Pace Development Corporation Plc (PACE) yesterday made clarifications to the Stock Exchange of Thailand (SET) following the bourse's decision to post suspend and notice pending signs on its stock trade.
The company engaged an independent financial advisory to measure the fair values of investments in Pace Project One Co Ltd and Pace Project Three Co Ltd by using the income approach method and discounted cash flow to present value.
Based on a report of the advisory firm dated May 12, 2017, the fair values of such investments amounted to 8.23 billion baht, and Pace Development Corporation Group recorded such investments in the consolidated statement of financial position on June 30, 2017, amounting to 8.23 billion.
The effect from loss of control in subsidiaries in the consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2017 amounts to 8.86 billion baht.
"However, as [limited] by circumstance, the auditor cannot reach a conclusion as a result of review of the report by such independent financial advisory firm on the estimation of income of the observation deck because the construction is not completed, so there is no commercial operations to compare. This is also a new business in the Thai market," the company said in its statement.
"Although there are no commercial operations to compare and this is a new business in the Thai market, the advisory firm researched nine observation decks around the world, including Baiyoke Tower, which is the second tallest building in Thailand.
"MahaNakhon observation deck has been designed with an elevator system that has the highest capacity and speed in Thailand, allowing a capacity of more than 3 million visitors per year. These assumptions shall be verified after construction is complete and commercial operations start."
Pace Development Corporation and Sahaviriya Steel Industries Plc were both mentioned in the SET's statement explaining the trade stoppage.
"As the companies' auditors are unable to reach a conclusion on [their] financial statements ended June 30, 2017, the Securities and Exchange Commission [SEC] may require [these] companies [to] amend their financial statements. The SET, therefore, keeps its "NP" [notice pending] sign on these two stocks until the companies can submit their amended financial statements or the SEC concludes the companies don't have to amend their financial statements," said the SET in its statement.
"There should not be a problem as the company is selling some of its assets for liquidity, with the transactions pending. Although shareholders' equities remain negative, the company has booked its revenue, even though the auditor has not approved [the financial statement]. A resolution on this is expected without any hindrance," said a property analyst who asked for anonymity.
Separately, financially beleaguered Energy Earth Plc said in its filing to the SET it is still awaiting financial information from its subsidiaries for consolidation, and has not been able to submit consolidated financial results for auditor review within 45 days of the end of the quarter.
"The company requests delaying submission of quarterly financial reports for the three-month and six-month periods ended June 30, 2017 until Sept 29, 2017," it said.