From the auditor's report:
1) the limitation of scope in obtaining evidence concerning the intangible assets (advertising
rights) amounting to $11.0 million (or equivalent to HK$52.5 million) of The Observer Star
Global Publishing Holdings Limited and its subsidiaries (the “OSGPH Group”) and
consequently the appropriateness of the financial statements of OSGPH Group that had
been included in the consolidated financial statements of the Group for FY2004;
2) the limitation of scope in obtaining relevant information and the absence of alternative
audit processes available on the carrying value of the intangible assets of Asia Network
Technologies Limited and its subsidiaries (the “ANTL Group”) amounting to US$368.7
million which were included in the consolidated balance sheet of the Group.
Consequently, the Preceding Auditors were unable to obtain sufficient evidence to
ascertain the fair value of the underlying assets recorded as investment in associates
amounting to $89.8 million and the recognition of the negative goodwill amounting to
$83.5 million in the consolidated statement of profit and loss of the Group;
3) the on-going investigation by the Commercial Affairs Department (“CAD”) regarding
accounting irregularities on the financial statements of Auston International Group Ltd.
and its subsidiaries (the “AIGL Group”) for the financial periods 2002, 2003 and the first
half of 2004. The outcome of the investigation might uncover other information, which
might require adjustments to be made to the FY2004 financial statements; and
4) the uncertainty regarding the ability of the AIGL Group to meet their financial obligations
and to continue as going concern for the foreseeable future.
Comments:
1) Sun Business is in the process of engaging an international firm of valuators to conduct an
independent valuation of the intangible assets owned by OSGPH Group and the valuation is
expected to be completed by 28 July 2006. Therefore, it is unwise for us to spectulate the nature of the report.
2) The auditors are unable to determine the US$368.7 million of Book value of ANT, which represent S$89million in Sun Business's balance sheet. Sun Business has received
49,068,758 STV Plc shares at an admission price of 20p each, valuing the Company’s stake in STV Plc at about S$28.71 million. Accordingly, Sun Business has made an allowance for impairment loss of associates of about S$61.1 million for the financial period ended 31 March 2006. Therefore, there will be a loss of s$61million off its balance sheet.
Bearing all these in mind, the NTA of Sun Business still stand at $0.09 as of 31st March 2006.
There will be an increase in NTA after march due to the disposal of magazine rights to SNMD.
Long term buy is my recommendation.
Comments