Month: June 2011
- 2011.06 CH ENV ENERGY
Company Name: China Environmental Energy Investment LimitedStock Code: 00986Year end: March 31, 2011
Basis of Disclaimer of Opinion
We were appointed as auditor of the Company in April 2011. The consolidated financial statements for the year ended 31 March 2010 have been audited by the predecessor auditor. The auditor’s report issued by the predecessor auditor contained a disclaimer opinion regarding, inter alia, the inability to determine whether the income, expenses, assets and liabilities and related disclosures relating to a significant subsidiary of the Company included in the consolidated financial statements for that year have been accurately recorded and properly accounted for in the consolidated financial statements. Our opinion on the current year’s consolidated financial statements is also modified because of the possible effect of this matter on the current year’s figures and the corresponding prior year’s figures included in the consolidated financial statements.
Further, in the absence of the relevant accounting records and supporting documents, we are unable to determine whether the opening balances of the Group’s assets and liabilities and accumulated losses at 1 April 2010 are accurately brought forward from the last accounting period. This has caused us not able to determine whether these assets, liabilities and accumulated losses and the related disclosures have been accurately recorded and accounted for in the consolidated financial statements.
Any adjustments that might have been found to be necessary to the opening balances of the Group’s assets, liabilities and accumulated losses at 1 April 2010 may affect the results of the Group for the years ended 31 March 2011 and 2010 and the related disclosures in the consolidated financial statements.
Disclaimer of opinion
Because of the significance of the matters described in the basis for disclaimer of opinion section, 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 31 March 2011 and of the Group’s loss and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards. 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.
- 2011.06 C G SOURCE ENGY
Company Name: China Ground Source Energy LimitedStock Code: 08128Year end: March 31, 2011
Basis for qualified opinion
Corresponding figures and Gain on disposal of subsidiaries
As previously explained in our report dated 29 June 2010 on the Group’s consolidated financial statements for the six months ended 31 March 2010, due to the scope limitations in relation to 湖南 衡興環保科技開發有限公司 (“Hengxing”), being one of the subsidiaries of Shenzhen Lisai Industrial Development Company Limited (“Shenzhen Lisai”) as at the date the Group acquired Shenzhen Lidesui Huanbao Jishu Company Limited and Shenzhen Lisai Gardens Luhua Company Limited which in turn together held the entire equity interest of Shenzhen Lisai (collectively refer to as the “Lisai Group”), we were unable to satisfy ourselves as to the accuracy of the carrying value of net assets of Hengxing initially included in the calculation of goodwill arising from acquisition of Lisai Group on 7 November 2007, the carrying value of Hengxing at the date of disposal subsequently on 27 August 2009, and the carrying value of goodwill arising from acquisition of Lisai Group and the carrying value of goodwill as at the date of disposal of Hengxing, stated in the Group’s consolidated financial statements. We qualified our opinion on the Group’s consolidated financial statements for the six months ended 31 March 2010 in respect of this scope limitation accordingly.
Any adjustments that might have been found necessary in respect of the above would have had a consequential impact on the Group’s results for the six months ended 31 March 2010 and the related disclosures made in respect of corresponding figures for the six months ended 31 March 2010 in the consolidated financial statements for the year ended 31 March 2011.
As detailed in note 40(a) to the consolidated financial statements, the Group disposed of its entire interest in one of its wholly-owned subsidiaries IIN Network Technology Limited and its subsidiaries including the Lisai Group (“IIN Network Technology Group”) to an independent third party during the year ended 31 March 2011. The Group recorded a gain on disposal of subsidiaries of approximately HK$15,901,000 for the year ended 31 March 2011.
With the impact of the scope limitations in relation to Hengxing mentioned above, we were unable to satisfy ourselves as to the accuracy of the carrying value of goodwill as of the date of disposal of IIN Network Technology Group during the year ended 31 March 2011 and as to whether the amount of gain on disposal of subsidiaries has been accurately recorded in the consolidated income statement for the year ended 31 March 2011. Any adjustments to the figure would have a consequential effect on the profit of the Group and the related disclosures for the year ended 31 March 2011.
