Further to the announcement made on 30 April 2014 in relation to the qualified opinion by the External Auditors, Messrs Helmi Talib & Co., the Board of Directors of China Ouhua wishes to provide the following information:-
1. The deposit of RMB118,800,000.00 in respect of the Proposed Acquisition of 40 acres of land, buildings and ancillary facilities located at No. 3 Wolong North Road, Yantai City (" the Property") is recoverable. In the event the transaction for the Proposed Acquisition is unable to be completed, the deposit shall be recoverable in full from Huangwu Subdistrict Office. The Company will send a representative to liaise, handle and monitor with the Huangwu Subdistrict Office to expedite the transfer of property ownership. Huangwu Subdistrict Office had also indicated their intention to complete the transfer of property ownership as soon as possible and to receive the final payment.
2. The Land which was initially registered as state owned property in 1976 is required to be converted to commercial and industrial land. The complexity of the process of conversion has complicated the transfer of property procedures as it involves various government departments and documentations. Turnover of staff within the various government departments and their internal priorities had also contributed to the delay in the process. At this juncture, the Board is unable to ascertain the expected completion date as the duration to be taken for the transfer of property ownership is reckoned to be hard to determine.
3. The Company would continue to pursue the recoverability of the trade receivables of RMB44.93 million and if required, the necessary impairment will be made in the financial year ending 31 December 2014.