China Sky replaces auditor, cites difficult working relationship and fee hike

CITING a difficult working relationship and a proposed increase in audit fees, China Sky Chemical Fibre has changed its auditor from Baker Tilly TFW LLP to RT LLP.

"The board, after rounds of discussion with the management and due consideration of all circumstances, requested and accepted the resignation of Baker Tilly on July 8, 2015," said executive director Song Jiansheng in an announcement late Tuesday night.

The company, whose shares are still suspended, was involved in a spat with Singapore Exchange (SGX) at the end of 2011. Shares in the China-based textile manufacturer were suspended after the company got an SGX directive in November 2011 to appoint a special auditor to probe its financial dealings.

China Sky had refused to comply with the directive and SGX, in turn, refused to lift the company's share trading suspension. Baker Tilly was appointed in September 2013 after previous auditor Deloitte resigned.

Addressing worries of shareholders still stuck in the counter, China Sky said it has started on the process of appointing new auditors and will hold an extraordinary general meeting on the matter in due course.

The company added that it can complete the audit for financial statements for the period ended Dec 31, 2014. It is also committed to hold its annual general meeting to seek approval for 2014 accounts by Aug 31, 2015, the deadline granted by SGX to do so.

China Sky management has completed 90 per cent of work on outstanding accounting matters, Mr Song said.

The company posted a net profit of 72.8 million yuan (S$16 million) for 2014, compared with a loss of 68 million yuan a year ago. Revenue was up nearly 5 per cent to 2.08 billion yuan.

It said it will apply to resume trading after the various follow-up procedures on its accounts are completed.