2016.10 DBA TELECOM

Company Name: DBA Telecommunication (Asia) Holdings Limited
Stock Code: 03335
Year end: December 31, 2015

Basis for disclaimer of opinion

  1. Opening balances and corresponding figures

Our audit opinion on the consolidated financial statements of the Group for the year ended 31 December 2014, which forms the basis for the corresponding figures presented in the current year’s consolidated financial statements, was disclaimed because of the significance of the possible effect of the limitations on the scope of our audit and the material uncertainty relating to the going concern basis, details of which are set out in our auditor’s report dated 12 October 2016.

There were no satisfactory audit procedures to ascertain the existence, accuracy, presentation and completeness of certain opening balances and corresponding figures (as further detail explained in the following paragraphs) shown in the current year’s consolidated financial statements.

  1. Deconsolidation of the subsidiaries

Certain subsidiaries of the Company in the People’s Republic of China were deconsolidated from the Group since 1 January 2012. No sufficient evidence has been provided to satisfy ourselves as to whether the Company had lost control of these subsidiaries since 1 January 2012 and throughout the year ended 31 December 2015 and 2014.

Accordingly, no sufficient evidence has been provided to satisfy ourselves, in relation to the deconsolidated subsidiaries, as to the completeness of the transactions of the Group for the year ended 31 December 2015 and 2014 and the Group’s financial position as at those dates.

  1. Gain on deconsolidation of subsidiaries

As explained in notes 2 and 8 to the consolidated financial statements, upon the liquidation of two subsidiaries of the Company which are investment holding companies on 28 May 2015, the Company recognised a gain on deconsolidation of subsidiaries of approximately RMB177,665,000 for the year ended 31 December 2015.

No sufficient evidence has been provided to satisfy ourselves as to certain assets and liabilities of those liquidated subsidiaries. As a result, we are unable to satisfy ourselves that the gain on deconsolidation of those subsidiaries of approximately RMB177,665,000 for the year ended 31 December 2015 was fairly stated.

  1. Share option reserve

Given the fact that the supporting documents relating to the share options granted by the Company to its ex-directors and eligible persons were incomplete, we are unable to obtain sufficient appropriate audit evidence to verify the presentation and accuracy of the carrying amount of the share option reserve of approximately RMB1,321,000 as at 31 December 2015 and 2014 and the accuracy and completeness of the transfer of share option reserve of approximately RMB4,171,000 for the year ended 31 December 2014.

  1. Amount due to a shareholder

Given the inherent limitations arising from the consequential correlation impact to certain associated audit qualifications points, (1), (2), (3), (6), (7), (8) and (9b), as described in our disclaimer of opinion paragraphs, we have been unable to obtain sufficient audit evidence in respect of the accuracy and completeness of the amount due to a shareholder of approximately RMB215,635,000 and RMB205,971,000 shown in the consolidated statement of financial position as at 31 December 2015 and 2014 respectively. There were no other satisfactory audit procedures that we could perform to satisfy ourselves whether the aforesaid balances were fairly stated as at 31 December 2015 and 2014.

  1. Amounts due to deconsolidated subsidiaries

No sufficient evidence have been received by us up to the date of this report in respect of the amounts due to deconsolidated subsidiaries of approximately RMB3,084,000 and RMB75,285,000 shown in the consolidated statement of financial position as at 31 December 2015 and 2014 respectively. There were no other satisfactory audit procedures that we could perform to satisfy ourselves whether the aforesaid balances were fairly stated as at 31 December 2015 and 2014.

  1. Commitments and contingent liabilities

No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of commitments and contingent liabilities as at 31 December 2015 and 2014.

  1. Related party transactions and disclosures

No sufficient evidence has been provided to satisfy ourselves as to the existence, accuracy and completeness of the disclosures of the related party transactions for the year ended 31 December 2015 and 2014 and balances as at 31 December 2015 and 2014 as required by Hong Kong Accounting Standard (“HKAS”) 24 (Revised) “Related Party Disclosures”.

  1. Other disclosures in the consolidated financial statements

No sufficient evidence has been provided to satisfy ourselves as to the accuracy and completeness of the disclosures as required by the following in relation to:

(a) Hong Kong Financial Reporting Standard 2 “Share-based Payment” for the presentation of share option scheme in the notes to consolidated financial statements;

(b) HKAS 7 “Statement of Cash Flows” for the presentation of the non-cash transaction in the notes to consolidated financial statements.

