2016.10 DBA TELECOM

Company Name: DBA Telecommunication (Asia) Holdings Limited
Stock Code: 03335
Year end: December 31, 2015

Basis for disclaimer of opinion

  1. Opening balances and corresponding figures

Our audit opinion on the consolidated financial statements of the Group for the year ended 31 December 2014, which forms the basis for the corresponding figures presented in the current year’s consolidated financial statements, was disclaimed because of the significance of the possible effect of the limitations on the scope of our audit and the material uncertainty relating to the going concern basis, details of which are set out in our auditor’s report dated 12 October 2016.

There were no satisfactory audit procedures to ascertain the existence, accuracy, presentation and completeness of certain opening balances and corresponding figures (as further detail explained in the following paragraphs) shown in the current year’s consolidated financial statements.

  1. Deconsolidation of the subsidiaries

Certain subsidiaries of the Company in the People’s Republic of China were deconsolidated from the Group since 1 January 2012. No sufficient evidence has been provided to satisfy ourselves as to whether the Company had lost control of these subsidiaries since 1 January 2012 and throughout the year ended 31 December 2015 and 2014.

Accordingly, no sufficient evidence has been provided to satisfy ourselves, in relation to the deconsolidated subsidiaries, as to the completeness of the transactions of the Group for the year ended 31 December 2015 and 2014 and the Group’s financial position as at those dates.

  1. Gain on deconsolidation of subsidiaries

As explained in notes 2 and 8 to the consolidated financial statements, upon the liquidation of two subsidiaries of the Company which are investment holding companies on 28 May 2015, the Company recognised a gain on deconsolidation of subsidiaries of approximately RMB177,665,000 for the year ended 31 December 2015.

No sufficient evidence has been provided to satisfy ourselves as to certain assets and liabilities of those liquidated subsidiaries. As a result, we are unable to satisfy ourselves that the gain on deconsolidation of those subsidiaries of approximately RMB177,665,000 for the year ended 31 December 2015 was fairly stated.

  1. Share option reserve

Given the fact that the supporting documents relating to the share options granted by the Company to its ex-directors and eligible persons were incomplete, we are unable to obtain sufficient appropriate audit evidence to verify the presentation and accuracy of the carrying amount of the share option reserve of approximately RMB1,321,000 as at 31 December 2015 and 2014 and the accuracy and completeness of the transfer of share option reserve of approximately RMB4,171,000 for the year ended 31 December 2014.

  1. Amount due to a shareholder

Given the inherent limitations arising from the consequential correlation impact to certain associated audit qualifications points, (1), (2), (3), (6), (7), (8) and (9b), as described in our disclaimer of opinion paragraphs, we have been unable to obtain sufficient audit evidence in respect of the accuracy and completeness of the amount due to a shareholder of approximately RMB215,635,000 and RMB205,971,000 shown in the consolidated statement of financial position as at 31 December 2015 and 2014 respectively. There were no other satisfactory audit procedures that we could perform to satisfy ourselves whether the aforesaid balances were fairly stated as at 31 December 2015 and 2014.

  1. Amounts due to deconsolidated subsidiaries

No sufficient evidence have been received by us up to the date of this report in respect of the amounts due to deconsolidated subsidiaries of approximately RMB3,084,000 and RMB75,285,000 shown in the consolidated statement of financial position as at 31 December 2015 and 2014 respectively. There were no other satisfactory audit procedures that we could perform to satisfy ourselves whether the aforesaid balances were fairly stated as at 31 December 2015 and 2014.

  1. Commitments and contingent liabilities

No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of commitments and contingent liabilities as at 31 December 2015 and 2014.

  1. Related party transactions and disclosures

No sufficient evidence has been provided to satisfy ourselves as to the existence, accuracy and completeness of the disclosures of the related party transactions for the year ended 31 December 2015 and 2014 and balances as at 31 December 2015 and 2014 as required by Hong Kong Accounting Standard (“HKAS”) 24 (Revised) “Related Party Disclosures”.

  1. Other disclosures in the consolidated financial statements

No sufficient evidence has been provided to satisfy ourselves as to the accuracy and completeness of the disclosures as required by the following in relation to:

(a) Hong Kong Financial Reporting Standard 2 “Share-based Payment” for the presentation of share option scheme in the notes to consolidated financial statements;

(b) HKAS 7 “Statement of Cash Flows” for the presentation of the non-cash transaction in the notes to consolidated financial statements.

Any adjustments to the figures as described from points 1 to 9 above might have a significant consequential effect on the Group’s results and cash flows for the two years ended 31 December 2015 and 2014 and the financial position of the Group as at 31 December 2015 and 2014, and the related disclosures thereof in the consolidated financial statements.

Material uncertainty relating to the going concern basis

In forming our opinion, we have considered the adequacy of the disclosures made in note 2 to the consolidated financial statements which explains that a proposal for the resumption of trading in the Company’s shares and the proposed restructuring of the Group has been submitted to The Stock Exchange of Hong Kong Limited to pursue a restructuring of the Company.

The consolidated financial statements have been prepared on a going concern basis on the assumption that the proposed restructuring of the Company will be successfully completed, and that, following the 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 complete the restructuring. We consider that the disclosures are adequate. However, in view of the extent of the uncertainty relating to the completion of the restructuring, 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 as described in the basis for disclaimer of opinion paragraphs and the material uncertainty relating to the going concern basis, 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 and whether the consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.