POWERLEADER SCIENCE & TECHNOLOGY COMPANY LIMITED *

Transcription

1 The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement, for which the directors of Powerleader Science & Technology Company Limited (the Directors ) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to Powerleader Science & Technology Company Limited. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable. POWERLEADER SCIENCE & TECHNOLOGY COMPANY LIMITED * (A foreign joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock code: 8236) CHANGE OF AUDITORS AND DELAY IN PUBLICATION OF ANNUAL RESULTS The Board wishes to announce the following: (1) The Company s auditors, Deloitte Touche Tohmatsu, has tendered its resignation as auditors of the Company with effect from 15 March 2006; and (2) The publication of the audited final results of the Company and its subsidiaries for the financial year ended 31 December 2005 will be delayed. Trading in H Shares on the Stock Exchange has been suspended at the Company s request from 9: 30 a.m. on 16 March 2006 and remains suspended until publication of the Company s 2005 annual results. CHANGE OF AUDITORS On 15 March 2006, the Company received a written notice from DTT of their intention to resign as auditors of the Company with effect from 15 March As indicated by DTT, they have become aware that the Group has made very significant purchases from two suppliers (the Suppliers ) of raw materials which are used to make finished products sold 1

2 to a customer (the Customer ) (collectively, the Transactions ) but the Group did not maintain proper records in respect of the Transactions. The amount of recorded purchases during the year ended 31 December 2005 from the two Suppliers was in aggregate approximately RMB168,000,000 and the amount of sales during the year ended 31 December 2005 to the Customer was approximately RMB159,000,000. In respect of the Transactions, DTT had raised concerns on production by the Group of the documentation, including that (1) no copy of goods received notes were maintained in the warehouse and the warehouse keepers interviewed by DTT were not aware of any goods received from the Suppliers, although goods received notes in respect of purchases from the Suppliers were provided by accounts department to DTT; (2) no raw material requisition form or any other production records were maintained in relation to the assembling (with material referred to (1) above used) of finished products for onward sale to the Customer; and (3) goods delivery notes in respect of sales to the Customer could not be readily made available. DTT have confirmed in their notice of resignation that there were no other matters in addition to those mentioned above that need to be brought to the attention of the Shareholders. The Board would like to respond to the issues raised by DTT regarding the sufficiency of documentation evidence for audit purpose. Regarding the Transactions, it is a new business arrangement adopted by the Group whereby designated raw materials (the Designated Materials ) are purchased from the Suppliers upon the Customer s request. Under the special arrangement made with the Customer, the Company has to purchase the Designated Materials required in the production process from the Suppliers for assembling of the finished products sold to the Customer. In respect of the goods received notes mentioned in point (1) above, as a duplicate set of the goods received notes was not maintained in the warehouse area, the warehouse staff interviewed by DTT was not able to produce the warehouse copy of the goods received notes mentioned in point (1) above upon DTT s request. For the raw material requisition form mentioned in point (2) above, the Company had already made its best endeavour to locate, upon DTT s request, the relevant warehouse copy of the requisition forms in respect of the Designated Materials, a duplicate set of which was kept at account department. The relevant warehouse copy was not provided to DTT up to the date DTT ceased all the audit field work. Regarding point (3) above on the goods delivery notes, due to the reason that a duplicate set of the goods delivery notes was not maintained at the warehouse, the warehouse staff was not able to locate the warehouse copy upon DTT s request. The Company had already made best endeavour to locate, upon DTT s request, the relevant notes in respect of the sales to the Customer among the substantial amounts of goods delivery notes issued by the Group to all customers. In the course of collecting the relevant notes, DTT had already ceased all the audit field work where several sample goods delivery notes had actually been provided to DTT. 2