Any adjustments to the figures as described from points 1 to 9 above might have a significant consequential effect on the Group’s results and cash flows for the two years ended 31 December 2015 and 2014 and the financial position of the Group as at 31 December 2015 and 2014, and the related disclosures thereof in the consolidated financial statements.

Material uncertainty relating to the going concern basis

In forming our opinion, we have considered the adequacy of the disclosures made in note 2 to the consolidated financial statements which explains that a proposal for the resumption of trading in the Company’s shares and the proposed restructuring of the Group has been submitted to The Stock Exchange of Hong Kong Limited to pursue a restructuring of the Company.

The consolidated financial statements have been prepared on a going concern basis on the assumption that the proposed restructuring of the Company will be successfully completed, and that, following the restructuring, the Group will continue to meet in full its financial obligations as they fall due in the foreseeable future. The consolidated financial statements do not include any adjustments that would result from a failure to complete the restructuring. We consider that the disclosures are adequate. However, in view of the extent of the uncertainty relating to the completion of the restructuring, we disclaim our opinion in respect of the material uncertainty relating to the going concern basis.

Disclaimer of opinion

Because of the significance of the matters as described in the basis for disclaimer of opinion paragraphs and the material uncertainty relating to the going concern basis, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the consolidated financial statements and whether the consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

2016.10 DAISHOMICROLINE

Company Name: Daisho Microline Holdings Limited
Stock Code: 00567
Year end: March 31, 2015

Basis for qualified opinion

Prepayment to a sewage treatment company

Included in the Group’s “Other receivables, deposits and prepayments” as at 31 March 2014 was a prepayment of HK$9,849,000 to a sewage treatment company. As explained in note 19(a)(i)* to the consolidated financial statements, an impairment loss on the carrying amount of the prepayment of HK$7,424,000 was recognised during the year ended 31 March 2015 as the directors considered the chance to recover the prepayment was low.

The sewage treatment company had been suffering from financial difficulties since July 2013 but we have not obtained sufficient appropriate audit evidence to substantiate the financial ability of the sewage treatment company as at 31 March 2014. In addition, since the financial and operating status of the guarantor of the sewage treatment company and the value of the assets being frozen as at 31 March 2014 had not been evaluated properly, we were unable to verify the financial ability of the guarantor of the sewage treatment company as at 31 March 2014. We were unable to obtain sufficient appropriate audit evidence to evaluate the recoverability of the prepayment of HK$9,849,000 as at 31 March 2014. Therefore, we were unable to determine whether any adjustments to the impairment loss recognised during the year ended 31 March 2015 in respect of the prepayment were necessary, which may have a significant impact on the financial performance and the elements making up the consolidated statement of cash flows of the Group for the year ended 31 March 2015.

Loan receivable

Included in the Group’s “Other receivables, deposits and prepayments” as at 31 March 2014 was a loan receivable of HK$2,522,000. As explained in note 19(a)(ii)# to the consolidated financial statements, an impairment loss on the unsettled loan receivable of HK$2,499,000 was recognised during the year ended 31 March 2015 as the directors considered the chance to recover the loan receivable was low.

* As reproduced in note 7(i) to this announcement.

# As reproduced in note 7(ii) to this announcement.

We have not obtained sufficient appropriate audit evidence to verify the financial ability of the borrower as at 31 March 2014 and we were unable to obtain sufficient documentation to evaluate the recoverability of the loan receivable of HK$2,522,000 as at 31 March 2014. Therefore, we were unable to determine whether any adjustments to the impairment loss recognised during the year ended 31 March 2015 in respect of the loan receivable were necessary, which may have a significant impact on the financial performance and the elements making up the consolidated statement of cash flows of the Group for the year ended 31 March 2015.

Impairment of available-for-sale financial assets

As at 31 March 2014, the Group had available-for-sale financial assets carried at cost with carrying amount of HK$19,281,000, which were an unlisted equity investment in a Japanese company. An impairment loss on this unlisted equity investment of HK$10,000,000 had been recognised during the year ended 31 March 2015.

