ecoWise reports variances in H1 FY2021 results, to expand scope of internal audit

ENVIRONMENTAL solutions provider ecoWise Holdings : 5CT 0% has reported material variances between its audited and unaudited financial statements for the first half-year period ending Apr 30, 2021.

In a filing on Wednesday (May 11) evening, the strife-hit group reported S$160,000 in net profit for the period in its audited financial statements, as opposed to the S$1.7 million profit reported in the unaudited financial statements issued on Jun 14, 2021.

The audited financial statements have factored in potential legal claims, potential fines as well as taxes and impairments, which resulted in lower other gains as well as higher administrative expenses and other losses.

ecoWise’s completed audit of its H1 FY2021 financial statements comes after the Singapore Exchange Regulation (SGX RegCo) in June 2021 served the group a notice of compliance (NOC).

Shortly after the NOC was issued last year, executive chairman and chief executive Lee Thiam Seng flagged concerns that insufficient information was provided by the finance team then. He requested more information on certain transactions for the board to determine if the group’s H1 results provided an accurate and updated position of ecoWise’s financial and cash flow position.

In its latest May 11 filing, ecoWise said its independent auditor RSM Chio Lim has issued a disclaimer of opinion in their independent auditor’s report on the consolidated financial statements.

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The basis for the disclaimer of opinion relates to service agreements entered by Chongqing ecoWise Investment Management, an internal audit under the NOC and the company’s ability to continue as a going concern, among others.

The group said its plans for the immediate future include stabilising its operations in Singapore and Malaysia, some of which have been impacted significantly by the Covid-19 pandemic.

It is also exploring opportunities to generate additional funds for working capital purposes – either via loans from third parties or existing substantial shareholders, and further intends to monetise non-core assets in Singapore, Malaysia and China.

Separately, the group said SGX RegCo has directed its internal auditor EY to expand the scope of its internal audit.

The expanded scope will include service agreements entered by Chongqing ecoWise Investment Management; disclosures of related party relationships, transactions and balances; unconsolidated entities highlighted in RSM’s report; and recoverability of assets in a jointly controlled entity.

It will also include potential breaches of Catalist listing rules under Section B.

Work on the expanded scope is expected to be completed within the next 3 months.

Shares of ecoWise have been suspended from trading since Jun 18, 2021.