- 2009.06 INTELLI-MEDIA
Company Name: Intelli-Media Group (Holdings) LimitedStock Code: 8173Year end: March 31, 2009
BASIS FOR DISCLAIMER OF OPINION
At 31 March 2009, “Payment for intangible assets- mining claims” in the amount of HK$8,429,879,000 was recorded in the consolidated balance sheet. As explained in notes 14 and 37 to the consolidated financial statements, through the acquisition of 100% issued capital of First Pine Enterprises Limited on 18 December 2008, the Company indirectly owns 64% equity interests in Mt. Mogan Resources and Development Corporation (“Mogan”) incorporated in the Philippines. Mogan holds certain offshore exploration permit applications for mining claims that are the rights to explore, develop, operate and exploit magnetite sand and other associated mineral deposits located in specified area of approximately 41,094 hectares in the Leyte Gulf and San Padro Bay off Leyte and Samar Provinces, the Philippines (“Mining Area”) subject to the issuance in favour of Mogan of an Exploration Permit and a Mineral Agreement in accordance with the Philippine Mining Act 1995 (Republic Act No. 7942) (the “Mining Act”). Pursuant to the Mining Act, an Exploration Permit, when approved by the Mines and Geosciences Bureau (the “MGB”) of the Department of Environment and Natural Resources (the “DENR”) of the Philippines, grants the exploration mining applicant the right to conduct exploration for the specified mineral(s) in the specified area(s) within a specified timeframe; whilst a Mineral Agreement, when made with and granted by the DENR/MBG acting on behalf of the Government of Philippines, shall provide the applicant with the exclusive rights to conduct mining operations to extract and exploit the pre-agreed upon mineral resource(s) in the specified area(s) for a term not exceeding 25 years starting from its execution date and renewable for another term of not exceeding 25 years.
As at 31 March 2009 and up to the date of this report, neither an Exploration Permit nor a Mineral Agreement has been approved and granted in favour of Mogan by the relevant authorities of the Philippines. The directors of the Company believe that Mogan will ultimately be able to obtain both the Exploration Permit and Mineral Agreement in respect of the Mining Area. The directors of the Company has obtained legal opinion in respect of Philippine law that the MGB has accepted Mogan’s exploration permit applications and that Mogan has priority in securing the Exploration Permit(s) over the applied Mining Area. During the year, Mogan also entered into a Memorandum of Agreement with DENR (“MOA”) under which Mogan was entitled to conduct a technical study jointly with DENR in the area covered by Mogan’s exploration permit applications. Mogan has also entered into a soil sampling agreement with a geotechnical contractor during the year. Mogan has commenced exploration jointly with DENR in the Leyte Gulf area covered by Mogan’s exploration permit applications and the MOA since early April 2009.
As disclosed in note 39 to the financial statements, the Company and its wholly-owned subsidiary, Black Sand Enterprises Limited (as borrower), entered into a convertible loan agreement dated 30 September 2008 with an independent party which has agreed to provide a loan of Euro 200 million for financing the future mining operations in the Philippines. At 31 March 2009 and up to the date of this report, the draw-down of the loan is not yet completed. At 31 March 2009, the Group has net current liabilities of HK$12,175,000 and a loss of HK$162,860,000 attributable to equity holders of the Company for the year then ended. The consolidated financial statements have been prepared on a going concern basis, the validity of which is dependent on the successful outcome of the grant of Exploration Permit and Mineral Agreement for mining operation in the Philippines as mentioned in the preceding paragraph, successful completion of the convertible loan drawn-down and future funding being available (as further disclosed in note 2(b) to the financial statements), and the Group’s ability to attain a profitable mining operation in the future. We considered that appropriate disclosures have been made. However, the uncertainties surrounding the outcome of these matters raise significant doubt about the Group’s ability to continue as a going concern.
In view of the extent and potential impact of the significant uncertainties described above, we disclaim our opinion in these respects.
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 Company and the Group as at 31 March 2009 and of the Group’s loss and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of Hong Kong Companies Ordinance.
- 2009.06 ARTFIELD GROUP
Company Name: Artfield Group LimitedStock Code: 1229Year end: March 31, 2009
Basis of Qualified Opinion
Our report on the consolidated financial statements of the Group for the year ended 31 March 2008 was qualified in view of the limitations of the scope of our audit resulting from insufficiency of supporting documentation and explanations with respect to the carrying amounts of an under development on-line game intellectual property rights (“Intangible Asset”) held by Matrix Software Inc. (“Matrix”), a then subsidiary of the Group, and the goodwill (“Goodwill”) arising from the acquisition of Matrix; the full impairment loss recognised in respect of the Goodwill and Intangible Asset; and incomplete books and records of Matrix.
Any adjustments found to be necessary to the opening balances of the above items as at 1 April 2008 would have consequential effects on the loss of the Group for the year ended 31 March 2009.
As further explained in notes to the consolidated financial statements, on 3 February 2009 (the “Disposal Date”), the Group disposed of its entire interest in Matrix, to an independent third party. Due to lack of complete books and records of Matrix, we were unable to obtain sufficient evidence regarding the value of the net liabilities of Matrix disposed of by the Group at the Disposal Date and hence the gain on disposal arising therefrom. Any adjustments found to be necessary to the amount would affect the amount recorded in the consolidated income statements in respect of Matrix up to the Disposal Date, with a corresponding effect on the gain on disposal and the related disclosures thereof in the consolidated financial statements.
Qualified opinion arising from limitation of audit scope
In our opinion, except for any adjustments that might have been found necessary had we been able to satisfy ourselves regarding the matter as set out in the basis for qualified opinion paragraph, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 March 2009 and of the Group’s loss and cash flow 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 the Hong Kong Companies Ordinance.