There was objective evidence of impairment as a result of the deteriorated economic environment of electronic component industry in Japan since an earthquake in 2011. However, we were unable to obtain sufficient appropriate audit evidence to assess the present value of estimated future cash flows discounted at the then current market rate of return for a similar financial asset at the dates when the objective evidence existed. There were no alternative audit procedures that we could perform to verify the carrying amount of the available-for-sale financial assets as at those dates and 31 March 2014. Therefore, we were unable to determine whether any adjustments to the impairment loss recognised during the year ended 31 March 2015 in respect of the available-for-sale financial assets were necessary, which may have a significant impact on the financial performance and the elements making up the consolidated statement of cash flows of the Group for the year ended 31 March 2015.

Qualified opinion

In our opinion, except for the possible effects of the matters described in the basis for qualified opinion paragraphs, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 March 2015, and of its financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Other matter

The consolidated financial statements of the Group for the year ended 31 March 2014 were audited by the predecessor auditor who expressed a qualified opinion on those statements on 27 June 2014.

2016.09 C ZENITH CHEM

Company Name: China Zenith Chemical Group Limited
Stock Code: 00362
Year end: June 30, 2016

Basis for Qualified Opinion

Opening balances, corresponding figures and comparative financial statements

The corresponding figures and comparative financial statements in the current year’s financial statements were derived from the financial statements for the year ended 30 June 2015 which contained a disclaimer of audit opinion, details of the qualifications were set out in the auditor’s report dated 30 September 2015. We have not been able to obtain sufficient appropriate audit evidence as to whether (i) the opening balances, (ii) the corresponding figures and comparative financial statements were properly recorded and accounted for.

Any adjustments that might have been found to be necessary would have had a consequential impact on the net assets of the Group as at 30 June 2016, results of the Group for the year ended 30 June 2016 and the related disclosures thereof in the financial statements.

Qualified Opinion

In our opinion, except for the effects of the possible effects on the opening balances, corresponding figures and comparative financial statements, the consolidated financial statements give a true and fair view of the financial position of the Group as at 30 June 2016 and of the Group’s financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Emphasis of Matter

We draw attention to note 2 to the consolidated financial statements which indicates that the Group has net current liabilities of approximately HK$839,335,000 as at 30 June 2016. These conditions, along with other matters as set out in note 2 to the consolidated financial statements, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.

2016.09 BIRMINGHAM INTL

Company Name: Birmingham International Holdings Limited
Stock Code: 02309
Year end: June 30, 2017

Basis for Disclaimer of Opinion

  1. Corresponding figures

Our audit opinion on the consolidated financial statements of the Group for the year ended 30 June 2015 was qualified because of the significance of possible effect of the limitations on the scope of our audit and fundamental uncertainty relating to the going concern basis, details of which are set out in our auditor’s report dated 30 September 2015.

There were no satisfactory audit procedures to ascertain the existence, accuracy, presentation and completeness of certain opening balances and corresponding figures (as further details explained in the following paragraphs) shown in the current year’s consolidated financial statements.

  1. Amounts due to former directors

At 30 June 2015 and 30 June 2016, the Group recorded amounts due to former directors of approximately HK$10,769,000 and HK$10,769,000, respectively. We were unable to obtain sufficient and satisfactory audit evidence to verify the amounts and the repayment terms of these amounts. There was no other satisfactory audit procedures including direct confirmation that we could perform to satisfy ourselves as to whether these amounts were fairly stated in the consolidated statements of financial position as at 30 June 2015 and 30 June 2016.

  1. Other payables

We have not obtained sufficient and satisfactory audit evidence to satisfy ourselves as to the existence and amounts of other payables of approximately HK$5,353,000 and HK$5,353,000 as at 30 June 2015 and 30 June 2016, respectively. There are no other satisfactory audit procedures including direct confirmation that we could perform to satisfy ourselves as to whether these amounts were fairly stated in the consolidated statements of financial position as at 30 June 2015 and 30 June 2016.

