NEW Silkroutes Group has appointed KPMG Services to carry out an independent review regarding two agreements involving a China unit, and the valuation of its stake in a Thai firm.

 

KPMG will report directly to the Singapore Exchange' s regulatory arm (SGX RegCo) and New Silkroutes' audit and risk committee.

 

This comes after independent external auditor Deloitte & Touche included a disclaimer of opinion on the group' s financial statements for the fiscal year ended June 30.

 

Deloitte said in its Oct 14 report that it was unable to obtain sufficient audit evidence on matters including the business rationale, commercial substance and structuring of two agreements that New Silkroutes' wholly-owned subsidiary Shanghai Fengwei Garment Accessory (SFGA) signed with a Chinese entity in April.

 

New Silkroutes disclosed that the Chinese entity is Shanghai Minlin New Textile Materials Sales Centre. Its ultimate beneficial owner, Lin Jie, is an acquaintance of New Silkroutes' executive director and substantial shareholder, Shen Yuyun.

 

In addition, Deloitte had said it could not determine the appropriateness of the valuation methodology used for Thai General Nice Coal and Coke.

 

New Silkroutes holds 4.5 per cent of the Thai entity and had classified this stake as a financial asset at fair value through other comprehensive income. It recorded a fair-value loss of US$2.5 million in FY20, bringing its value to US$17.2 million. But the Thai firm had not begun operating by end-June.

 

NEW Silkroutes Group has started a strategic review of its physical oil trading division, IEG, which has been hit by a " significant reduction" in trading volumes and lower oil prices.

 

The review will include exploring options to scale down, divest, enter into arrangements with creditors, or wind up the oil and trading business of IEG, the mainboard-listed group said on Tuesday.

 

This comes as New Silkroutes incurred a net loss after tax of approximately US$8.2 million for the financial year ended June 30, largely due to the oil and gas segment. The group added that it is expecting more provisions of expected credit loss while trying to recover the remaining trade and other receivables amid the pandemic.

 

In addition, IEG' s subsidiary, TXZ Tankers Pte Ltd, has been experiencing " challenging situations" in view of the decrease in shipping charters.

 

HEALTHCARE and energy firm New Silkroutes Group has appointed chief executive officer (CEO) VicPearly Wong as its executive director, and Lincoln Kwok as its finance director.

 

With the additional role, Dr Wong, 44, is responsible for the overall management and operations of the group, as well as facilitating and managing the company, New Silkroutes said in a bourse filing on Monday evening.

 

Meanwhile, Mr Kwok, 44, is responsible for the group' s treasury, finance, audit and strategic planning functions. These include fundraising, developing and maintaining banking relationships, and assisting the CEO in assessing and structuring corporate finance deals and investments, New Silkroutes said.

 

Prior to this, Mr Kwok was financial controller at Hong Kong-listed Pipeline Engineering Holdings, which offers infrastructure pipeline construction and related engineering services.

 

Dr Wong and Mr Kwok' s appointments come after the mainboard-listed firm in October announced that non-independent, non-executive chairman Goh Jin Hian and finance director William Teo Thiam Chuan have resigned.

 

New Silkroutes said then that Dr Goh stepped down as its chairman to " focus on personal matters and to pursue other interests" .

 

Mr Teo, meanwhile, stepped down " to devote more time to his personal affairs" , it added.

 

The resignations of the two New Silkroutes directors also came after the firm announced on Oct 15 that its auditor Deloitte & Touche has given a disclaimer of opinion on the financial statements of the group for the financial year ended June 30.

 

At the same time, Dr Goh also quit as independent director of cord-blood banking firm Cordlife Group.

 

Dr Goh, the medically-trained son of former Singapore prime minister Goh Chok Tong, was New Silkroutes' CEO till Oct 1, when he assumed the position of non-executive chairman.

 

He also quit as Cordlife' s chairman in early October, after Inter-Pacific Petroleum' s (IPP) judicial managers sued him in relation to an alleged breach of director' s duties.

 

New Silkroutes previously noted that Dr Goh and Mr Teo were assisting the Commercial Affairs Department with investigations. The company said it understands that the alleged offence is false trading and market rigging in view of past share buybacks and acquisitions of shares.

 

Also assisting with the investigation is Kelvyn Oo, who was the executive director and chief corporate officer of New Silkroutes until he left on Aug 1.

 

Separately, New Silkroutes had also said that Dr Goh was suitable to continue as a board member despite the IPP litigation, because that is a civil suit against him and the allegations are without merit, based on his lawyers' legal advice.

 

Most recently in late October, New Silkroutes said it will appoint an independent public accounting firm to review matters relating to two of its agreements involving a China unit, and the valuation of its stake in a Thai firm.

