On December 31, Glorify announced that RAFFLES INTERIOR (01376.HK) entered into a sale and purchase agreement on December 31, 2024, under which the company agreed to sell its entire equity interest in China Soft Drinks Limited to the buyer at a nominal price of HKD 1 based on the "as is" benchmark (the "Sale"). China Soft Drinks is a wholly-owned subsidiary of the company and indirectly holds 51% of the equity interests in subsidiaries in China. The Sale was completed on the same day.
The company suspects that the original seller has potential fraud, misrepresentation, and violations of the statements and guarantees regarding the acquisition. The Sale reflects the company’s timely response to the uncooperative nature of certain management members and representatives of the subsidiaries in China, preventing any hindrance to the financial reporting process of the group's consolidated financial statements and related audit procedures concerning the subsidiaries in China, and ultimately limiting the downside risk associated with the acquisition.
In addition, the subsidiaries in China have recorded a net loss since the acquisition, showing no signs of profitability as of the date of the sale and purchase agreement. Based on the information available to the company and considering the nature of the potential misrepresentations and breaches mentioned above, the company still doubts the ability of the subsidiaries in China to achieve the guaranteed profit. After reevaluating the financial prospects of the subsidiaries in China, the company believes that they cannot demonstrate their ability to generate the guaranteed profit promised by the original seller through their ordinary business.