  1. Suspected misappropriation of funds and administrative expenses

During our audit on the consolidated financial statements of the Group for the year ended 30 June 2015, we have not obtained sufficient and satisfactory audit evidence to satisfy ourselves as to the nature of the suspected misappropriation of funds of HK$9,643,000 and certain administrative expenses amounted to approximately HK$5,663,000 included in the consolidated profit of loss for the year ended 30 June 2015. Furthermore, there may be a cut-off effect in connection with the suspected misappropriation of funds on the consolidated loss for the year ended 30 June 2015 or on the financial years prior to that. We have not been provided with sufficient and satisfactory audit evidence of whether the amounts are fairly stated and should be recorded in the year ended 30 June 2015 or prior years. Details of which are set out in points 4 and 6 under the heading “Basis for Disclaimer of Opinion” in our auditor’s report dated 30 September 2015.

Accordingly, our opinion on the current year’s consolidated financial statements is also qualified because of the possible effects of this matter on the comparability of the current year’s figures and the corresponding figures.

  1. Convertible notes

(a) The U-Continent convertible notes

On 5 February 2014, the Company issued a zero coupon convertible notes (the “First CN”) of principal amount of HK$50,000,000 to U-Continent Holdings Limited (“U-Continent”). On 21 February 2014, HK$10,000,000 of the First CN was converted into 333,333,333 ordinary shares of the Company.

In 2014, the Company issued a zero coupon convertible note in two tranches to the principal amount of HK$125,000,000 (as to HK$105,000,000 under the first tranche and HK$20,000,000 under the second tranche) (the “Second CN”) to U-Continent. On 9 October 2014, HK$45,000,000 of the Second CN was converted into 1,500,000,000 ordinary shares of the Company.

Subsequently, the Company rescinded the First CN and Second CN agreements (the “Agreements”) by way of a letter dated 20 July 2015 to U-Continent and filed a writ of summons against U-Continent in the High Court of Hong Kong (the “High Court”) on 21 July 2015 claiming for loss and damages suffered by the Company as a result of the alleged misrepresentations made by U-Continent, details of which are set out in the announcement of the Company dated 21 July 2015. As a result of the above legal action, the Company has classified the remaining balance of the First CN of HK$40,000,000 and the Second CN of HK$80,000,000, totaling HK$120,000,000 as at 30 June 2015 and 30 June 2016, as an amount due to U-Continent, and included in borrowings.

On 12 April 2016, the Company entered into a settlement agreement with U-Continent to extend the maturity dates of the remaining unconverted First CN and Second CN to 31 December 2016 or such other date as the parties to the settlement agreement may agree in writing (with all the other terms and conditions of the remaining unconverted First CN and Second CN remain unchanged) subject to the terms and conditions of the settlement agreement. Up to the date of these consolidated financial statements, the conditions of the settlement agreement entered into with U-Continent have not been fulfilled.

We were unable to obtain sufficient appropriate audit evidence on the accounting treatment of the First CN and the Second CN, including whether the First CN and the Second CN constitute equity instruments which should be classified under convertible notes reserve, or whether the recognition of the remaining balances of the First CN of HK$40,000,000 and the Second CN of HK$80,000,000 as at 30 June 2015 and 30 June 2016 to borrowings is appropriate. In addition, we were unable to determine whether the conversion of the First CN during the year ended 30 June 2015 constituted a transaction within the scope of HK(IFRIC) Interpretation 19 “Extinguishing Financial Liabilities with Equity Instruments” which would require the determination of the fair value of the equity or loss for the year ended 30 June 2015

(b)  The debt convertible notes

On 20 December 2013, the Company and Mr. Yeung Ka Sing, Carson (“Mr. Yeung”) agreed to capitalise the debt owed by the Company of HK$193,500,000 to Mr. Yeung by issuing a zero coupon convertible note (the “Debt CN”). The Debt CN could be converted to a total of approximately 6,450,000,000 ordinary shares of the Company at a conversion price HK$0.03 per share.

The Company recorded the initial value of the Debt CN of HK$193,500,000, which was the carrying value of the debt owed by the Company as at the completion date of the subscription agreement entered into between the Company and Mr. Yeung (i.e. 5 February 2014). However, in accordance with HK(IFRIC) Interpretation 19 “Extinguishing Financial Liabilities with Equity Instruments”, when equity instruments issued to a creditor to extinguish all or part of a financial liability are recognised initially, an entity shall measure them at the fair value of the equity instruments issued. We have not obtained sufficient and satisfactory audit evidence to satisfy ourselves as to the fair value of the Debt CN. Any adjustment to the fair value of the Debt CN at the time of issuance will affect classification of the accumulated losses and convertible notes reserve as at 30 June 2015 and 30 June 2016.

