A True And Fair View Of The financial Position In Audited Financial Statements For The Financial Period From 1 January 2022 To 30 June 2023 Except For Possible Effects Noted In Basis For Qualified Opinion

BackNov 06, 2023
Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-03112023-00001
Subject A TRUE AND FAIR VIEW OF THE FINANCIAL POSITION IN AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2022 TO 30 JUNE 2023 EXCEPT FOR POSSIBLE EFFECTS NOTED IN BASIS FOR QUALIFIED OPINION
Description YNH PROPERTY BERHAD ("YNH" or "the Company") A TRUE AND FAIR VIEW OF THE FINANCIAL POSITION IN AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2022 TO 30 JUNE 2023 EXCEPT FOR POSSIBLE EFFECTS NOTED IN BASIS FOR QUALIFIED OPINION
Query Letter Contents

We refer to your Company's announcement dated 1 November 2023, in respect of the aforesaid matter.

 

In this connection, kindly furnish Bursa Malaysia Securities Berhad with the following additional information for public release:-

 

1. Based on your representation that Benjamin Dawson (“BD”) and Samir Sumathi Fernando & Co (“SSF & Co”) were appointed on 3 April 2023 and 27 April 2023 respectively, please provide the following information for greater clarification :-

(i) Full details of circumstances/ events leading to the appointment of BD and SSF & Co to undertake the special review;

(ii) The scope of work undertaken by BD and SSF & Co seems similar. Please highlight clearly the differences of work scope performed by both BD and SSF & Co; and

(iii) If there is no clear distinction in terms of the scope of work performed by BD and SSF & Co, to disclose the rationale for appointing the two.   

 

2. With regard to the appointment of BD and SSF & Co, please disclose the following:-

 

(i) Background information of BD and SSF & Co respectively, including but not limited to, the name of legal partners/legal assistants in charged of the special review as well as their professional experience and expertise with regard to all applicable laws and Bursa Malaysia Securities Berhad’s Listing Requirements (“LR”);

(ii) Facts and circumstances/ events that led to SSF & Co’s extended completion date by approximately 4 months from 11 July 2023 until 30 November 2023.

(iii) In view that the special review by BD has been completed in July 2023, please disclose:

(a) Report on the findings of the special review; and

(b) Proposed recommendation or remedial action (if any)

 

4. Based on the outcome of the special review by BD, what are the steps/proposed steps that YNH has undertaken/will undertake to address the findings of the report.

 

5. In view that YNH has appointed both BD and SSF & Co to undertake the special review, please disclose the reasons for YNH’s intention to appoint a professional firm to conduct an independent review. In this regard, please state the full details of the scope of work to be undertaken and confirm whether it will be similar or different from the previous special review.

 

6. To disclose the view of YNH’s audit committee members with regard to the details of the “Qualified Opinion” as disclosed in the Auditors’ Report for financial period from 1 January 2022 to 30 June 2023.

 

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

 

Yours faithfully

 

Listing

Regulation

 

cc:-   Market Surveillance, Securities Commission

We refer to the Bursa Query Letter dated 3 November 2023 in respect of the aforesaid matter. In this connection, kindly refer below for the additional information for public release as requested:

 

1.   Based on your representation that Benjamin Dawson (“BD”) and Samir Sumathi Fernando & Co (“SSF & Co”) were appointed on 3 April 2023 and 27 April 2023 respectively, please provide the following information for greater clarification:-

 

(i)   Full details of circumstances/ events leading to the appointment of BD and SSF & Co to undertake the special review;

YNH’s Response

In view of a series of articles were published on news portals or website containing serious allegations, accusations and inference against the Company and its Directors, the External Auditors have requested the Management to conduct an independent legal opinion in regards to the joint venture and turnkey construction agreements entered into by YNH Group.   

 

(ii)   The scope of work undertaken by BD and SSF & Co seems similar. Please highlight clearly the differences of work scope performed by both BD and SSF & Co; and

YNH’s Response

The work undertaken by BD and SSF are almost similar as reproduced below:

Scope of work of BD

To identify whether any of the Joint Venture Agreements, Turnkey Construction Agreements and all supplemental agreements related thereto entered into by Kar Sin Berhad are in accordance with the laws and regulations in relation to related party transactions.

Scope of work of SSF & CO

To provide a legal opinion on whether the Joint Venture Agreements/Turnkey Construction Agreements ("the Agreements") entered into between Kar Sin Berhad ("Kar Sin") and various Landowners/Counterparties are in compliance with all applicable laws and the Bursa Main Market Listing Requirements and to confirm whether the parties involved in the Agreements are related parties or otherwise.

 

(iii)   If there is no clear distinction in terms of the scope of work performed by BD and SSF & Co, to disclose the rationale for appointing the two.

