- 2008.10 WARDERLY
Company Name: Warderly International Holdings LimitedStock Code: 607Year end: April 30, 2007
Basis for Disclaimer of Opinion
(1) As detailed in note 26 to the consolidated financial statements, following the claims by creditors of the Company’s wholly-owned subsidiary, Dongguan Kalee Electrical Co., Ltd. (“Dongguan Kalee”), the People’s Court in Dongguan City of Guangdong Province granted a seal order on the whole factory of Dongguan Kalee and Dongguan Intermediate People’s Court contemplated a forced sale order on all the assets owned by Dongguan Kalee including its factory, land, plant and equipment by way of auction for the purpose of discharging claims by its creditors. Due to the seal order, only limited financial information of Dongguan Kalee was available for our inspection.
In addition, certain accounting books and records of the Company’s wholly-owned subsidiary, Housely (Macao) Commercial Offshore Company Limited (“Housely Macao”), were lost because they were not properly kept by the former employee in Macau.
As a result of the lack of certain accounting books and records for our inspection, we were unable to carry out audit procedures to satisfy ourselves as to whether certain balances relating to Dongguan Kalee and Housely Macao, which have been included in the consolidated financial statements of the Group, are valid, complete, accurately recorded and properly accounted for in the consoldiated financial statements.
They include the following income and expenses for the year ended 30 April 2007:–
Cost of sales HK$228,921,000
Other income HK$5,112,000
Distribution costs HK$3,141,000
Loss of a PRC Factory HK$528,852,000
(2) Included in the Group’s trade and other payables of HK$135,712,000 were recorded payables of HK$100,885,000 relating to Dongguan Kalee (the “Payables”). No satisfactory replies to our satisfaction on the direct confirmations from the major creditors in respect of the Payables were received as at the date of this audit report. There were no other satisfactory audit procedures that we could adopt as only limited financial information was available for our inspection as disclosed in point (1) above. Consequently, we were unable to satisfy ourselves on the completeness and valuation of the Payables amounting to HK$100,885,000 stated in the consolidated balance sheet as at 30 April 2007.
(3) Included in the Group’s property, plant and equipment of HK$117,539,000 was HK$114,669,000 owned by Dongguan Kalee. As detailed in point (1) above and note 26 to the consolidated financial statements, the whole factory of Dongguan Kalee has been sealed up. As the Directors did not consider the possibility of debt restructuring arrangement and intend to liquidate Dongguan Kalee after the expected forced sale, the Directors estimate the fair value of assets of Dongguan Kalee as at 30 April 2007 by reference to the fair value of its total outstanding liabilities including the Payables of HK$100,885,000 and other liabilities of HK$15,410,000 of Dongguan Kalee on the same date.
As we were unable to satisfy ourselves as to the completeness and valuation of the Payables as detailed in (2) above, we were unable to satisfy ourselves on the valuation of the property, plant and equipment of HK$114,669,000 stated in the consolidated balance sheet as at 30 April 2007.
Any adjustments that might have been found to be necessary in respect of the matters set out in points (1) to (3) above may have a consequential and significant effect on the aforementioned items for the year ended 30 April 2007 and the related disclosures in the consolidated financial statements.
Disclaimer of Opinion: Disclaimer on View given by Consolidated Financial Statements
Because of the significance of the matters described in the basis for disclaimer of opinion paragraph, we do not express an opinion on the consolidated financial statements as to whether they give a true and fair view of the state of affairs of the Group as at 30 April 2007 and of the loss and cash flows of the Group for the year then ended in accordance with Hong Kong Financial Reporting Standards and as to whether the consolidated financial statements have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.
- 2008.10 BENEFUN INT’L
Company Name: Benefun International Holdings LimitedStock Code: 1130Year end: June 30, 2008
Basis for qualified opinion
Included in the total cost of sales in the consolidated income statement for the year ended 30 June 2008 are alleged purchase of finished goods of approximately $30.63 million for which we were not able to obtain any purchase invoices nor any evidence of goods receipts. Management attributed this situation to the closure of shops and factories during the year resulting in difficulty in locating the underlying records for the relevant transactions. There were no other satisfactory audit procedures that we could adopt to satisfy ourselves as to the nature of the recorded transactions and whether those transactions and balance were free from material misstatement. At the balance sheet date, there were no outstanding payables arising from the recorded transactions.
Qualified opinion arising from limitation of audit scope
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to the recorded purchase transactions, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2008 and of the Group’s loss and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of Hong Kong Companies Ordinance.