  1. Material uncertainty relating to the going concern basis

We draw attention to note 2(b) to the consolidated financial statements. The Group recorded a loss attributable to the owners of the Company of approximately HK$58,574,000 for the year ended 30 June 2016, and net current liabilities and net liabilities of approximately HK$141,155,000 and HK$54,106,000 respectively as at 30 June 2016. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern, the validity of which is dependent upon future funding available at a level sufficient to finance the working capital requirements of the Company and completion of the proposed restructuring as fully detailed in note 2(b) to the consolidated financial statements. The consolidated financial statements do not include any adjustments that would result from the failure to obtain the financial support.

We consider that the material uncertainty has been adequately disclosed in the consolidated financial statements. However, in view of the extent of the uncertainty relating to the availability of future funding, we disclaim our opinion in respect of the material uncertainty relating to the going concern basis.

Any significant consequential effect in connection with the above matters would affect the net assets and net liabilities of the Group as at 30 June 2015 and 30 June 2016 respectively, and the Group’s loss for the years ended 30 June 2015 and 30 June 2016, and the related disclosures in the consolidated financial statements.

Disclaimer of Opinion

Because of the significance of the matters as described in the basis for disclaimer of opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the 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.

2016.09 TRONY SOLAR

Company Name: Trony Solar Holdings Company Limited
Stock Code: 02468
Year end: June 30, 2016

Basis for disclaimer of opinion

  1. Opening balances and corresponding figures

Our audit opinion on the consolidated financial statements of the Group for the year ended 30 June 2015, which forms the basis for the corresponding figures presented in the current year’s consolidated financial statements, was disclaimed because of the significance of the possible effect of the limitations on the scope of our audit and the material uncertainty relating to the going concern basis, details of which are set out in our audit report dated 29 April 2016.

There were no satisfactory audit procedures to ascertain the existence, accuracy, presentation and completeness of certain opening balances and corresponding figures (as further detail explained in the following paragraphs) shown in the current year’s consolidated financial statements.

  1. Trade and other payables

No sufficient evidence has been provided to satisfy ourselves as to the carrying amount of the trade and other payables amounted to approximately RMB265,697,000 and RMB274,652,000 as at 30 June 2016 and 2015 respectively are fairly stated.

  1. Commitments and contingent liabilities

No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of commitments and contingent liabilities as at 30 June 2016 and 2015.

Any adjustments to the figures as described from points 1 to 3 above might have a significant consequential effect on the Group’s results and cash flows for the two years ended 30 June 2016 and 2015 and the financial positions of the Group as at 30 June 2016 and 2015, and the related disclosures thereof in the consolidated financial statements.

Material uncertainty relating to the going concern basis

The disclosures in note 2 to the consolidated financial statements indicates the Group incurred a loss of approximately RMB58,050,000 for the year ended 30 June 2016 and net current liabilities of approximately RMB131,472,000 in the consolidated statements of financial position of the Group as at 30 June 2016. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern. In view of the extent of the uncertainty relating to the future working capital sufficiency of the Group, we disclaim our opinion in respect of the material uncertainty relating to the going concern basis.

Disclaimer of opinion

Because of the significance of the matters as described in the basis for disclaimer of opinion paragraphs and the material uncertainty relating to the going concern basis, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the consolidated financial statements. In all other respects, in our opinion, the consolidated financial statements have been properly prepared in compliance with the Hong Kong Companies Ordinance.

2016.09 HMV DIGIT CHINA

Company Name: HMV Digital China Group Limited
Stock Code: 08078
Year end: June 30, 2016

BASIS FOR QUALIFIED OPINION

(a)  Corresponding figures

Included in the Group’s investment at fair value through other comprehensive income as at 30 June 2014 was an investment in Dragonlott Holdings Limited (“DHL”) of approximately HK$46,674,000 in which the Group holds 13.28% equity interests. The directors of the Company have not been provided with any financial or other relevant information of DHL from the management of DHL and therefore it was unable to determine the fair value of the investment in DHL. The investment in DHL was fully written off during the year ended 30 June 2015. We have not been provided with sufficient audit evidence as to whether the other comprehensive loss arising from the written off of the investment in DHL should be recorded in the prior years. However, we are satisfied that the investment in DHL is fairly stated as at 30 June 2015. Any adjustment to this figure might have a consequential effect on the Group’s other comprehensive loss for the year ended 30 June 2015.

