DGAP-News: China Specialty Glass AG: Publication in accordance with Section 37q(2)(1) WpHG
(firmenpresse) - DGAP-News: China Specialty Glass AG / Key word(s): Statement
China Specialty Glass AG: Publication in accordance with Section
37q(2)(1) WpHG
20.08.2013 / 08:52
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- Convenience Translation -
- The German version shall be decisive -
Publication in accordance with Section 37q(2)(1) WpHG
The Financial Reporting Enforcement Panel (FREP) has concluded that the
annual financial statements and the consolidated financial statements of
China Specialty Glass AG (CSAG), Grünwald, Munich district, as of the
reporting date 12/31/2011 and the condensed management report of CSAG for
the 2011 financial year are erroneous:
a. Annual report as of December 31, 2011
Leasehold of a property in Guangzhou, China
The reporting of the lease pre-payment for the object listed under
property, plant and equipment as a 'leasehold building' (kEUR 1,282) and
the listed 'land-use right' (kEUR 801) as a finance leasing contract within
the meaning of IAS 17.10 ff. is erroneous because
the legally permitted contract period of the lease agreement does not
correspond to the major part of the economic lifetime of the asset (IAS
17.10 (c)) and
at the inception of the leasing agreement, the present value of the minimum
lease payments does not amount to at least substantially all of the fair
value of the leased asset (IAS 17.10 (d)).
The lease agreement is to be considered an operating lease agreement in
which the advance lease payments should be recognized as an expense on a
straight-line basis over the term of the lease (IAS 17.10 in conjunction
with IAS 17.33 ff.). Contrary to the reporting in the financial statements,
the prepayment amount is to be listed under 'other noncurrent assets.'
With regard to the legally permitted lease period of 20 years, the
prepayment amount totaling kEUR 2,083 is kEUR 45 too high.
In addition, the notes to the consolidated financial statements do not
include a description of the significant leasing agreements in accordance
with IAS 17.35 (d) as well as the required disclosures on the lease
payments that have already been made in full for the entire contract period
in accordance with IAS 17.35 (a).
Property in Sichuan, China
The disclosures made in the notes to the consolidated financial statements
regarding a leasehold building (kEUR 10,416) listed as an addition to
property, plant and equipment which 'has been treated as an advance payment
for leasehold buildings, as due to the likely long-term nature of the
lease, the arrangement would be considered to be a finance lease' is
incorrect as, among other things,
a Group company commissions the construction of the buildings and therefore
the corresponding acquisition or production costs are to be considered in
the consolidated financial statements and there is no 'leasehold building'
within the meaning of the disclosure in the notes to the consolidated
financial statements;
a rental agreement with a third party that could be classified as a finance
leasing agreement had not been concluded as of the reporting date.
With these erroneous disclosures, the actual circumstances are not
presented fairly in the statements. This is thus a violation of IAS 1.15.
Trade and other receivables
The current assets 'Trade and other receivables' (kEUR 28,050) include
payments for plant and equipment (kEUR 6,452) and for land-use rightsin
Sichuan, China (kEUR 6,079) that should be listed in noncurrent assets as
'property, plant and equipment' and 'land-use rights.' This is thus a
violation of IAS 16.74 (b) and IAS 16.4 in conjunction with IAS 1.54 (a)
and (h), respectively.
Related party disclosures
Leasehold of a property in Guangzhou, China
The lease agreement pertaining to a property in Guangzhou, China, was made
between a Group company and Mr. Chun Li Shi, who is to be considered a
related party in accordance with IAS 24.9 (a) as a member of the CSAG board
and the son of an indirect majority shareholder and member of the CSAG
board (COO), Mr. Nang Heung Sze. Contrary to the legally permitted contract
period of 20 years, a lease payment for a period of 30 years was agreed
upon. Contrary to the contractual agreement of a monthly lease payment, the
lease was paid in its entirety at the start of the lease period. A
disclosure that accurately describes the type and, especially, the scope of
the business relationship to Mr. Chun Li Shi has not been made in the notes
to the consolidated financial statements. This is thus a violation of IAS
24.18 (a) and (b) in conjunction with IAS 24.19 (f), IAS 24.21 (c) and (d).
Remuneration of the Management Board
The disclosure of remuneration for members of the management for the
categories 'short-term employee benefits', 'post-employment benefits',
'other long-term benefits, 'termination benefits' and 'share-based payment
benefits' has not been made in the financial statements.
b. Condensed management report and Group management report
The condensed management report and Group management report for the 2011
financial year does not contain a comprehensive analysis of the business
performance and situation of the CSAG Group, so that it does not become
clear, for example, how it was possible to achieve revenue of kEUR 76,884
with technical assets valued at approximately kEUR 2,792. Contrary to the
requirements of Section 315(1)(3) HGB, the analysis did not include the
significant financial performance indicators that reflect, for example, the
positive revenue developments in 2011 in comparison to capacity
utilization, the amount of wear and tear on the facilities and the age
structure of production facilities as well as the required reinvestment
measures.
In addition, the presentation of the financial position, financial
performance and cash flows for the 2011 financial year does not conclude
with an overall statement of the business situation for the Group at the
time the Group management report was prepared. This is in violation of
Section 315(1)(1) HGB in conjunction with DRS 15 Tz. 49.
c. Annual financial statements as of December 31, 2011
Shareholdings in affiliated companies
The shares held in Hing Wah Holdings (Hong Kong) Ltd., Hong Kong, valued at
kEUR 100,121 were listed under 'Investments' and not as 'Shares in
affiliated companies' (Section 266(2) A.III.1 HGB), although the company is
considered an affiliated company in accordance with Section 271(2) HGB,
because CSAG is the sole shareholder and controls it within the meaning of
Section 290(2) HGB.
Payout block within the meaning of Section 268(8)(2) HGB
The payout block imposed in view of the deferred tax assets reported in the
annual financial statements within the meaning of Section 268(8)(2) HGB
valued at kEUR 1,078 was erroneously not reported in the notes. This is
thus in violation of Section 285 Nr. 28 HGB.
End of Corporate News
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Language: English
Company: China Specialty Glass AGMaximiliansplatz 15
80333 München
Germany
Phone: +49 (0)40 60 91 86-0
Fax: +49 (0)40 60 91 86-60
E-mail: ir(at)csg-ag.com
Internet: http://www.csg-ag.de
ISIN: DE000A1EL8Y8
WKN: A1EL8Y
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Stuttgart
End of News DGAP News-Service
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226572 20.08.2013
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