TARGET
Intelligence Report
VOLUME XXI  No. 173 T U E S D A Y August 13, 2019

 

 

 

 

 

PART II

 

FREEMAN  FINTECH  CORPORATION  LTD:

THE  COMPANY  RELEASES  ITS  2019  ANNUAL  REPORT

 

The  Independent  Auditor  Has  Declined  To  Express

An  Opinion  With  Regard  To  The  Financials,  However

 

 

Freeman FinTech Corporation Ltd (民眾金融科技控股有限公司) (Code: 279, Main Board, The Stock Exchange of Hongkong Ltd) has released its Annual Report in respect of the Financial Year, ended March 31, 2019.

 

In that Annual Report, published and disseminated at 9:18 a.m. on Tuesday, July 30, 2019, Management announced at Page 70, among other things:

 

 

2019

2018

 

($HK’000)

($HK’000)

Revenue

(74,633)

500,469

Gross Profit/(Loss)

(92,748)

490,441

Provision for Impairment Loss
   of Loans Receivable, Net


(1,368,726)


(320,000)

Profit/(Loss) Before Taxation

(2,149,801)

324,384

Profit/(Loss) for The Year

(2,153,195)

303,022

Profit/(Loss) Attributable
   to Shareholders


(2,160,250)


269,894

 

Comparing the Company’s Financials in respect of the Five-Year Financial Summary, found at Page 252 of the 2019 Annual Report, it was shown that:

 

1.

The Loss Before Taxation for the 2019 Financial Year was the worst result of the past Five Financial Years;

 

 

2.

The Net Loss for the 2019 Financial Year was the worst result of the past Five Financial Years;

 

 

3.

The Loss Attributable to Shareholders for the 2019 Financial Year was the worst result of the past Five Financial Years; and,

 

 

4.

Shareholders’ Funds (Net Assets), at $HK2,456,710,000, were at the lowest level of the past Five Financial Years.

 

Crowe (Hongkong) CPA Ltd (國富浩華[香港]會計師事務所有限公司), Certified Public Accountants, on June 28, 2019, in its capacity as the Independent Auditor to the Shareholders of Freeman FinTech Corporation Ltd, stated, inter alia, in its Report:

 

We do not express an opinion on the consolidated financial statements of the Group. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these 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.’

 

At Page 67 of the 2019 Annual Report, Crowe (Hongkong) CPA Ltd stated, under the heading, ‘BASIS FOR DISCLAIMER OF OPINION:

 

‘Multiple uncertainties relating to going concern

 

‘On 12 March 2019 and 10 April 2019, the Company received demand letters from lenders for immediate repayment of borrowings in outstanding principal amounts of HK$784 million and HK$429 million respectively. On 26 April 2019, the Company received a notice of event of default from another lender to reserve its right to demand immediate repayment for borrowings with an outstanding principal amount of HK$777 million at 31 March 2019. On 10 June 2019, the Company received a notice of event of default and repayment from an additional lender for immediate repayment of borrowings in an outstanding principal, together with accrued interest amount of HK$719 million. In addition, on 10 May 2019, the Company received a petition from one of the above lenders in the matter of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) from the High Court of the Hong Kong Special Administrative Region (the “High Court”) that the Company be wound up by the High Court on the ground that the Company is insolvent and unable to pay its debts. These conditions indicate the existence of material uncertainties which may cast significant doubt about the ability of the Group to continue as a going concern.

 

As further explained in Note 2.1, the directors of the Company are taking measures to improve the liquidity and solvency position of the Group. These measures include (i) negotiations with potential strategic investors in respect of a possible equity contribution to the Company; (ii) negotiations with the lenders and other creditors to defer or roll over the bank and other borrowings of the Company, (iii) speeding up the collection of receivables process and (iv) tightening the operating cash outflows through cutting costs and capital expenditures.

 

As at the date of approval of these financial statements, these measures had not yet been concluded or implemented. The validity of the going concern assumption on which the consolidated financial statements are prepared is dependent on the successful and favourable outcomes of the measures taken by the directors of the Company as described above. The consolidated financial statements have been prepared on the assumption that the Group will continue as a going concern and, therefore, do not include any adjustments relating to the realisation and classification of non-current assets and non-current liabilities that may be necessary if the Group is unable to continue as a going concern. Should the going concern assumption be inappropriate, adjustments may have to be made to reflect the situation that assets may need to be realised at amounts other than those currently recorded in the consolidated statement of financial position. In addition, the Group may have to provide for further liabilities that might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities…’.

 

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