29 December 2016

Re:
Open Letter to Auditor: Request for a Forensic Audit of Financial Statements of China All
Access (Holdings) Limited (HK: 0633).
To:
Mr. Raymond Cheng, Managing Director, HLB Hodgson Impey Cheng Limited. Auditor for China
All Access (Holdings) Limited (HK: 0633).
--Dear Mr. Raymond Cheng,
Your firm, HLB Hodgson Impey Cheng Limited (HLB), is the official auditor for China All Access
(Holdings) Limited (HK: 0633) (CAA or Company), having been appointed on 20 October 2015.
HLB, represented by Mr. Yu Chi Fat (Practising Certificate Number: P05467), audited CAA for FY
2015. CAAs 2015 annual results announcement, published on 30 March 2016 and the 2015 annual
report, published on 27 April 2016 were both approved by your firm (the annual results were agreed
by your firm).
Triam Research released a research report on CAA on 13 December 2016, which set out our research
opinions and beliefs about CAA based upon our qualitative and quantitative analysis, all of which was
based on public information sources. The Company issued a clarification response to our report on 18
December 2016. Triam released its rebuttal dated 20 December 2016, and CAA issued additional
clarification announcements on 20 December 2016 and 21 December 2016.
We do not believe that CAAs clarifications credibly answer any of the questions that we have raised,
and that misstatements and misrepresentations have been committed by the Company and serious
issues remain.
In our report and rebuttal, we have presented evidence that the financial statements for 2015 are
unreliable.
1. We highlighted that there were large discrepancies in the table of top customers (contributing
10% or more to the revenues) between the annual results announcement and annual report.
The company changed the basis of computation two times within a week for issues that were
unaddressed since March 2016. Please refer to our report and rebuttal for details.
2. We have highlighted material differences in the customer mix between the annual results
announcement and the annual report. Only in the annual report but not in the results
announcement, two new customers (labeled B and C) appear with over 30% of revenue
attributed to them. Customer A, attributed with RMB 1.2 billion revenue contribution in the
results announcement is seen the annual report with only RMB 609 million. See our report,
rebuttal and company responses for details.

3. We have also highlighted large discrepancies in the financial statements between the 2015
annual results announcement and the 2015 annual report. The breakdown of assets and
liabilities are materially different between the two disclosures. Various intermediate results in
the income statement are also different. In its clarification statement, CAA has said that these
large discrepancies do not matter since the top and bottom line figures match.
4. The annual report showed a large RMB 721 million cash outflow labeled potential equity
investment (singular), without a corresponding balance sheet asset. In its clarification
statement, the company has said that these were actually acquisition of non controlling
interests and detailed investments in Changfei and Lead Communications. There was nothing
potential about these stake increases, and they were both not non-controlling interests as
CAA already was the controlling shareholder in both entities at the time. We find both the
clarification and the associated figures released by the company to be highly questionable.
5. For 2015, we have highlighted that a) the level of total receivables and prepayments at the
company is at alarming levels, b) the change in trade receivables compared to be change in
revenues for 2015 to be highly questionable (this continued in 1H 2016), c) justifications
provided for various prepayments and other receivables to be extremely suspicious. Together
these receivables and prepayment represent over 140% of shareholders equity as we have
highlighted in our report. CAA has provided either comical clarifications or remained silent on
these items, which reflect billions in shareholders equity.
6. Our research discovered a RMB 1 billion revenue shortfall (36% of continuing operations
revenue) when we compared 2015 annual report satellite and infocomm segment revenues
against corresponding SAIC filings. Such massive discrepancies were not seen in 2014. CAA
has said timing and accounting standards differences account for these differences that affect
1/3 of annual report revenues.
7. CAA admitted in its 18 December 2016 announcement that CAA's Chairman Mr. Chan Yuen
Ming holds key positions in Skycomm subsidiaries as revealed by SAIC records. This makes
Skycomm group a related party to CAA. This relationship goes back several years, but there
has been no related party disclosure in the 2015 annual report or earlier filings. The company
admits to an ongoing asset transfer transaction with Skycomm, but no related party disclosure
has been filed whatsoever.
To summarize, there are simply too many inconsistencies and inaccuracies in the financial statements
for 2015.
We believe that these issues call for a review and forensic audit of CAAs financial statements. We
look forward to you - in your capacity as the official auditor for the company - reviewing closely these
issues and resolving them in due course, or, your resignation from the company if you agree with our
view that CAA has misrepresented itself to shareholders and regulators.
We have sent or will be sending copies of this letter to HKICPA, SFC and HKEX.
Sincerely
Triam Research
Attachments:

1. 13 December 2016: China All Access (HK: 0633): Evidence of financial manipulation,
undisclosed related party and poor fundamentals. We see a 93% downside from current stock

prices. Available at https://www.scribd.com/document/334046847/Conviction-Short-Report-onHK-0633-China-All-Access-by-Triam-Research#fullscreen&from_embed

2. 18 December 2016: Company Response titled Clarification Announcement and Resumption of

Trading. Available at
http://www.hkexnews.hk/listedco/listconews/SEHK/2016/1218/LTN20161218035.pdf

3. 20 December 2016: Triam Research Issues First of Several Rebuttals. Available at

https://www.scribd.com/document/334674394/Triam-Research-First-Rebuttal-to-HK-0633China-All-Access#from_embed

4. 20 December 2016: Company Response titled Clarification Announcement in Relation to

Second Allegation Report. Available at
http://www.hkexnews.hk/listedco/listconews/SEHK/2016/1220/LTN20161220748.pdf

5. 21 December 2016: Company Announcement titled Clarification Announcement in Relation to

2015 Annual Results Announcement and 2015 Annual Report. Available at
http://www.hkexnews.hk/listedco/listconews/SEHK/2016/1221/LTN20161221700.pdf

6. 28 December 2016: Triam Research Issues Second Rebuttal. Available at

https://www.scribd.com/document/335181726/Triam-Research-Second-Rebuttal-to-HK-0633China-All-Access