(b)  Revenue and distribution costs of a firm

As explained in note 5 to the consolidated financial statements, the directors of the Company had not been provided with sufficient information regarding the revenue from box office takings and the related distribution costs of a film. As such, we had not been provided with sufficient evidence in relation to the audit of the amounts of revenue and trade receivable from box office takings and the related distribution costs and other payables of the film. There are no other satisfactory audit procedures that we could adopt to determine the amounts of revenue from box office takings and the related distribution costs of the film for the year ended 30 June 2016 and the corresponding trade receivable and other payables as at 30 June 2016. Any adjustment to these figures might have a consequential effect on the results for the year and net assets as at 30 June 2016.

QUALIFIED OPINION

In our opinion, except for the possible effects on the matter described in the basis for qualified opinion paragraphs, the consolidated financial statements give a true and fair view of the financial position of the Group as at 30 June 2016, and of its financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

MATERIAL UNCERTAINTY RELATING TO THE GOING CONCERN BASIS

Without further qualifying our opinion, we draw attention to the consolidated financial Statements which mentions that the Group incurred a loss of approximately HK$181,139,000 for the year ended 30 June 2016 and as at 30 June 2016 the Group had net current liabilities of approximately HK$16,805,000. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern.

2016.09 WINSWAY

Company Name: E-Commodities Holdings Limited
Stock Code: 01733
Year end: June 30, 2016

Basis for Qualified Conclusion

(a)  Impairment of other investments in equity securities

As disclosed in note 12 to the interim financial report, as of 30 June 2016, the Group continues to make a full impairment provision of $245,700,000(31 December2015:$250,656,000)against the Group’s investments in certain of these companies, having taken into account the investees’ poor financial performance since 2015, worsening of financial results during the six months ended 30 June 2016, and other indicators of impairment.  We qualified our auditor’sreportdated22 April2016on the Group’s financial statements for the year ended 31 December 2015 in respect of a limitation in the scope of our audit relating to this impairment loss provision.  Given the inherent limitations in the scope of our review, which is by definition substantially less than an audit, we continue to be unable to reach a conclusion as to whether the directors’ judgement in this matter is appropriate and therefore whether the amount of this impairment loss provision is, or is not, in accordance with the applicable accounting framework.

Any decrease in the impairment losses recognised against other investments in equity securities would affect the net assets of the Group as at 30 June 2016 and could also affect the Group’s profit for the six months then ended, opening balance of accumulated losses as at 1 January 2016 and net liabilities as at 31 December 2015 and the related disclosures in the interim financial report.

(b)  Impairment of loan due from a third party

As disclosed in note 13 to the interim financial report, as at 30 June 2016, the Group had an outstanding loan due from Moveday Enterprises Limited (“Moveday”) of US$15.5 million (equivalent to approximately $120,316,000) (31 December 2015: US$20.4 million (equivalent to approximately $158,075,000)). As at 30 June 2016, the Group continues to make an impairment provision of $120,316,000(31 December2015:$120,189,000)having taken into account information about the adverse financial and operating circumstances of Moveday since 2015, and lack of significant improvement over its financial and operating circumstances during the six months ended 30 June 2016, but not the possibility of any recovery that may be achieved in future through re-negotiation of the terms of the loan or alternative forms of settlement in kind. We qualified our auditor’sreportdated22 April2016 on the Group’s financial statements for the year ended31December 2015 in respect of a limitation in the scope of our audit relating to this impairment loss provision.   Given the inherent limitations in the scope of our review, which is by definition substantially less than an audit, we continue to be unable to reach a conclusion as to whether the directors’ judgement in this matter is appropriate and therefore whether the amount of this impairment provision is, or is not, in accordance with the applicable accounting framework.

Any decrease in the impairment losses recognised against this loan balance due from Moveday would affect the net assets of the Group as at 30 June 2016 and could also affect the Group’s profit for the six months then ended, opening balance of accumulated losses as at 1 January 2016 and net liabilities as at 31 December 2015, and the related disclosures in the interim financial report.