- 2011.06 SRGL
Company Name: Sino Resources Group LimitedStock Code: 00223Year end: March 31, 2011
BASIS FOR QUALIFIED OPINION
Our audit opinion on the consolidated financial statements of the Group for the year ended 31 March 2010 (the “2010 Financial Statements”), which form the basis for the corresponding figures presented in the current year’s consolidated financial statements, was disclaimed because of the significance of the possible effects of the inability to obtain sufficient audit evidence of our audit, details of which are set out in our audit report dated 23 July 2010. We are unable to obtain sufficient reliable evidence to satisfy ourselves as to whether the net liabilities of the Group as at 31 March 2010 and the results and cash flows and the related disclosures in the notes to the consolidated financial statements of the Company and of the Group for the year ended 31 March 2010 were fairly stated. Any adjustment found to be necessary may affect the net liabilities of the Company and of the Group as at 31 March 2010 and the results and cash flows and the related disclosures in the notes to the consolidated financial statements of the Company and the Group for the year ended 31 March 2010.
QUALIFIED OPINION
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2011, 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 the Hong Kong Companies Ordinance.
- 2011.06 CLIMAX INT’L
Company Name: Climax International Company LimitedStock Code: 00439Year end: March 31, 2011
Basis for qualified opinion
Corresponding figures
As explained in our independent auditor’s report dated 13 July 2010 on the Group’s consolidated financial statements for the year ended 31 March 2010, due to the lost of accounting books and records and high turnover rate of accounting personnel of Climax Investments Limited and its subsidiaries (collectively referred to as the “CIL Group”), which was disposed of during the year ended 31 March 2010, we were unable to obtain sufficient appropriate audit evidence to ascertain the appropriateness of the profit for the year from discontinued operation of HK$33,358,000 as recorded in the Group’s consolidated statement of comprehensive income for the year ended 31 March 2010, which included loss for the year of the CIL Group attributed to the Group of HK$11,470,000 and the gain on disposal of the CIL Group of HK$44,828,000, and the related amounts recorded in the consolidated statement of cash flows and the related amounts disclosed in the notes to the consolidated financial statements in respect of CIL Group for the year ended 31 March 2010. In addition, we were unable to obtain sufficient reliable evidence to satisfy ourselves as to the existence, accuracy and completeness of the adjustment and/or disclosures in relation to the contingent liabilities, commitment and pledge of assets of the CIL Group arising from the lawsuits and claims against it during the year ended 31 March 2010 and upon its disposal. We issued a “disclaimer opinion” on the consolidated financial statements for the year ended 31 March 2010 in respect of this scope limitation accordingly.
Any adjustments that might have been found necessary in respect of the above would have had a consequential impact on the related amounts recorded in the consolidated statement of comprehensive income and consolidated statement of cash flows; and the related disclosures thereof for the year ended 31 March 2010.
Qualified opinion on the loss and cash flows arising from limitation of scope
In our opinion, except for the possible effects of any adjustments that might have been determined to be necessary had we been able to obtain sufficient information concerning the matters as described in the basis for qualified opinion paragraph, the consolidated statement of comprehensive income and the consolidated statement of cash flows give a true and fair view of the Group’s loss and cash flows for the year ended 31 March 2011 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.
Opinion on the financial position
In our opinion, the consolidated statement of financial position gives a true and fair view of the state of affairs of the Group as at 31 March 2011 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.
- 2011.06 CH RAILSMEDIA
Company Name: China Railsmedia Corporation LimitedStock Code: 00745Year end: March 31, 2011
Basis for Disclaimer of Opinion
Material uncertainty and inability to obtain sufficient appropriate audit evidence relating to recoverability of other receivable and arbitration
As described in Note 24 to the consolidated financial statements, the Group commenced arbitration against a subcontractor (the “Case”) to recover the other receivables of the Group in the amount of approximately HK$10,400,000 (the “Receivable”). The Case is in respect of costs incurred on behalf of the subcontractor arising from execution of a civil engineering works contract in Hong Kong. Although the directors of the Company, after consultation with their legal advisors, are of the view that the Group has valid grounds to recover the Receivable, the outcome of such arbitration cannot be determined as at the date of approval of these consolidated financial statements.
