- 2011.10 C HIGHPRECISION
Company Name: f China High Precision Automation Group LimitedStock Code: 00591Year end: June 30, 2011
Basis for disclaimer of opinion
When performing our audit procedures and seeking independent corroborative evidence, we identified inconsistencies between the information contained in the Group’s accounting records and information independently obtained. The Company’s management explained and showed documents that the Company’s products are related to aerospace and other fields which are classified as state secrets. The Company’s management explained they were unable to provide us with sufficient supporting documentation for us to carry out appropriate additional procedures due to the provisions of the Law of the People’s Republic of China on Guarding State Secrets.
Given these circumstances, there were no practicable audit procedures that we could perform to satisfy ourselves that the information and documents presented to us for our audit were complete and accurate in all material respects, nor could we quantify the extent of adjustments that might be necessary for the Group’s consolidated financial statements for the year ended 30 June 2011.
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 and 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 30 June 2011 and of the Group’s profit and cash flows for the year then ended in accordance with Hong Kong 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.
- 2011.10 CHINA MEDICAL
Company Name: China Medical and Bio Science LimitedStock Code: 08120Year end: July 31, 2011
BASIS FOR DISCLAIMER OF OPINION
In forming our opinion, we have considered the adequacy of the disclosure made in note 2 to the consolidated financial statements which explains that on 29 April 2011, a formal restructuring agreement was entered into among an investor, the Company and the Provisional Liquidators pursuant to which the parties agreed to the terms and conditions for the purpose of facilitating the Company’s Restructuring Proposal and The Stock Exchange of Hong Kong Limited has granted a conditional approval to the Company to resume the trading in the shares of the Company subject to the Company fulfilling the resuming conditions by 31 October 2011.
The consolidated financial statements have been prepared on a going concern basis on the assumption that the proposed restructuring will be successfully implemented and that, following the proposed 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 implement the restructuring proposal. We consider that the disclosures are adequate. However, in view of the extent of the material uncertainty relating to the completion of the implementation of the restructuring proposal, 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 described in the Basis for Disclaimer of Opinion paragraphs, 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.
- 2011.10 CHINA AGROTECH
Company Name: China Agrotech Holdings LimitedStock Code: 01073Year end: June 30, 2011
Basis for disclaimer of opinion
(1) Scope limitation — Biological assets
As detailed in note 41 to the consolidated statement of financial position, on 17 May 2011, an order was issued by the middle court of Taiyuan City, Shanxi (the “Court”) for sealing up the Plantation Base as defined below for a period of two years from 18 May 2011 to 17 May 2013 pending trial by the Court. As a result of the sealing up, the Group is not able to transfer, sale, change register, pledge and other similar activities in respect of the Plantation Base. The total fair value less costs to sell of the biological assets associated with the Plantation Base amounted to approximately HK$832,042,000 as at 30 June 2011. In the absence of available information evidencing the financial effects of the seal up order, the current valuation of the aforesaid biological assets is prepared based on an assumption, among others, that these biological assets can be freely disposed of and transferred free of all encumbrances. Due to the lack of sufficient appropriate evidence for the above-mentioned, we are not able to satisfy ourselves as to whether the bases of measurement are appropriate and the value of the aforesaid biological assets is fairly stated in the consolidated statement of financial position of the Group as at 30 June 2011.
(2) Scope limitation — Financial guarantees undertaken by the Group
During the course of our audit, certain information showing that the Group has outstanding contingent liabilities arising from guarantees provided to banks for liabilities of third parties to a total extent of HK$132,136,000 as at 30 June 2011 has been obtained.
In the opinion of the directors of the Company, due to the absence of adequate information, they are unable to confirm whether these financial guarantees are related to the Group. Consequently, the financial effects of these guarantees have not been measured and accounted for in the consolidated financial statements for the current year.
We were not able to carry out alternative audit procedures to satisfy ourselves as to the matters set out above.
Any adjustment that might have been found to be necessary in respect of the matters set out in the paragraphs above would have a significant consequential effect on the financial position of the Group and of the Company as at 30 June 2011 and the profit and cash flows of the Group for the year then ended and the related disclosures in the financial statements.
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. 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.
Emphasis of matter — Material uncertainty relating to possible outcome of outstanding litigation
Without further qualifying our opinion, we draw attention to note 41 to the consolidated financial statements concerning the uncertainty relating to the possible outcome of a lawsuit initiated on 16 May 2011 by a seller (the “Plaintiff”) of certain Lacebark Pine plantation base in Shanxi Province (the “Plantation Base”) against a new wholly-owned subsidiary acquired by the Group on 1 November 2010 (the “Defendant”) alleging that (i) in entering three sales and purchases contracts of the Plantation Base the Defendant had induced the Plaintiff to sell at extremely low prices that were collectively far below the consideration the Company paid for the acquisition of the Defendant, and (ii) the underlying consideration was not paid for. The Plaintiff requested the Court to cancel the sales and purchases contracts and return the Plantation Base to the Plaintiff.
As the case is in the early stage of its proceeding, there is a material uncertainty in respect of the outcome of the final judgment and the financial impact on the financial position of the Group.