Qualified Conclusion

Based on our review, except for the possible effects of the matters described in the Basis for Qualified Conclusion paragraph, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2016 is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34, Interim financial reporting.

Emphasis of Matter

Without further qualifying our conclusion, we draw attention to note 2 to the interim financial report which describes that the Group has a net cash outflow of $736,740,000 in respect of operating activities for the six months ended 30 June 2016. These conditions, along with other matters as set forth in note 2 to the interim financial report, indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern. The interim financial report has been prepared on a going concern basis, the validity of which depends upon the Group’s ability to generate sufficient cash flows from future operations to cover the Group’s operating costs and to meet its financing commitments. The interim financial report does not include any adjustments that would result should the Group be unable to continue to operate as a going concern.

2016.08 INNO-TECH HOLD

Company Name: Inno-Tech Holdings Limited
Stock Code: 08202
Year end: June 30, 2016

BASIS FOR QUALIFIED OPINION

Scope limitation-Opening balances, corresponding figures and comparative financial statements

The corresponding figures and comparative financial statements in the current year’s financial statements were derived from the financial statements for the year ended 30 June 2015 which contained a disclaimer of audit opinion, details of the qualifications were set out in the auditor’s report dated 28 January 2016. We have not been able to obtain sufficient appropriate audit evidence as to whether (i) the opening balances for the year ended 30 June 2016 were free from material misstatement; and (ii) the corresponding figures and comparative financial statements were properly recorded and accounted for, in compliance with the requirements of applicable Hong Kong Financial Reporting Standards.

There were no alternative audit procedures to satisfy ourselves as to whether the opening balances, corresponding figures and comparative financial statements were free from material misstatement. Any adjustments that might have been found to be necessary would have had a consequential impact on the net liabilities of the Group as at 30 June 2016, results of the Group for the year ended 30 June 2016 and the related disclosures thereof in the financial statements.

QUALIFIED OPINION ARISING FROM LIMITATION OF AUDIT SCOPE

In our opinion, except for the effects of the matters described in the basis for qualified opinion paragraph, the consolidated financial statements give a true and fair view of the financial position of the Group as at 30 June 2016 and of the Group’s financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

EMPHASIS OF MATTER

We draw attention to note 3(b)(i) to the consolidated financial statements which indicates that the Group has net current liabilities of approximately HK$125,236,000 as at 30 June 2016. These conditions, along with other matters as set out in note 3(b)(i) to the consolidated financial statements, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.

2016.08 G CHINA FIN

Company Name: Greater China Financial Holdings Limited
Stock Code: 00431
Year end: June 30, 2016

BASIS FOR DISCLAIMER ON CONCLUSION

(a)  De-consolidation of subsidiaries

As fully described in note 1 to the condensed consolidated financial statements, due to the managements appointed by the Group to Shanghai Xinsheng Pawnshop Limited (“Xinsheng”) and Shanghai Zhongyuan Pawnshop Limited (“Zhongyuan”) were replaced and were unable to exercise the right to manage the business of pawn broking and money lending in the PRC of Xinsheng and Zhongyuan under the Exclusive Consulting Service Agreements in July 2016, the Company had been unable to both i) access the complete sets of books and records together with the supporting documents and company chops of Xinsheng and Zhongyuan and ii) maintain and operate the business of Xinsheng and Zhongyuan. As such, the directors of the Company consider that the Company has lost its control over Xinsheng and Zhongyuan.

As a result, the directors considered it is appropriate to de-consolidate Xinsheng and Zhongyuan from the condensed consolidated financial statements of the Group as from 1 January 2016 even though the actual date for loss of control happened around July 2016 and the Company received Xinsheng and Zhongyuan’s management accounts every month up to June 2016, however, the Company was denied to access the books and records for review procedures and unable to control over the operations of Xinsheng and Zhongyuan. The net loss on de-consolidation of Xinsheng and Zhongyuan and impairment loss on the amounts due from the de-consolidated subsidiaries, based on the management accounts, were HK$323,208,000 and HK$94,203,000 respectively. As set out in note 23 to the condensed consolidated financial statements, the Group had de-consolidated the balance of liabilities included in de-consolidated subsidiaries as at 1 January 2016, which consisted of amounts due to the Group, borrowings, other payables and accruals and tax payables of HK$64,966,000, HK$195,170,000, HK$11,216,000 and HK$713,000 respectively.

