China Specialty Glass AG
China Specialty Glass AG: Publication in accordance with Section 37q(2)(1) WpHG
China Specialty Glass AG / Key word(s): Statement 20.08.2013 / 08:52 --------------------------------------------------------------------- - 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 rights in 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 --------------------------------------------------------------------- 20.08.2013 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: China Specialty Glass AG Maximiliansplatz 15 80333 München Germany Phone: +49 (0)40 60 91 86-0 Fax: +49 (0)40 60 91 86-60 E-mail: ir@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 --------------------------------------------------------------------- 226572 20.08.2013
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