As a result of the uncertainty of the timing and the outcome of the Case, we are unable to ascertain as to how much and when the Receivable would be recoverable or whether the full amount might be recoverable. There were no other practical satisfactory audit procedures that we could adopt to assess the carrying value of the Receivable. Any adjustments to the carrying value of the Receivable that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2011 and the loss of the Group for the year then ended.
Material uncertainties relating to the going concern basis of the Group
In forming our opinion we have considered the adequacy of the disclosures made in Note 3 to the consolidated financial statements concerning the adoption of the going concern basis on which the consolidated financial statements have been prepared. As explained in Note 3 to the consolidated financial statements, the directors are currently undertaking measures to satisfy its working capital needs and improve the liquidity position of the Group.
The consolidated financial statements have been prepared on a going concern basis, the validity of which depends upon the outcome of the Case and the recoverability of the Receivable and the successful outcome of the Group’s measures to satisfy its working capital needs and improve the liquidity position. The consolidated financial statements do not include any adjustments that would result from the Group failure to recover the Receivable as stated above and a failure as to the successful outcome of the measures undertaken by the Group on satisfying its working capital needs and improving the liquidity position of the Group. If the Receivable was not to be recovered or there was a failure as to the successful outcome of the aforementioned measures on the working capital and liquidity position of the Group, adjustments would have to be made to the consolidated financial statements to reduce the value of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively. We are uncertain whether the consolidated financial statements of the Group should be prepared under the going concern basis due to the matters as mentioned in preceding paragraph.
Disclaimer of Opinion
Because of the significance of the matters described in the basis for disclaimer of opinion paragraph, 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 March 2011 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.
- 2011.06 PAN ASIA MINING
Company Name: Pan Asia Mining LimitedStock Code: 08173Year end: March 31, 2011
Basis for disclaimer of opinion – Material uncertainty relating to the exploitation rights for mining operations in the Philippines
At 31 March 2011, the Company indirectly owns 64% equity interest in Mt. Mogan Resources and Development Corporation (“Mogan”) incorporated in the Philippines. Mogan has obtained two exploration permits to explore magnetite sand and other associated mineral deposits located in specific offshore area with 41,094 hectares in the Leyte Gulf and San Pedro Bay off Leyte and Samar Provinces of the Philippines (“Mining Area”) as further disclosed in the note 8. During the year ended 31 March 2011, Mogan has submitted an application for the conversion of approximately 5,000 hectares of the existing two exploration permits over specific offshore area with 41,094 hectares in the Leyte Gulf and San Pedro Bay off Leyte and Samar Provinces of the Philippines into a mineral production sharing agreement. At 31 March 2011, the exploration and evaluation assets under these two exploration permits, as stated in the consolidated statement of financial position, amounted to HK$8,438,360,000.
Pursuant to the Mining Act 1995 (Republic Act No. 7942) of the Philippines, an exploration permit grants its holder the right to conduct exploration for the specified mineral(s) in the specific area(s) within a specified timeframe; whilst a mineral production sharing agreement, when made with and granted by the Department of Environment and Natural Resources/Mines and Geosciences Bureau (“DENR/MGB”) on behalf of the Government of the Philippines, shall provide the applicant with the exclusive rights to conduct the mining operations to extract and exploit the pre-agreed mineral(s) in the specific area(s) for a term not exceeding 25 years starting from the date of execution and renewable for a further term not exceeding 25 years.
At 31 March 2011 and up to the date of this report, the application of the mineral production sharing agreement has not yet been approved or granted by the DENR/MGB. The directors of the Company believe that a mineral production sharing agreement will be awarded by DENR/MGB of the Philippines to Mogan.
The consolidated financial statements do not include any adjustments that would be necessary if the mineral production sharing agreement for the Mining Area would not be awarded by the Government of the Philippines. We consider that adequate disclosures have been made. However, the uncertain outcome of obtaining the mineral production sharing agreement raises significant doubt on the Group’s mining rights to the Mining Area in the Philippines, which in turn creates a material uncertainty as to whether or not impairment should be recognised on the exploration and evaluation assets of the Group and interests in subsidiaries of the Company at the end of the reporting period.
