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08-03-2012, 06:06 PM
Business Times - 08 Mar 2012
Sino Techfibre lists steps taken to protect assets
Queried on audit disclaimer, it says it'll work to resume share trading
By LYNETTE KHOO
SINO Techfibre has taken several steps to safeguard its assets since discrepancies were uncovered by its auditors and is now working towards resuming trading of its shares.
'The company intends to prepare a detailed work plan on the processes for the resumption of trading of the company to be submitted together with the application,' it said yesterday in response to queries from the Singapore Exchange (SGX).
Queries from SGX were prompted by an audit disclaimer on Sino Techfibre's financial statements for the year ended Dec 31, 2010.
Citing a list of measures undertaken to strengthen controls on its cash, the troubled S-chip said an escrow account has been opened with Agricultural Bank of China to receive all incoming funds for the daily operations of its subsidiaries and to make outgoing payments.
Any payments exceeding 50,000 yuan (S$9,900) has to be authorised and approved by executive director Li Wenheng, while any payment exceeding 10 million yuan requires the approval of the board.
The company's seal, which is required to authorise any transfers from the escrow account, is in the control of the audit committee and in physical possession of the interim CEO.
Sino Techfibre has appointed its independent director (ID) Tay Wee Kwang as the interim CEO and Lee Wing Hang, another ID, as the interim chairman.
'The management has also lodged a police report in the PRC to seek the assistance of the police to locate one of the sales managers who had gone missing,' Sino Techfibre said. 'To-date this sales manager has not been located.'
Sino Techfibre's shares have been suspended since April last year after its auditor Ernst & Young (E&Y) found discrepancies in invoices issued by the group and its suppliers and could not verify whether the invoices were genuine.
About a week later, a fire broke out at the company's premises in Shandong province, allegedly destroying the company's books and financial records.
KPMG auditors were hindered from completing the special audit as they were denied access to information by the company on the premise of protecting 'state secrets'. The China-based maker of polyurethane and microfibre synthetic leather products supplies to the People's Liberation Army and the Chinese government sector, which both accounted for one-third of its total sales.
The impasse prompted the group's audit committee to appoint Stone Forest Corporate Advisory Pte Ltd to conduct a business valuation for the group.
According to minutes of the annual general meeting held last month, the group has cash-at-hand of about 100 million yuan while its short-term bank borrowing is about 140 million yuan.
Taking a question from a shareholder, a representative from E&Y explained that the discrepancies were found from sampling checks, so the extent of discrepancies was not known.
Sino Techfibre lists steps taken to protect assets
Queried on audit disclaimer, it says it'll work to resume share trading
By LYNETTE KHOO
SINO Techfibre has taken several steps to safeguard its assets since discrepancies were uncovered by its auditors and is now working towards resuming trading of its shares.
'The company intends to prepare a detailed work plan on the processes for the resumption of trading of the company to be submitted together with the application,' it said yesterday in response to queries from the Singapore Exchange (SGX).
Queries from SGX were prompted by an audit disclaimer on Sino Techfibre's financial statements for the year ended Dec 31, 2010.
Citing a list of measures undertaken to strengthen controls on its cash, the troubled S-chip said an escrow account has been opened with Agricultural Bank of China to receive all incoming funds for the daily operations of its subsidiaries and to make outgoing payments.
Any payments exceeding 50,000 yuan (S$9,900) has to be authorised and approved by executive director Li Wenheng, while any payment exceeding 10 million yuan requires the approval of the board.
The company's seal, which is required to authorise any transfers from the escrow account, is in the control of the audit committee and in physical possession of the interim CEO.
Sino Techfibre has appointed its independent director (ID) Tay Wee Kwang as the interim CEO and Lee Wing Hang, another ID, as the interim chairman.
'The management has also lodged a police report in the PRC to seek the assistance of the police to locate one of the sales managers who had gone missing,' Sino Techfibre said. 'To-date this sales manager has not been located.'
Sino Techfibre's shares have been suspended since April last year after its auditor Ernst & Young (E&Y) found discrepancies in invoices issued by the group and its suppliers and could not verify whether the invoices were genuine.
About a week later, a fire broke out at the company's premises in Shandong province, allegedly destroying the company's books and financial records.
KPMG auditors were hindered from completing the special audit as they were denied access to information by the company on the premise of protecting 'state secrets'. The China-based maker of polyurethane and microfibre synthetic leather products supplies to the People's Liberation Army and the Chinese government sector, which both accounted for one-third of its total sales.
The impasse prompted the group's audit committee to appoint Stone Forest Corporate Advisory Pte Ltd to conduct a business valuation for the group.
According to minutes of the annual general meeting held last month, the group has cash-at-hand of about 100 million yuan while its short-term bank borrowing is about 140 million yuan.
Taking a question from a shareholder, a representative from E&Y explained that the discrepancies were found from sampling checks, so the extent of discrepancies was not known.
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