Month: May 2011
- 2011.05 BEP INT’L HOLD
Company Name: BEP International Holdings LimitedStock Code: 02326Year end: March 31, 2011
Basis for Disclaimer of Opinion
As set out in note 2 (b), notwithstanding that the Group held 100% equity interests in Bailingda Industrial (Shenzhen) Company Limited (“BEP (China)”) for the period from 26 October 2008 to 30 July 2010, the directors of the Company deconsolidated BEP (China) since 26 October 2008 as they considered that the Group no longer had the power to govern the financial and operating policies of BEP (China), and accordingly control over BEP (China) was lost when the premises of BEP (China) were sealed by the Baoan People’s Court on 26 October 2008. However, we have been unable to inspect the court orders issued by the Baoan People’s Court, and accordingly we have been unable to obtain sufficient reliable evidence to satisfy ourselves as to whether it is appropriate to deconsolidate BEP (China) from 26 October 2008 to 30 July 2010.
The Group recorded a loss on deconsolidation of BEP (China) of HK$49,677,000 based on its unaudited statement of financial position as at 30 September 2008 and unaudited income statement for the period from 1 April 2008 to 30 September 2008, which were the latest management accounts available to the directors of the Company. The loss of BEP (China) prior to deconsolidation included in the consolidated income statement for the year ended 31 March 2009 amounted to HK$28,357,000. These losses had a corresponding impact on the Group’s accumulated losses as at 1 April 2009 and 31 March 2010. However, as a result of the circumstances described above, the directors of the Company were unable to provide us with the complete set of accounting books and records for BEP (China). We were therefore unable to carry out audit procedures to obtain sufficient reliable audit evidence to satisfy ourselves as to whether the accumulated losses as at 1 April 2009 and 31 March 2010 are free from material misstatements. The matters described above caused us to disclaim our audit opinion on the consolidated financial statements in respect of the year ended 31 March 2010.
As explained in note 2 (b), on 30 July 2010, the directors of the Company resolved to dispose of the entire equity interests in the holding company of BEP (China), Better Electrical Products Company Limited which was a wholly owned subsidiary of the Company, to a company wholly owned by a director of the Company for a consideration of HK$1 and recorded a gain on disposal of HK$1. However, as a result of the circumstances described above, we were unable to satisfy ourselves as to whether the gain on disposal, as well as the related disclosures set out in the notes to the consolidated financial statements are free from material misstatement.
Any adjustments that might have been found to be necessary in respect of the above would have a significant effect on the state of the Group’s affairs as at 31 March 2010 and on its profit or loss for the years ended 31 March 2011 and 2010.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been able to obtain sufficient appropriate 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 accordance with the disclosure requirements of the Hong Kong Companies Ordinance.
- 2011.05 CHINA FORESTRY
Company Name: China Forestry Holdings Co., Ltd.Stock Code: 00930Year end: December 31, 2010
Basis for disclaimer of opinion
Authenticity of accounting records and documentation
During the course of our audit for the year ended 31 December 2010, evidence obtained by us indicated irregularities with respect to the maintenance of the Company’s and the Group’s accounting records and the transactions recorded therein. As disclosed in note 2 to the financial statements, our report of these concerns led to the establishment of an independent board committee of the Company (“Independent Committee”), whose findings cast serious doubts over the authenticity and reliability of records and documents of the Company and of the Group and over the reliability of the information and explanations provided to us by members of management as well as by parties external to the Group.
Given these circumstances, which are more fully described in note 2, there were no practicable audit procedures that we could perform to satisfy ourselves that the information and documents presented to us for the purpose of our audit are complete and accurate in all material respects, nor to quantify the extent of adjustments that might be necessary in respect of the Group’s financial information.
Incomplete books and records
Included in the consolidated financial statements of the Group is the financial information of one of its subsidiaries, Kunming Ultra Big Forestry Resource Development Co., Ltd. (“Kunming Ultra Big”). As disclosed in note 2, Kunming Ultra Big is the Company’s key operating subsidiary and accounts for all of the Group’s reported turnover and inventory and substantially all of the Group’s reported loss before taxation and plantation assets. As disclosed in note 2 to the financial statements, certain members of the accounting and finance team and resources management department have not reported for work since mid-February 2011 and current management has confirmed to us that the Company has been unable to contact them. As note 2 to the financial statements also discloses, the Company’s directors were unable to locate all books and records of Kunming Ultra Big and were unable to unreservedly confirm its financial position, results of operations and cash flow. We were therefore unable to carry out satisfactory audit procedures to obtain reasonable assurance regarding the completeness, accuracy, existence, valuation, ownership, classification and disclosures of the transactions undertaken by Kunming Ultra Big. Accordingly, we were unable to ascertain whether the financial information of Kunming Ultra Big included in the Group’s consolidated financial statements has been properly prepared in accordance with IFRSs.
Non-compliance with IFRSs and omission of disclosures
As explained in note 2 to the financial statements, as the consolidated financial statements of the Group have been prepared by the directors based on incomplete books and records and the board believes it is almost impossible and not practical to ascertain the correct amounts. Consequently, the directors of the Company were unable to represent that the financial statements comply with IFRSs, or that the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited have been complied with. Given these circumstances, which are more fully described in note 2, there were no practicable audit procedures that we could perform to quantify the extent of adjustments that might be necessary in respect of the Group’s financial statements.
Going concern assessment
As explained in note 2 to the financial statements, in making their assessment of the Company’s ability to continue as a going concern, the directors have considered the Group’s ability to pay off all existing loans and payables and carry on its operations for the foreseeable future. However, the directors have been unable to predict the action that may be taken by the senior note holders as a result of any potential breach of financial or non-financial covenants caused by the matters disclosed in note 2, or the consequential impact to the Group. In addition, as a result of the matters disclosed in note 2, the directors are unable to represent that all present and contingent liabilities or assets of the Group have been completely identified, or that all assets recorded in the statement of financial position are recoverable or fairly stated. Given these circumstances, which are more fully described in note 2 and in the paragraphs above, there were no practicable audit procedures that we could perform to form an opinion on whether management’s assessment of its ability to continue as a going concern considers all events and conditions which may be relevant.
Disclaimer of opinion
Because of the significance of the matters 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 as to whether they give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2010 and of the Group’s loss for the year then ended in accordance with International Financial Reporting Standards and as to whether the financial statements have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.