In view of the extent and potential impact of the material uncertainty described above, we disclaimed our opinion in this respect.
Source: - 2011.06 CHINA SOLAR
Company Name: China Solar Energy Holdings LimitedStock Code: 00155Year end: March 31, 2011
Basis for Qualified Opinion
As disclosed in note 36 to the consolidated financial statements, during the year ended 31 March 2011, the Group has granted 1,259,000,000 share options to certain consultants, which vested immediately upon their issuance. In the opinion of the directors of the Company, these share options were granted to these consultants for rendering services to the Group, including consultancy services in respect of seeking potential investors to invest in the Company and identification of potential investment opportunities in the solar energy business. The Group has determined the fair value of the share options at the dates of grant of HK$137,759,000 and charged the full amount to profit or loss and included as consultancy expenses in the consolidated statement of comprehensive income. During the year ended 31 March 2011, 305,000,000 share options were subsequently cancelled and the relevant fair value previously charged to profit or loss of HK$38,949,000 were transferred from share option reserve to accumulated losses.
However, since these share options were granted by the Company without entering into formal service agreements with these consultants, we were unable to obtain sufficient information with respect to the nature, scope and the length of the consultancy services to be provided by the consultants and obtain other sufficient appropriate audit evidence and explanations to satisfy ourselves that the recorded consultancy expenses and the transfer of share option reserve to accumulated losses upon cancellation of the share options have been appropriately recorded in accordance with the requirements of Hong Kong Financial Reporting Standard 2 “Share-based Payment” issued by the HKICPA, including whether it is appropriate for the full amount of these share options to be charged to profit or loss in the current year. Any adjustments that would be required may have a consequential significant effect on the total assets less current liabilities as at 31 March 2011 and the total comprehensive expense for the year and the related disclosures in the notes to the consolidated financial statements.
Qualified Opinion
In our opinion, except for the possible effects of the matters as described in the Basis for Qualified Opinion paragraphs, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 March 2011 and of its 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 the Hong Kong Companies Ordinance.
- 2011.06 ASIA TELEMEDIA 04
Company Name: Asia TeleMedia LimitedStock Code: 00376Year end: December 31, 2007
Basis for disclaimer of opinion
1. Completeness of information
A winding-up order was made against the Company on 18 March 2008 and the Liquidators were appointed on 14 January 2009. The Liquidators have only been able to provide books and records of the Group which are available to them by the directors and management of the Group for the purpose of the audit. In consequence, we were unable to carry out auditing procedures necessary to obtain adequate assurance regarding the assets, liabilities, income and expenses appearing in the financial statements. There were no satisfactory audit procedures that we could adopt to obtain sufficient appropriate audit evidence regarding the accuracy and completeness of the assets, liabilities, income and expenses of the Company and of the Group, and the adequacy of disclosures in these financial statements.
2. Loss of accounting records in the PRC representative offices
The consolidated financial statements and the financial statements of the Company contain financial information of the representative offices located in Beijing and Shenzhen (the “PRC representative offices”). The PRC representative offices were closed and the accounting records could not be retrieved. As a consequence, we were unable to obtain all information that we required in relation to our audit and were also unable to carry out other satisfactory auditing procedures that we considered necessary to obtain adequate assurance regarding the assets and liabilities of the PRC representative offices of approximately HK$10,903,000 and HK$1,936,000 respectively and the loss contributed by the PRC representative offices for the year of approximately HK$32,798,000, and the adequacy of disclosures in these financial statements. The specific balances that we could not carry out satisfactory auditing procedures are as follows:
– Write off of property, plant and equipment amounting to approximately HK$694,000;
– Write off of a deposit with an agency of approximately HK$28,880,000;
– Write off of a sundry deposit of approximately HK$254,000;
– Bank balance (general account) of approximately HK$496,000; and
– Other payables and accrued charges of approximately HK$1,936,000.
Any adjustments on the above balances would affect the net liabilities of the Group and the Company as at 31 December 2007 and the loss for the year then ended.