 

This comes after Deloitte said in its Oct 14 report that it was unable to obtain sufficient audit evidence on matters including the business rationale, commercial substance and structuring of two agreements that New Silkroutes' wholly-owned subsidiary Shanghai Fengwei Garment Accessory signed with a Chinese entity in April.

 

Deloitte had also said it could not determine the appropriateness of the valuation methodology used for Thai General Nice Coal and Coke.

HEALTHCARE and energy firm New Silkroutes Group will appoint an independent public accounting firm to review matters relating to two of its agreements involving a China unit, and the valuation of its stake in a Thai firm.

 

This comes after independent external auditor Deloitte & Touche included a disclaimer of opinion on the group' s financial statements for the fiscal year ended June 30.

 

Deloitte said in its Oct 14 report that it was unable to obtain sufficient audit evidence on matters including the business rationale, commercial substance and structuring of two agreements that New Silkroutes' wholly-owned subsidiary Shanghai Fengwei Garment Accessory (SFGA) signed with a Chinese entity in April.

 

New Silkroutes disclosed that the Chinese entity is Shanghai Minlin New Textile Materials Sales Centre. Its ultimate beneficial owner, Lin Jie, is an acquaintance of New Silkroutes' executive director and substantial shareholder, Shen Yuyun.

 

New Silkroutes and SFGA signed a management agreement (MA) with Shanghai Minlin, which gives New Silkroutes a guaranteed profit of US$2.8 million from SFGA' s operations for the year to Dec 31, 2021. Shanghai Minlin will take any excess profits or bear any excess losses.

 

SFGA and Shanghai Minlin also signed a management-service agreement (MSA), under which SFGA is to receive services such as human resource management, corporate image planning, production process management, marketing development and financial management from Shanghai Minlin.

 

In response to the Singapore Exchange' s (SGX) queries, New Silkroutes said on Wednesday night that the need to ease its cash flow was a key reason for inking the MA.

 

The independent review will cover the commercial substance of the MA and MSA. It will also look into potential tax exposures and the impact of any non-compliance with regulatory or legal requirements from the MSA.

 

New Silkroutes noted that SFGA' s revenue had increased by about 100 million yuan (S$20.6 million) after both the MA and MSA were inked, thanks to new orders introduced by Shanghai Minlin.

 

Deloitte also said it could not determine the appropriateness of the valuation methodology used for Thai General Nice Coal and Coke.

 

New Silkroutes holds 4.5 per cent of the Thai entity and had classified this stake as a financial asset at fair value through other comprehensive income. It recorded a fair-value loss of US$2.5 million in FY20, bringing its value to US$17.2 million.

 

But the Thai firm had not begun operating by end-June.

 

New Silkroutes said it believes the valuation is reasonable and appropriate, but that the board and the management would explore with the incoming auditors on other methods of valuation that are acceptable.

 

Deloitte' s disclaimer of opinion was published on the same day the company announced that chairman Goh Jin Hian and finance director William Teo had quit.

 

Separately, Dr Goh and Mr Teo have been assisting the Commercial Affairs Department with its investigation into alleged false trading and market rigging.

TROUBLED healthcare provider New Silkroutes Group announced the appointment of Darrell Lim Chee Lek as acting independent non-executive chairman of the board with effect from Oct 20.

 

He replaces former chairman Goh Jin Hian, the son of former Singapore prime minister Goh Chok Tong, who resigned amid investigations by the Commercial Affairs Department (CAD) earlier this month.

 

Mr Lim was appointed to the board of New Silkroutes on Aug 1, 2020 as an independent, non-executive director, and became lead independent director this month. As at late July he was listed as the executive board director of BRC Asia, co-founder of hedge fund Bright Point Capital and non-executive director of XM Studios. He was formerly the head of investor relations at the Singapore Exchange.

 

Other members of the board include Shen Yuyun, who is executive director, Vivien Chen Chou Mei Mei as independent non-executive director, Andrew Chua Soon Kian as non-independent non-executive director and Alex Chua Siong Kiat as independent non-executive director.

 

On Sept 30, the company disclosed that Dr Goh and then-finance director William Teo Thiam Chuan were being investigated by the CAD over a possible offence under the Securities and Futures Act.

 

New Silkroutes said then that it understood that the alleged offence was false trading and market rigging to do with past share buy-backs and share acquisitions.

 

Mr Teo has also since quit the company. Another director who has recently left New Silkroutes is Kelvyn Oo, where he had been executive director and chief corporate officer until he stepped down on Aug 1. He is also assisting with the CAD probe.