resolved?
Company's response:
The disposal referred to the disposal of Post-Ante Trading Limited and the disposal was completed on 10 May 2018. The Group had also recovered full payment from the purchaser before 31 March 2021.
The Management considered this issue resolved.
SGX-ST Query 13
Page 14: Impairment of non-financial assets: Veracity of HBXR transactions
How did the AC resolve the issue of veracity of the HBXR transactions? What is the AC's conclusions on the veracity after their investigation?
Company's response:
The Company is finalising the scope of work for Guangdong Zhuming Law Firm, 广东铸铭律师事务所 to conduct a special investigation and verification of bank balances, and the veracity of HBXR transactions. The proposed scope of works will be sent to SGX RegCo by 6 September 2021 for review and comment before being finalised.
SGX-ST Query 14
Page 14: Recoverability of financial assets: Recoverability of proceeds from disposal of Post-Ante Group
Provide details of this Post-Ante Group. Was the disposal announced and was shareholders' approval required?
Company's response:
The Company had released announcements on 17 October 2017, 16 November 2017, 24 November 2017 respectively in relation to the disposal of Post-Ante Trading Limited (the "Disposal") and the resolution for the Disposal was passed at a Special General Meeting held on 29 March 2018. Please see the response on SGX-ST Query 12 above.
SGX-ST Query 15
Page 15: Veracity, existence and completeness of bank balances
Provide an update and status to-date on the special audits and special investigations to verify veracity of bank balances and the work done by the AC to-date in reviewing the findings.
Company's response:
The Company is finalising the scope of work for Guangdong Zhuming Law Firm, 广东铸铭律师事务所 to conduct a special investigation and verification of bank balances, and the veracity of HBXR transactions. The proposed scope of works will be sent to SGX RegCo by 6 September 2021 for review and comment before being finalised.
SGX-ST Query 16
Page 15: Gross profit
Explain the reason for the high 62.2% gross profit margin, and whether this gross margin in excess of 60% is in line with the gross profit margins for additive related companies in the PRC.
Company's response:
The increase in gross profit mainly due to increase in revenue from Additive Related Segment during the quarter. The staff salaries and travel expenses were recorded in the administrative expenses in accordance
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United Food Holdings Limited published this content on 27 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 August 2021 07:01:07 UTC.