3. Directors’ emoluments
We were unable to carry out auditing procedures necessary to obtain adequate assurance regarding directors’ emoluments of HK$1,564,000 as set out in note 10 to the financial statements. This is not in accordance with the requirements of Section 161A of the Hong Kong Companies Ordinance.
Material uncertainty relating to the going concern basis
As explained in note 2 to the financial statements, the Company submitted a resumption proposal on 17 December 2010 (updated on 25 March 2011) and subsequently amended by a written submission to The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 31 March 2011 (together the “Resumption Proposal”). By a letter dated 1 April 2011, the Stock Exchange informed the Company that it was allowed to proceed with the Resumption Proposal, subject to prior compliance with the conditions to the satisfaction of Listing Division within six months from the date of the Stock Exchange’s letter. These conditions are explained in note 2 to the financial statements.
As at 31 December 2007, the Group and the Company had incurred a consolidated loss attributable to equity holders of the Company of approximately HK$47,603,000 and HK$50,109,000 respectively, had net current liabilities of approximately HK$78,551,000 and HK$90,622,000 respectively and had deficiency of shareholders’ fund of approximately HK$77,197,000 and HK$85,079,000 respectively. 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. The consolidated financial statements have been prepared on a going concern basis on the assumption that the Resumption Proposal will be successfully completed in the foreseeable future and the financial position of the Group will be substantially improved as all liabilities of the Company will be discharged through the implementation of a scheme to be proposed by the Company under Section 166 of the Companies Ordinance of Hong Kong (the “Scheme”).
The financial statements do not include any adjustments which would result from a failure to complete the Resumption Proposal and to approve the Scheme by the Company’s Scheme Creditors and the High Court of Hong Kong (the “Court”), other approvals to be obtained from shareholders, the Court and the Hong Kong regulatory authorities.
If the Resumption Proposal could not be completed, further adjustments might have to be made to reduce the value of assets to their recoverable amount, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities to current assets and liabilities respectively. We consider that appropriate disclosures have been made accordingly. However, in view of the extent of the uncertainties relating to the completion of the Resumption Proposal as at the balance sheet date, we disclaim our opinion in respect of material uncertainty relating to the going concern basis.
Disclaimer of opinion: disclaimer on view given by financial statements
Because of the significance of the matters described in the “Basis for disclaimer of opinion” above and the “Material uncertainty relating to the going concern basis” as described above, 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 December 2007 and of the Group’s results and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards. In all other respects, in our opinion the consolidated financial statements have been properly prepared in accordance with the Hong Kong Companies Ordinance.
- 2011.06 ASIA TELEMEDIA 03
Company Name: Asia TeleMedia LimitedStock Code: 00376Year end: December 31, 2008
Basis for disclaimer of opinion
1. Prior year audit scope limitations affecting opening balances
The auditor’s report on the consolidated financial statements for the year ended 31 December 2007 were also qualified in respect of limitations of audit scope similar to those described in sub-paragraphs (2) to (4) below. Any adjustments to these comparative amounts may have a consequential effect on the balance of accumulated losses of the Group and the Company as at 1 January 2008, the loss for the year ended 31 December 2008 and related disclosures in these financial statements. The specific balances written off in prior year that we could not carry out satisfactory auditing procedures are as follows:
– Write off of property, plant and equipment amounting to approximately HK$694,000;
– Write off of a deposit with an agency of approximately HK$28,880,000; and
– Write off of a sundry deposit of approximately HK$254,000.
2. Completeness of information
A winding-up order was made against the Company on 18 March 2008 and the Liquidators were appointed on 14 January 2009. The Liquidators have only been able to provide books and records of the Group which are available to them by the directors and management of the Group for the purpose of the audit. In consequence, we were unable to carry out auditing procedures necessary to obtain adequate assurance regarding the assets, liabilities, income and expenses appearing in the financial statements. There were no satisfactory audit procedures that we could adopt to obtain sufficient appropriate audit evidence regarding the accuracy and completeness of the assets, liabilities, income and expenses of the Company and of the Group, and the adequacy of disclosures in these financial statements.
