New Silkroutes appoints KMPG to carry out independent review

NEW Silkroutes Group has appointed KPMG Services to carry out an independent review regarding two agreements involving a China unit, and the valuation of its stake in a Thai firm.

KPMG will report directly to the Singapore Exchange's regulatory arm (SGX RegCo) and New Silkroutes' audit and risk committee.

This comes after independent external auditor Deloitte & Touche included a disclaimer of opinion on the group's financial statements for the fiscal year ended June 30.

Deloitte said in its Oct 14 report that it was unable to obtain sufficient audit evidence on matters including the business rationale, commercial substance and structuring of two agreements that New Silkroutes' wholly-owned subsidiary Shanghai Fengwei Garment Accessory (SFGA) signed with a Chinese entity in April.

New Silkroutes disclosed that the Chinese entity is Shanghai Minlin New Textile Materials Sales Centre. Its ultimate beneficial owner, Lin Jie, is an acquaintance of New Silkroutes' executive director and substantial shareholder, Shen Yuyun.

In addition, Deloitte had said it could not determine the appropriateness of the valuation methodology used for Thai General Nice Coal and Coke.

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New Silkroutes holds 4.5 per cent of the Thai entity and had classified this stake as a financial asset at fair value through other comprehensive income. It recorded a fair-value loss of US$2.5 million in FY20, bringing its value to US$17.2 million. But the Thai firm had not begun operating by end-June.

Shares in New Silkroutes closed up 9.59 per cent at S$0.08 on Friday.