SAKAE Holdings said its auditors Deloitte & Touche LLP have issued a qualified opinion on its financial statements for fiscal year 2014 ended Dec 31 - a third straight year of audit qualification on its books.
The qualification has arisen due to Sakae Holdings' accounting treatment for its investments in its associates, Griffin Real Estate Investment Holdings Pte Ltd (GREIH) and Gryphon Capital Management Pte Ltd (GCM), since the financial year ended Dec 31, 2012.
Sakae has made a full provision for impairment loss on its investment in GREIH amounting to S$6.64 million and S$10.1 million at the company level and group level respectively, and its investment in GCM amounting to S$150,000 and S$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 owns 24.7 per cent of GREIH and 20 per cent of GCM. Sakae is involved in a legal spat with other parties related to GREIH, the special vehicle used to invest in Bugis Cube.