- 2013.01 SHIRBLE STORE
Company Name: Shirble Department Store Holdings (China) LimitedStock Code: 00312Year end: June 30, 2012
Basis for Qualified Conclusion
In our auditor’s report dated 5 December 2012 on the financial statements for the year ended 31 December 2011 we qualified our opinion in respect of an inability to obtain sufficient appropriate audit evidence in respect of the nature of certain transactions which were recorded as prepayments, deposits and advances from suppliers in the consolidated statement of financial position as at 31 December 2011 and any other similar transactions. Specifically, in the Basis for qualified opinion paragraph of our auditor’s report dated 5 December 2012 we referred to the following balances:
(i) prepayments and deposits with a total balance of RMB512,330,000 as at 31 December 2011. The total balance includes payments of RMB55.3 million, RMB256.5 million and RMB152.5 million which are accounted for and disclosed as prepayments and deposits for the decoration work on two department stores of the Group, the purchases of three properties (a distribution centre and properties in Shenzhen and Haifeng) and goods respectively; and
(ii) amounts received by the Group totalling RMB69.6 million, which were included in “Advances from suppliers”.
We also referred to certain subsequent events which occurred during the period immediately following 31 December 2011, which were related to the above balances. Specifically, we referred to:
(iii) additional advance payments to suppliers for goods of RMB110 million;
(iv) the subsequent termination of the contract for the decoration work on department stores, the letter of intent for purchase of the distribution centre, and the contract for purchase of Shenzhen property and the refund of the related prepayments and deposits;
(v) the recovery from the relevant suppliers of the above-mentioned total amount of RMB262.5 million paid by the Group as prepayments for goods (being refund of the RMB152.5 million prepayment as at 31 December 2011 and the additional RMB110 million prepayment which had been paid to the suppliers in January 2012); and
(vi) the return to the suppliers of RMB63.6 million out of the above-mentioned advance of RMB69.6 million
Further details of these transactions are disclosed in notes 12(b), 14 and 17 to this Interim financial report. These transactions are reflected in this Interim financial report as follows:
(a) the balances as at 31 December 2011 are included as comparative amounts in the Consolidated statement of financial position at 30 June 2012, as further disclosed in notes 12(b) and 14; and
(b) the cash flows during the six months ended 30 June 2012 have been reported within the “Net cash generated from/(used in) investing activities” in the Condensed consolidated statement of cash flows, with the exception of the cash flows relating to payments to/from suppliers, which have been included in “Cash generated from operations”. As the majority of the cash flows relating to these transactions in 2011 occurred during the second half of that year, these transactions have not impacted materially on the comparative amounts shown in the Condensed consolidated statement of cash flows for the six months ended 30 June 2011.
As we stated in our Basis for qualified opinion in our Auditor’s report dated 5 December 2012 on the financial statements for the year ended 31 December 2011, there was insufficient evidence available to us to ascertain the nature of the above mentioned payments and receipts. Consequently, we have also been unable to complete our review of the Group’s Interim financial report for the six months ended 30 June 2012. Had we been able to complete our review, matters might have come to our attention indicating that adjustments might be necessary to the Interim financial report.
Except for the adjustments to the interim financial statements that we might have become aware of had it not been for the situation described above, based on our review, nothing has come to our attention that causes us to believe that the interim financial report as at 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, Interim Financial Reporting.