YNH’s Response

Our External Auditors initiated their request for independent legal opinion in early April 2023 as part of the audit procedures. In view of the tight deadline, the Management has decided to appoint two legal firms to perform the independent legal review concurrently to facilitate audit requirements so that the audit of the Group Financial Statement could be completed by October 2023.

 

2.   With regard to the appointment of BD and SSF & Co, please disclose the following:-

 

(i)   Background information of BD and SSF & Co respectively, including but not limited to, the name of legal partners/legal assistants in charged of the special review as well as their professional experience and expertise with regard to all applicable laws and Bursa Malaysia Securities Berhad’s Listing Requirements (“LR”);

YNH’s Response

The profiles of BD and SSF will be announced in due course.

 

(ii)   Facts and circumstances/ events that led to SSF & Co’s extended completion date by approximately 4 months from 11 July 2023 until 30 November 2023.

YNH’s Response

SSF issued its independent legal opinion on 11 July 2023 and their assignment was completed thereof. However, the Management of YNH has thereon required SSF to perform additional works, which include verification and validation on the joint venture and turnkey agreements. This is a separate engagement which started in August 2023 and is expected to complete in end November 2023.

 

(iii)   In view that the special review by BD has been completed in July 2023, please disclose:

(a) Report on the findings of the special review; and

(b) Proposed recommendation or remedial action (if any)

YNH’s Response

 

Report on Findings of the Special Review 

Proposed Recommendation or remedial action, (if any)

Direct Extraction from the Report of BD


Conclusion

The critical consideration is whether the Agreement exceed the financial threshold under the Listing Requirements. This is a matter which the financial adviser of Kar Sin Bhd and YNH is well placed to advice the board.

 

 

 

 

None

Direct Extraction from the Report of SSF & Co

 

Conclusion

Based on the analysis in regard to the compliance of the 17 Agreements with all applicable laws and the Main Market Listing requirements, we would advice that subject to the verification/validation exercise including the various rectifications to be done as proposed in this opinion, the 17 Agreements entered into by Kar Sin Bhd do not appear on the face of it to be scams as alleged in various reports found on Facebook/internet and which were also sent to Bursa/Seciurities Commission, unless of course the said verification/validation exercise to be performed by the Task Force/Company Auditors shows otherwise.

 

 

 

 

 

 

 

 

 

Direct Extraction from the Report of SSF & Co

 

 

  1. Due to the continuous spreading and publication of the allegations by the anonymous persons, we opine, that it is critical at this juncture for the Company to empanel Solicitors on a Retainer basis to advise the Company and the Board should legal suits/proceedings be instituted by the Authorities/3rd parties.
  2. In this connection, our Firm would be very pleased to offer our services to you on a Retainer which will include amongst others if requested to do the recommended validation/verification exercise of the 17 Agreements and to draw up various mitigation pleas including reviewing/preparing re­sponses to Bursa/Securities Commission should further queries be received/raised. The detailed scope of the Retainer services can be discussed further, if needed

 

 

4.   Based on the outcome of the special review by BD, what are the steps/proposed steps that YNH has undertaken/will undertake to address the findings of the report.

YNH’s Response

As report of the BD and SSF & Co were only tabled at the Board Meeting held in October 2023, the Audit Committee and the Board will deliberate further on the steps to undertake to address the findings of the report at the forthcoming Meeting in November 2023.    

 

5.   In view that YNH has appointed both BD and SSF & Co to undertake the special review, please disclose the reasons for YNH’s intention to appoint a professional firm to conduct an independent review. In this regard, please state the full details of the scope of work to be undertaken and confirm whether it will be similar or different from the previous special review.

YNH’s Response

Since the finding report of BD and SSF & Co were appointed by the Management and the qualified amount on the inventories in respect of the Joint Ventures and Turnkey Contracts entered by the Group with the respective joint venture parties or landowner is substantial i.e. RM1.1 billion, the Audit Committee opined that it would be appropriate for the Audit Committee to appoint a professional firm for the independent review and report directly to them. The Audit Committee is in the midst of finalising the appointment of the  professional firm and also their scope of works. An announcement to this development will be announced in due course.  

 

6.   To disclose the view of YNH’s audit committee members with regard to the details of the “Qualified Opinion” as disclosed in the Auditors’ Report for financial period from 1 January 2022 to 30 June 2023.

YNH’s Response

As the 3 membes of the Audit Committee were only appointed on 31 March 2023, they have accepted and taken note of the Qualified Opinion raised by the External Auditors but have requested an independent review to be conducted as mentioned in Item 4 above.

 

The Company will make the necessary announcement on further material development of the above matter in due course. 

 

This announcement is dated 6 November 2023.

 

Announcement Info

Company Name YNH PROPERTY BERHAD
Stock Name YNHPROP
Date Announced 06 Nov 2023
Category General Announcement for PLC
Reference Number GA1-06112023-00075