BASIS FOR DISCLAIMER OF OPINION
- Opening balances and corresponding figures
The consolidated financial statements of the Group for the year ended 31 December 2010 which form the basis for the corresponding figures presented in the current year’s consolidated financial statements were not audited by us. There were no satisfactory audit procedures for us to ascertain the existence, accuracy, presentation and completeness of the opening balances, corresponding figures and other related disclosures (as further details explained in the following paragraphs) shown in the current year’s consolidated financial statements.
- Limited accounting books and records of the Group
Due to the insufficiency of supporting documentation and explanations for accounting books and records in respect of the Group for the years ended 31 December 2011 and 2010, we were unable to carry out audit procedures to satisfy ourselves as to whether the following income and expenses for the years ended 31 December 2011 and 2010 and the assets and liabilities as at those dates, and the segment information and other related disclosure notes in relation to the Group, as included in the consolidated financial statements of the Group, have been accurately recorded and properly accounted for in the consolidated financial statements:
|Income and expenses for the years ended 31 December:|
|Cost of sales||(1,073,924)||(782,497)|
|Other gains and losses||(518,899)||11,287|
|Distribution and selling expenses||(421,940)||(171,030)|
|Administrative and general expenses||(104,559)||(76,494)|
|Interest on borrowings wholly repayable within five years||(8,897)||(21,677)|
|(Loss)/Profit before tax||(314,296)||367,808|
|Income tax expense||(42,650)||(116,796)|
|(Loss)/Profit for the year attributable to owners of the Company||(356,946)||251,012|
|Other comprehensive income/(loss) for the year, net of tax|
|Fair value gain/(loss) on available-for-sales investments||2,867||(2,867)|
|Total comprehensive (loss)/income for the year attributable to owners of the Company||(354,079)||248,145|
|Assets and liabilities as at 31 December:|
|Property, plant and equipment||343,345||190,271|
|Prepayments for acquisition of property, plant and equipment||142,733||64,639|
|Prepayments for acquisition of computer software||15,217||24,150|
|Prepaid lease payments||5,891||6,151|
|Deferred tax assets||29,381||9,474|
|Investment in securities||–||294,045|
|Inventories 342,617 354,047||342,617||354,047|
|Trade and other receivables||1,045,840||480,865|
|Prepaid lease payments||260||260|
|Investments in securities||–||31,789|
|Amount due from a related party||–||2,280|
|Pledged bank deposits||–||2,625|
|Bank and cash balances||1,331,308||1,690,155|
|Trade and other payables||344,210||203,299|
|Net current assets||1,928,503||2,271,777|
|Total assets less current liabilities||2,504,650||2,881,665|
|Deferred tax liabilities||170||1,500|
- 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 2011 and 2010.
- Related party transactions and disclosures
No sufficient evidence has been provided to satisfy ourselves as to the existence and completeness of the disclosures of the related party transactions for the years ended 31 December 2011 and 2010 and the related party balances as at 31 December 2011 and 2010 as required by International Accounting Standard (“IAS”) 24 (revised) “Related Party Disclosures”.
- Consolidated statement of changes in equity
Except for share capital and share premium, no sufficient evidence has been provided to satisfy ourselves as to the movements and balances of reserves as included in the consolidated statement of changes in equity for the two years ended 31 December 2011 and 2010.
- Consolidated statement of cash flows
No sufficient evidence has been provided to satisfy ourselves as to the cash flows as included in the consolidated statement of cash flows for the two years ended 31 December 2011 and 2010.
- 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 in relation to the financial risk management, directors’ and employees’ emoluments, dividends, subsidiaires, share-based payment, operating leases, and events after the reporting period as disclosed in notes 6, 11, 12, 19, 31, 33 and 37.
Any adjustments to the figures as described from points 1 to 7 above might have significant consequential effects on the Group’s results and cash flows for the two years ended 31 December 2011 and 2010 and the financial position of the Group as at 31 December 2011 and 2010, 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 described in the basis for disclaimer of opinion paragraphs 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 Group as at 31 December 2011 and of the Group’s results and cash flows for the year then ended in accordance with International Financial Reporting Standards and whether the consolidated financial statements have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.