YNH’s auditor issues qualified opinion on financial statements in relation to JV, turnkey contracts

Friday 17 May 2024

KUALA LUMPUR (Oct 27): YNH Property Bhd’s external auditor has issued a qualified opinion on the group’s financial statements for the 18-month period ended June 30, 2023, in relation to its joint venture (JV) and turnkey contracts for property development work.

Baker Tilly Monteiro Heng PLT expressed a “basis for qualified opinion” saying that an amount of RM1.1 billion had been included in YNH’s inventories regarding the contracts entered into with the JV parties or landowners.

An additional amount of RM97.5 million was paid to the landowners during the financial period. The land cost is subject to the agreed entitlement provided in the contract with the JV partners or landowners, according to the auditor's report as reproduced by YNH in a bourse filing on Friday.

“At the date of authorisation of these financial statements, the outcomes of the regulatory authorities’ investigation remain unknown, and the special review undertaken by the group has not been completed.

“Therefore, given the prevailing ongoing regulatory authorities’ investigations and the group’s special review which have not been completed, we could not obtain sufficient appropriate audit evidence that the JV and turnkey contracts entered into with the respective JV parties or landowners are not related party transactions, and on the value of these inventories as at June 30, 2023 and the related disclosures. Consequently, we were unable to determine whether any adjustments to the financial statements were necessary," said Baker Tilly.

“We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion,” it added.

YNH was in the spotlight in May, after the group announced that its wholly-owned unit Kar Sin Bhd was disposing of a piece of land measuring 5.09 acres (2.06 hectares) in Desa Sri Hartamas to Sunway’s wholly-owned subsidiary Sunway Living Space Sdn Bhd for RM170 million cash.

The deal seems to have hit a stumbling block, as Bursa Securities raised more questions over the transaction. Bursa issued its first query on May 22, to which YNH replied on May 19. Bursa again issued another query on May 25, and YNH was required to provide its response within 24 hours.

In its reply to the query, YNH acknowledged that the group had overlooked a few details, and will seek advice from the adviser to rectify the oversight.

Also in the same month, YNH saw the resignation of two independent and non-executive directors, Ching Nye Mi @ Chieng Ngie Chay and Ding Ming Hea.

The group's chairman and executive director Datuk Dr Yu Kuan Chon is the largest shareholder with a 24.41% stake, followed by Kenanga Investors Bhd (8.24%) and CGS-CIMB Securities Singapore (4.77%), Bloomberg data showed.

YNH’s share price settled unchanged at RM5.10 on Friday, with a market capitalisation of RM2.7 billion.

Edited ByS Kanagaraju

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