Auditors issue qualified opinion on Sakae's FY2014 results

SINGAPORE - Mainboard-listed Sakae Holdings said on Thursday that its auditors Deloitte & Touche have issued a qualified opinion on the company's financial statements for financial year 2014.

This is the third year running that Sakae's audited accounts have been qualified.

Sakae said the auditors issued the qualified opinion on account of the company's accounting treatment for its investments in its associates, Griffin Real Estate Investment Holdings Pte Ltd (GREIH) and Gryphon Capital Management Pte Ltd (GCM).

The applicable accounting standards required the company to use the equity accounting method to account for its share of results and net assets of its associates. But Sakae said it did not apply the equity accounting method to account for its share of results and net assets of GREIH and GCM as it had not relied on the management accounts of GREIH and GCM because of the uncertainties presented by on-going litigation in the Singapore Courts between and/or among the company, GREIH, GCM and other persons and entities.

Sakae said it has made a full provision for impairment loss on its investment in GREIH amounting to $6.64 million and $10.1 million at the company level and group level respectively, and its investment in GCM amounting to $150,000 and $369,000 at the company level and group level respectively as at Dec 31, 2014, and 2013.

Deloitte said in its independent auditors' report that the non-equity accounting of Sakae's investment in the associates, GREIH and GCM, for the financial years ended Dec 31, 2014 and 2013, is not in accordance with FRS 28 Investments in Associates and Joint Ventures.

"As only unaudited management accounts of GREIH and GCM were made available to the company, we have not been able to obtain sufficient appropriate audit evidence to enable us to determine what the group's share of results and net assets of GREIH and GCM and the related disclosures under FRS 112 Disclosure of Interests in Other Entities should have been had the equity accounting method been applied," Deloitte said.

Sakae. which owns 24.7 per cent of GREIH and 20 per cent of GCM, is embroiled in a legal dispute with other parties related to GREIH, the special vehicle used to invest in Bugis Cube.