In the opinion of the directors of the Company, the condensed consolidated financial statements at 30 June 2016 and for the six months ended prepared on the aforementioned basis present more fairly the results and state of affairs of the Group as a whole in light of the fact that they were denied access to the books and records of Xinsheng and Zhongyuan at the time of review. However, the de-consolidation of Xinsheng and Zhongyuan from the beginning of the year is a departure from the requirement of Hong Kong Financial Reporting Standard 10 “Consolidated Financial Statements”.

We have not been provided with sufficient information and explanations on the de-consolidation of Xinsheng and Zhongyuan and there were no alternative review procedures that we could perform to satisfy ourselves as to whether it was appropriate to de-consolidate the assets and liabilities with effect from 1 January 2016 and cease to recognise results of operations of Xinsheng and Zhongyuan from the condensed consolidated financial statements from the beginning of the financial year for the six months ended 30 June 2016. In addition, due to the unavailability of complete sets of books and records and the lack of information on the assets and liabilities of Xinsheng and Zhongyuan, we were unable to obtain sufficient appropriate evidences to determine whether the net loss on de-consolidation of subsidiaries and impairment loss on the amounts due from the de-consolidated subsidiaries of approximately HK$323,208,000 and HK$94,203,000 respectively, which were charged to the Group’s loss for the six months ended 30 June 2016, were free from material misstatement.

Due to insufficient information and explanation of Xinsheng and Zhongyuan, we were unable to complete our review procedure as to whether the de-consolidated liabilities should, to the extent unpaid, be recognised as liabilities of the Group.

(b)  Contingent liabilities and commitments

As disclosed in note 1 to the condensed consolidated financial statements, due to the lack of complete books and records of Xinsheng and Zhongyuan, we have been unable to obtain sufficient appropriate evidence and explanations as to whether the contingent liabilities and commitments committed by the Company were properly recorded and accounted for and in compliance with the requirements of applicable HKFRSs including HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. There were no alternative procedures that we could perform to satisfy ourselves as to whether the contingent liabilities and commitments were free from material misstatements.

DISCLAIMER ON CONCLUSION

Because of the significance of the matters described in the Basis for Disclaimer on Conclusion paragraphs, we were unable to obtain sufficient appropriate evidence to form a conclusion on the interim financial information. Accordingly, we do not express a conclusion on the condensed consolidated financial statements.

2016.08 CENT WEALTH FIN

Company Name: Central Wealth Financial Group Limited
Stock Code: 00572
Year end: June 30, 2016

BASIS FOR QUALIFIED CONCLUSION

Opening balances and corresponding figures

Our audit opinion on the consolidated financial statements of the Group for the year ended 31 December 2015 dated 21 March 2016 (the “2015 Financial Statements”), which forms the basis for the corresponding figures presented in the current period’s condensed consolidated statement of financial position and related explanatory notes, was disclaimed because of the significance of the possible effect of the limitations on the scope of our audit, details of which are set out in our audit report dated 21 March 2016. Any adjustments found to be necessary to the opening balances as at 1 January 2016 may affect the results and related disclosures in the notes to the condensed consolidated financial statements of the Group for the six months ended 30 June 2016. The comparatives figures shown in the condensed consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June 2015, the condensed consolidated statement of financial position as at 31 December 2015 and related explanatory notes may not be comparable with the figures for the current period.

Balance of the amount due to Able Success Asia Limited (“Able Success”)

At 30 June 2016, included in other payable is a balance of approximately HKD15,264,000 representing amount due to the former holding company, Able Success, a company incorporated in the British Virgin Islands with limited liability, and its entire issued share capital is beneficially owned by Mr. He Jianhong (“Mr. He”), who is the former chairman and executive director of the Company. Had we been able to complete our review of other payables, matters might have come to our attention indicating that adjustments might be necessary to the condensed consolidated financial statements.

QUALIFIED CONCLUSION

Except for the adjustments to the condensed consolidated financial statements that we might have become aware of had it not been for the situation described above, based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with HKAS 34.