3 It is also noted in the resignation letter of DTT that the major shareholder of the Customer is a family relative of the major shareholder of one of the Suppliers. The Board announces that it is not aware of such relationship and the Company also confirms that the Suppliers and Customer are Independent Third Parties and each of the connected persons (as defined in the GEM Listing Rules) of the Company has confirmed that he is independent of and not connected with the Suppliers and Customer. The Company only maintains business relationship with the Suppliers and the Customer. All transactions between the Suppliers and the Customer were carried out in accordance with the contractual terms between them and in the best interest of the Group and the Shareholders. The Designated Materials purchased at the aggregate sum of approximately RMB168,000,000 from the Suppliers have not been used up in the production process while all the finished products have been sold to the Customer with the sales amount of approximately RMB159,000,000 recorded. The remaining Designated Materials have been sold by the Group to other customers and proper records have been maintained by the accounts department for such sales. Under Article 164 of the Articles of Association, the Board shall have the right to appoint new auditor to fill the vacancy of the auditor of the Company until the conclusion of the next annual general meeting of the Company. Accordingly, the Board will appoint CCIF as the new auditors of the Company to fill the vacancy arising from DTT s resignation until the conclusion of the next annual general meeting of the Company and will propose to the Shareholders at the next general meeting of the Company such appointment. In addition, DTT had issued, subject to the aforesaid points mentioned in its resignation letter, a professional clearance letter to CCIF stating that they are not aware of any professional reason for why CCIF should not accept the appointment as auditors of the Company. The Board expressed their regret for the different ideas on the production of evidences for audit purposes. After consultation with the members of Audit Committee, who are also the independent non-executive Directors and who had a meeting with DTT on 13 March 2006, the Board will engage CCIF to conduct an independent investigation and to prepare a report to the members of Audit Committee in response to the concerns raised by DTT. CCIF has relevant experiences in conducting similar investigation relating to companies listed in Hong Kong with operations in the PRC. Relevant invoices, receipts and other documentary evidences in relation to the Transaction from the Suppliers and the Customer will be provided to CCIF and consent had been obtained from the Suppliers and the Customer to conduct interview and site visit upon request by CCIF for facilitating the audit and investigation progress. The Company will take appropriate corrective actions and implement stricter internal control procedures for the Group s operational need as may be recommended by CCIF. Further announcement will be made by the Company after the completion of investigation report by CCIF. DELAY IN PUBLICATION OF ANNUAL RESULTS Due to the reasons aforesaid, the Company will not be in a position to publish its audited final results for the financial year ended 31 December 2005 prior to 31 March The delay will constitute a breach of Rules 18.49, 18.48A and of the GEM Listing Rules which provide that a listed issuer must publish its annual report and announce preliminary 3

4 results in respect of each of its financial year not later than three months after the date upon which the financial year ended. The Board currently anticipates that the publication of the 2005 annual results will be delayed until 30 April Trading in H Shares on the Stock Exchange has been suspended at the Company s request from 9: 30 a.m. on 16 March 2006 and remains suspended until publication of the Company s 2005 annual results. DEFINITIONS Audit Committee Board CCIF Company Director(s) DTT GEM GEM Listing Rules Group Hong Kong H Shares Independent Third Party(ies) PRC Shareholder(s) Stock Exchange Takeovers Code audit committee of the Company board of Directors CCIF CPA Limited Powerleader Science & Technology Company Limited the director(s) of the Company Deloitte Touche Tohmatsu the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on GEM of the Stock Exchange the Company and its subsidiaries the Hong Kong Special Administrative Region of the PRC overseas listed foreign shares of nominal value of RMB0.10 each in the share capital of the Company, which are listed on GEM and subscribed for and traded in HK$ the independent third party or parties who is/are not connected or acting in concert (as defined in the Takeovers Code) with any of the directors, chief executive or substantial Shareholders of the relevant company or its subsidiaries or any of their respective associates (as defined in the GEM Listing Rules) the People s Republic of China shareholder(s) of the Company the Stock Exchange of Hong Kong Limited Hong Kong Code on Takeovers and Mergers 4

5 HK$ RMB Hong Kong dollars, the lawful currency of Hong Kong Renminbi, the lawful currency of the PRC ByOrderoftheBoard Powerleader Science & Technology Company Limited Li Ruijie Chairman Shenzhen, PRC, 31 March 2006 As at the date hereof, the Board comprises of Mr. Li Ruijie and Mr. Dong Weiping as executive directors, Mr. Wei Xinan, Mr. Wang Lixin and Mr. Ma Xin as non-executive directors and Mr. Jiang Baijun, Mr. Lo Yu Tseng, Robert and Mr. Yim Hing Wah as independent non-executive directors. The announcement will remain on the GEM website at at the Latest Company Announcement page for at least 7 days from the date of its publication. * For identification purpose only 5