In a surprise development, Viz Branz (VB) announced that its appointed auditors, Ernst & Young (EY), will not express an audit opinion for its recently concluded FY12 financial statements. After reviewing the auditor’s note and speaking with management, we deem this development to be a non-issue for VB. The disclaimer stems from earlier allegations of impropriety over a series of payments involving the company, which have since been unreservedly withdrawn. In addition, there was no commencement of CAD investigations at all. Management stands by their FY12 financial statements and stress that the figures present a “true and fair view” of the company as at end-FY12. VB operations will continue unhindered in the meantime. While this development may cause some short-term weakness in VB’s share price, we stand by our assertion that an impending GO is likely. A possible dip in the counter should open up buy-in opportunities for investors. We maintain our BUY rating with an unchanged fair value of S$0.74.
Non-issue for VB
In a surprise development, Viz Branz (VB) announced that its appointed auditors, Ernst & Young (EY), will not express an audit opinion for its recently concluded FY12 financial statements. The basis for this disclaimer of opinion stems from earlier allegations of impropriety over a series of payments involving the company made by VB’s former CEO and current top shareholder, Mr. Chng Khoon Peng, which have since been unreservedly withdrawn. After reviewing the auditor’s note and speaking with management, we deem this development to be a non-issue for VB.
Lack of access to CAD investigations, if any, cited as cause
EY cites the lack of access to the earlier complaints lodged with the Commercial Affairs Department (CAD) as one of the reasons for this disclaimer. In addition, EY stated they were unable to perform audit procedures to “ascertain the nature of transactions” alleged to have been irregular, and if the transactions were properly recorded and presented.
But CAD investigations did not even commence
From our understanding – and confirmed with management – investigations into the allegations were not even initiated by the CAD nor was there any indication that it was in the process. Furthermore, the allegations were about “irregular” payments to the CEO and not fraudulent revenue/profit recognition procedures.
Management stands by financial statements
Since its establishment in 1988, this is the first instance where a disclaimer has been issued. Management stands by their FY12 financial statements and stressed that the figures present a “true and fair view” of the company as at end-FY12. VB operations will continue unhindered in the meantime.
Focus still on GO; maintain BUY
While this development may cause some short-term weakness in VB’s share price, we stand by our assertion that an impending GO is likely. A possible dip in the counter should open up buying opportunities for investors. We maintain our BUY rating with an unchanged fair value of S$0.74.
In a surprise development, Viz Branz (VB) announced that its appointed auditors, Ernst & Young (EY), will not express an audit opinion for its recently concluded FY12 financial statements. The basis for this disclaimer of opinion stems from earlier allegations of impropriety over a series of payments involving the company made by VB’s former CEO and current top shareholder, Mr. Chng Khoon Peng, which have since been unreservedly withdrawn. After reviewing the auditor’s note and speaking with management, we deem this development to be a non-issue for VB.
Lack of access to CAD investigations, if any, cited as cause
EY cites the lack of access to the earlier complaints lodged with the Commercial Affairs Department (CAD) as one of the reasons for this disclaimer. In addition, EY stated they were unable to perform audit procedures to “ascertain the nature of transactions” alleged to have been irregular, and if the transactions were properly recorded and presented.
But CAD investigations did not even commence
From our understanding – and confirmed with management – investigations into the allegations were not even initiated by the CAD nor was there any indication that it was in the process. Furthermore, the allegations were about “irregular” payments to the CEO and not fraudulent revenue/profit recognition procedures.
Management stands by financial statements
Since its establishment in 1988, this is the first instance where a disclaimer has been issued. Management stands by their FY12 financial statements and stressed that the figures present a “true and fair view” of the company as at end-FY12. VB operations will continue unhindered in the meantime.
Focus still on GO; maintain BUY
While this development may cause some short-term weakness in VB’s share price, we stand by our assertion that an impending GO is likely. A possible dip in the counter should open up buying opportunities for investors. We maintain our BUY rating with an unchanged fair value of S$0.74.
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