3. Loss of accounting records
The consolidated financial statements and the financial statements of the Company contain financial information of the representative offices located in Beijing and Shenzhen (the “PRC representative offices”). The PRC representative offices were closed and the accounting records could not be retrieved. As a consequence, we were unable to obtain all information that we required in relation to our audit and were also unable to carry out other satisfactory auditing procedures that we considered necessary to obtain adequate assurance regarding the assets and liabilities of the PRC representative offices of approximately HK$ nil and HK$1,936,000 respectively and the loss contributed by the PRC representative offices for the year of approximately HK$10,903,000, and the adequacy of disclosures in these financial statements. The specific balances that we could not carry out satisfactory auditing procedures are as follows:
– Write off of bank balance (general account) of approximately HK$10,903,000 in current year; and
– Other payables and accrued charges of approximately HK$1,936,000.
Any adjustments on the above balances would affect the net liabilities of the Group and the Company as at 31 December 2008 and the loss for the year then ended.
4. Directors’ emoluments
We were unable to carry out auditing procedures necessary to obtain adequate assurance regarding directors’ emoluments of HK$794,000 as set out in note 10 to the financial statements. This is not in accordance with the requirements of Section 161A of the Hong Kong Companies Ordinance.
Material uncertainty relating to the going concern basis
As explained in note 2 to the financial statements, the Company submitted a resumption proposal on 17 December 2010 (updated on 25 March 2011) and subsequently amended by a written submission to The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 31 March 2011 (together the “Resumption Proposal”). By a letter dated 1 April 2011, the Stock Exchange informed the Company that it was allowed to proceed with the Resumption Proposal, subject to prior compliance with the conditions to the satisfaction of Listing Division within six months from the date of the Stock Exchange’s letter. These conditions are explained in note 2 to the financial statements.
As at 31 December 2008, the Group and the Company had incurred a consolidated loss attributable to equity holders of the Company of approximately HK$20,997,000 and HK$17,203,000 respectively, had net current liabilities of approximately HK$96,271,000 and HK$106,172,000 respectively and had deficiency of shareholders’ fund of approximately HK$96,779,000 and HK$100,867,000 respectively. 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. The consolidated financial statements have been prepared on a going concern basis on the assumption that the Resumption Proposal will be successfully completed and that the financial position of the Group will be substantially improved as all liabilities of the Company will be discharged through the implementation of a scheme to be proposed by the Company under Section 166 of the Companies Ordinance of Hong Kong (the “Scheme”).
The financial statements do not include any adjustments which would result from a failure to complete the Resumption Proposal, and to approve the Scheme by the Company’s Scheme Creditors and the High Court of Hong Kong (the “Court”), other approvals to be obtained from shareholders, the Court and the Hong Kong regulatory authorities.
If the Resumption Proposal could not be completed, further adjustments might have to be made to reduce the value of assets to their recoverable amount, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities to current assets and liabilities respectively. We consider that appropriate disclosures have been made accordingly. However, in view of the extent of the uncertainties relating to the completion of the Resumption Proposal as at the balance sheet date, we disclaim our opinion in respect of material uncertainty relating to the going concern basis.
Disclaimer of opinion: disclaimer on view given by financial statements
Because of the significance of the matters described in the “Basis for disclaimer of opinion” above and the “Material uncertainty relating to the going concern basis” as described above, 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 December 2008 and of the Group’s results and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards. In all other respects, in our opinion the consolidated financial statements have been properly prepared in accordance with the Hong Kong Companies Ordinance.
- 2011.06 ASIA TELEMEDIA 02
Company Name: Asia TeleMedia LimitedStock Code: 00376Year end: December 31, 2009
Basis for disclaimer of opinion
1. Prior year audit scope limitations affecting opening balances
The auditor’s report on the consolidated financial statements for the year ended 31 December 2008 were also qualified in respect of limitations of audit scope similar to those described in sub-paragraphs (2) to (4) below. Any adjustments to these comparative amounts may have a consequential effect on the balance of accumulated losses of the Group and the Company as at 1 January 2009, the loss for the year ended 31 December 2009 and related disclosures in these financial statements. In prior year, we could not carry out satisfactory auditing procedures in respect of write off of bank balance (general account) of approximately HK$10,903,000 in relation to the loss of accounting records discussed in sub-paragraph (3) below.
