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Camsing Healthcare names special auditor to look into unresolved audit matters

CAMSING Healthcare said on Wednesday that it has appointed RSM Corporate Advisory as its special auditor, as required by the Singapore Exchange Regulation (SGX RegCo) to investigate audit matters raised previously by the company's auditors.

RSM Corporate Advisory will report its findings on the “audit matters and further issues” directly to SGX RegCo, said the mainboard-listed company in an exchange filing. It will also give regular updates on the status of its review.

The audit matters relate to whether parties in certain distribution agreements and consignment agreements are related parties, said Camsing Healthcare.

The special auditor will also look into whether the group had retained the risks and rewards embodied in the products sold under the distribution agreements. Total sales under these distribution agreements amounted to around S$9.8 million in fiscal 2017 and 2018, representing 32.8 per cent and 25.7 per cent of sales in each respective fiscal year.

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Another audit matter is whether or not parties involved in a certain HK$15.6 million purchase agreement were related, along with related payments made and refunds to be received.

The special auditor will also need to investigate the recoverability of a licence fee income amounting to S$299,000 in fiscal 2018, and the reversal of the licence fee amounting to S$294,750 in fiscal 2019.

It will also have to help address uncertainty over the group’s cashflow and whether or not it can meet operating and financing needs over the next 12 months after the end of the reporting period. This is in view of the breach of certain bank covenants for credit facilities from two loans with total outstanding amounts of around S$3.4 million.

Lastly, the special auditor needs to look into the company’s auditors flagging of further issues relating to its China subsidiary, Camsing Healthcare (Fuzhou) Medical Instrument Co, where it holds a 51 per cent interest via Nature’s Farm. These issues regard purchases of medical supplies valued at four million yuan from Camsing Fuzhou sold to a related party during fiscal 2019.

SGX RegCo last month queried three former independent directors of Camsing Healthcare on why they resigned before the company's audit matters were resolved. They responded, stating they did so "to force management to deal with the issues that they had been avoiding for months".

The company's shares have been suspended since April 1 following a trading halt called on March 22.