Best World 'on track' to complete independent review: audit committee

BEST World International's audit committee is "cautiously optimistic" that the independent review into the sales practices adopted by the premium skincare firm in China is on track to be completed as planned, it said on Thursday.

According to the indicative timeline laid out on Nov 1, fieldwork for the review is expected to be completed in mid-December, and a draft report is expected to reach the Singapore Exchange Regulation (SGX RegCo) in early-January 2020.

A summary of key findings is expected to be published in early-February, and Best World will hold its annual general meeting for the 2018 financial year in late-February 2020.

In a status update on Thursday, Best World's audit committee assured shareholders that "significant progress has been made in the review", even though it understands from PwC, the independent reviewer, that "certain information and document requests made based on reviews of the information previously provided are currently outstanding".

Nevertheless, Changsha Best, Best World's biggest customer and primary import agent in China until the middle of last year, has provided PwC with access to additional documents and information requested since the last update on Nov 1, and has cooperated with PwC to facilitate the review.

Trading in Best World shares was suspended in May, pending the results of the independent review.

The scope of the review was first determined in March and subsequently expanded in May after SGX issued Best World a notice of compliance upon learning that Changsha Best was owned by the brother-in-law of Best World's chief executive Dora Hoan. Prior to that, Best World had already come under scrutiny over its sales practices in China.

The independent review put PwC on a "wide-ranging fact-finding exercise to establish the circumstances around the relationship with Changsha Best, reviewing documents and data points on sales in China, and reviews of the group's internal control procedures and corporate governance practices", the audit committee said.

PwC has made multiple trips to China to visit and interview franchisees and business partners, and review records and documents of Best World and third parties.

While Best World offered its cooperation, a large number of the documents and records required for the review were owned by third parties, some of which have been reluctant to share their records due to confidentiality concerns, the audit committee noted.

"Negotiating confidentiality arrangements with these third parties has also added to the time taken to complete the review," it added.

During this time, the audit committee has held regular meetings with PwC, management and the auditors of Best World to discuss progress of the review. Together with PwC, they have also been in communication with SGX RegCo, the audit committee said.

They added: "The company will continue to devote the necessary resources to complete the review as soon as reasonably practicable."