2. Completeness of information
A winding-up order was made against the Company on 18 March 2008 and the Liquidators were appointed on 14 January 2009. The Liquidators have only been able to provide books and records of the Group which are available to them by the directors and management of the Group for the purpose of the audit. In consequence, we were unable to carry out auditing procedures necessary to obtain adequate assurance regarding the assets, liabilities, income and expenses appearing in the financial statements. There were no satisfactory audit procedures that we could adopt to obtain sufficient appropriate audit evidence regarding the accuracy and completeness of the assets, liabilities, income and expenses of the Company and of the Group, and the adequacy of disclosures in these financial statements.
3. Loss of accounting records
The consolidated financial statements and the financial statements of the Company contain financial information of the representative offices located in Beijing and Shenzhen (the “PRC representative offices”). The PRC representative offices were closed and the accounting records could not be retrieved. As a consequence, we were unable to obtain all information that we required in relation to our audit and were also unable to carry out other satisfactory auditing procedures that we considered necessary to obtain adequate assurance regarding assets, liabilities and profit or loss contributed by the PRC representative offices for the year and the adequacy of disclosures in these financial statements. In the current year, no amount is contributed from assets and profit or loss of the PRC representative offices. Liabilities contributed by the PRC representative offices amounting to HK$1,936,000 have been included in other payables and accrued charges in the financial statements, of which we could not carry out satisfactory auditing procedures in the current year.
Any adjustments on the above balances would affect the net liabilities of the Group and the Company as at 31 December 2009 and the loss for the year then ended.
4. Directors’ emoluments
We were unable to carry out auditing procedures necessary to obtain adequate assurance regarding directors’ emoluments as set out in note 10 to the financial statements. This is not in accordance with the requirements of Section 161A of the Hong Kong Companies Ordinance.
Material uncertainty relating to the going concern basis
As explained in note 2 to the financial statements, the Company submitted a resumption proposal on 17 December 2010 (updated on 25 March 2011) and subsequently amended by a written submission to The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 31 March 2011 (together the “Resumption Proposal”). By a letter dated 1 April 2011, the Stock Exchange informed the Company that it was allowed to proceed with the Resumption Proposal, subject to prior compliance with the conditions to the satisfaction of Listing Division within six months from the date of the Stock Exchange’s letter. These conditions are explained in note 2 to the financial statements.
As at 31 December 2009, the Group and the Company had incurred a consolidated loss attributable to owners of the Company of approximately HK$12,822,000 and HK$11,510,000 respectively, had net current liabilities of approximately HK$109,731,000 and HK$117,632,000 respectively and had deficiency of shareholders’ fund of approximately HK$109,601,000 and HK$112,377,000 respectively. 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. The consolidated financial statements have been prepared on a going concern basis on the assumption that the Resumption Proposal will be successfully completed in the foreseeable future and that the financial position of the Group will be substantially improved as all liabilities of the Company will be discharged through the implementation of a scheme to be proposed by the Company under Section 166 of the Companies Ordinance of Hong Kong (the “Scheme”).
The financial statements do not include any adjustments which would result from a failure to complete the Resumption Proposal and to approve the Scheme by the Company’s Scheme Creditors and the High Court of Hong Kong (the “Court”), other approvals to be obtained from shareholders, the Court and the Hong Kong regulatory authorities.
If the Resumption Proposal could not be completed, further adjustments might have to be made to reduce the value of assets to their recoverable amount, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities to current assets and liabilities respectively. We consider that appropriate disclosures have been made accordingly. However, in view of the extent of the uncertainties relating to the completion of the Resumption Proposal as at the end of the reporting period, we disclaim our opinion in respect of material uncertainty relating to the going concern basis.
Disclaimer of opinion: disclaimer on view given by financial statements
Because of the significance of the matters described in the “Basis for disclaimer of opinion” above and the “Material uncertainty relating to the going concern basis” as described above, 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 December 2009 and of the Group’s results and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards. In all other respects, in our opinion the consolidated financial statements have been properly prepared in accordance with the Hong Kong Companies Ordinance.