Pang Pok, acting chairman and CEO of GS Holdings 43A 0.00% is being probed by the authorities for an offence under the Securities and Futures Act.

 

Pang, according to GS Holdings, has on Oct 26 been asked by the Commercial Affairs Department and the Monetary Authority of Singapore to provide certain documents to assist with the investigation.

 

Besides attending an interview, Pang has surrendered his passport as well. He is out on bail and as of Oct 30, has not been charged.

 

According to the company, it is required to provide CAD access to emails and chat messages made using the company' s phone by Pang from Jan 1 2021 to Oct 26.

 

GS Holdings says it will be extending its full cooperation.

 

GS Holdings says that while Pang is deemed capable of continuing as the CEO, lead independent director Irwin Lim Kee Way will take over Pang as the acting chairman with immediate effect.

The company does not expect its material impact to its operations because of the investigation.

 

If Zhang Rongxuan or his company does not respond to the demand by Nov 7, or is not able to back up his proposals for settling the debt with evidence that he has the ability to do so, the board of directors at GS Holdings&rsquo may consider taking legal action against him and his company.

 

FOOD and beverage company GS Holdings : 43A +3.08% has issued a letter of demand to its non-independent and non-executive chairman Zhang Rongxuan and his company Kaifeng Jufeel Biotechnology to recover a S$18.5 million debt.

 

If Zhang or his company does not respond to the demand by Nov 7, or is not able to back up his proposals for settling the debt with evidence that he has the ability to do so, the board of directors at GS Holdings may consider taking legal action against him and his company.

 

GS Holdings also announced in a bourse filing on Tuesday (Oct 17) that the board has decided to suspend Zhang from his duties as the non-independent and non-executive chairman of the company with immediate effect.

 

The board had taken into account the nominating committee&rsquo s recommendation and views before concluding that suspending Zhang was necessary, stated the filing.

 

The decision to issue a letter of demand to Zhang and suspend him came about after talks to acquire the healthcare and wellness business of a Chinese company failed.

 

This potential acquisition was proposed by Zhang as a means to settle part of his debt to GS Holdings, according to the company&rsquo s interim financial statements for the quarter ended Jun 30, 2023.

 

The Chinese company, which is wholly owned by an individual shareholder, had plans to expand its elderly care business overseas, particularly in South-east Asia, indicated the financial statements released on Aug 14.

 

The owner had informed GS Holdings&rsquo management that she was willing to help Zhang settle a portion of the S$18.5 million debt as part of their private arrangement.

 

However, preliminary due diligence performed by GS Holdings found that the Chinese company had to implement several measures to improve its business processes and accounting records. Time and resources were needed to fulfil those requirements.

 

Hence, it decided not to proceed with the acquisition due to commercial reasons and the substantial time and resources required to complete the deal, said GS Holdings in a bourse filing on Oct 12.

 

With the deal off, the owner of the Chinese company is no longer willing to help Zhang settle part of his debt owed to GS Holdings.

 

In a separate filing on Tuesday, GS Holdings said it has found, through bank statements obtained, that the Chinese authorities have retained 22 million yuan (S$4.1 million) from a Bank of China account held by its subsidiary, Wish Health Management (Shanghai).

 

GS Holdings said it will be engaging lawyers in China to obtain further information on the circumstances leading to the retention of funds, liaise with the relevant authorities and the bank officers on the matter and advise them on the next steps they can take for the funds to be released.

 

 

 

 

 

 

According to a ResearchAndMarkets.com report, the nutritional supplement market in China is expected to reach US$40 billion by 2023, growing at a CAGR of 14%. Based on an article from TMO Group, the consumption rates of health supplement in China are still far behind developed Western markets and neighbouring markets, where per capita health product consumption in China was RMB 177 during 2018, as compared to RMB 767,   RMB 662, RMB 924 in Hong Kong, Japan, and the US respectively.

 

The Company will be convening an Extraordinary General Meeting to seek shareholders&rsquo approval for the interested person transactions between the Group and Kaifeng Jufeel and the proposed expansion and diversification of business under the Master Agreement.

 

Commenting on this latest business venture, Mr Pang Pok, Chief Executive Officer and Executive Director of GS Holdings, said, &ldquo Increasing health-conscious behaviour and rising incidence of lifestyle diseases have led to a growing awareness of the role of healthcare supplements in improving general health and wellbeing prior to the outbreak of COVID-19.

 

Consequently, we believe that the emergence of the COVID-19 pandemic will reinforce the trend towards a more proactive approach in self-care and wellness.

 

With Kaifeng Jufeel&rsquo s plant-based aloe vera health supplements, food & beverages and products, we look forward to harness the market opportunities in this high growth market and develop new recurring revenue channels for our Group to further strengthen our business model and enhance our financial performance.&rdquo

According to a  ResearchAndMarkets.com  report, the nutritional supplement market in China is expected to reach US$40 billion by 2023, growing at a CAGR of 14%.  Based on an article from TMO Group, the consumption rates of health supplement in China are still far behind developed Western markets and neighbouring markets, where per capita health product consumption in China was RMB 177 during 2018, as compared to RMB 767,    RMB 662, RMB 924 in Hong Kong, Japan, and the US respectively.

Under the Master Agreement, Raffles Brands can distribute the aloe vera-based products in key geographical markets such as the People&rsquo s Republic of China, ASEAN countries and countries in the African continent, among others, for a period of 3 years. In addition, Kaifeng Jufeel shall undertake the assignment and/or transfer of all existing customer contracts to Raffles Brands.

It is also agreed that Kaifeng Jufeel will guarantee Raffles Brands with a minimum gross profit margin of 40% from the distribution business for each financial year.

Based on the audited accounts provided by Kaifeng Jufeel, the total audited revenue of Kaifeng Jufeel for the financial years ended 31 December 2017, 31 December 2018 and 31 December 2019 are approximately RMB 125,277,000, RMB 104,801,000, and RMB 109,675,000 respectively. Based on Kaifeng Jufeel&rsquo s representations to the Company, the revenue which arose from the sales of the products which will be distributed by Raffles Brands comprised approximately 80% of the total audited revenue for the foregoing financial years.

In this regard, the Board believes that foregoing distribution business is expected to increase the revenue and profits of the Group.

The Company will be convening an Extraordinary General Meeting to seek shareholders&rsquo approval for the interested person transactions between the Group and Kaifeng Jufeel and the proposed expansion and diversification of business under the Master Agreement.

Commenting on this latest business venture, Mr Pang Pok, Chief Executive Officer and Executive Director of GS Holdings,  said, 

&ldquo Increasing health-conscious behaviour and rising incidence of lifestyle diseases  have led to a growing awareness of the role of healthcare supplements in improving general health and wellbeing prior to the outbreak of COVID-19.

Consequently, we believe that the emergence of the COVID-19 pandemic will reinforce the  trend towards a more proactive approach in self-care and wellness.

With Kaifeng Jufeel&rsquo s  plant-based aloe vera health supplements, food & beverages and products,  we look forward to harness the market opportunities in this high growth market and develop new recurring revenue channels for our Group to further strengthen our business model and enhance our financial performance.&rdquo