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New Silkroutes' auditor flags prepayments to supplier; group makes dental clinics purchase

NEW Silkroutes Group's (NSG) independent external auditor said that it was unable to obtain sufficient evidence about prepayments made by the group's subsidiaries to a supplier for the financial year ended June 30, 2017.

These had to do with prepayments of US$500,494 and US$4.4 million made by the subsidiaries, Top Post Enterprises Limited and Baling (China) Investment respectively, for the purchase of iron ore fines.

"We were unable to obtain sufficient appropriate evidence about the carrying amount of the prepayments to a supplier as at June 30, 2017," said auditor Foo Kon Tan in a report released on the Singapore Exchange on Tuesday night. "Accordingly, we are unable to conclude whether or not the other information is materially misstated with respect to this matter."

Another matter highlighted was an outstanding amount of US$3.48 million, due June 30, arising from the disposal of the company's wholly owned subsidiaries, Digiland (Thailand) Ltd and Infonet Systems and Services.

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"The company has made a legal claim against various defendants to seek payment of the outstanding amount, as well as additional damage, interest and legal costs. There is an inherent uncertainty relating to the probability of success of the claim and recoverability of the claimed sum from the defendants," noted the auditor, adding however that the external legal counsel appointed by the company has indicated that it is reasonably confident of success in the claim.

In a separate announcement on Wednesday morning, NSG's subsidiary Healthsciences International (HSI), is acquiring a 70 per cent stake in three dental clinics in Singapore for S$3.2 million to expand its healthcare business. NSG has a 69.35 per cent stake in HSI.

To pay for the acquisition, NSG will issue some 7.2 million new shares at 44 Singapore cents for the clinics, which are equally owned by two dental practitioners, Ainsley Toh and Foong Siew Hong.

This deal comes four months after HSI completed the acquisition of six dental clinics and two dental supplies companies in Singapore.

The three clinics under the latest deal operate under The Dental Hub brand and are located at Bedok North Street 4, PSA Building at Alexandra Road, and Yew Tee Point at Choa Chu Kang. Collectively, they generated about S$2.7 million in revenue and S$0.5 million in earnings for their previous financial year.

The acquisition is expected to be completed by Oct 30 , boosting HSI's network to nine dental clinics and two dental supplies companies.

In another announcement issued on Wednesday morning, NSG said that it has entered into a subscription agreement with an investor, Zhou Bin, under which Mr Zhou has agreed to subscribe for 3.068 million new shares in the company at a price of S$0.44. The issue price represents a premium of approximately 12.14 per cent to the volume weighted average price of S$0.392 for trades done for the full market day on Oct 10.

Upon completion of the placement, Mr Zhou will own shares worth 2.06 per cent of the company's enlarged capital. "The estimated net proceeds of about S$1.350 million will be utilised by the company and its subsidiaries for general working capital purposes," said NSG.

Mr Zhou was introduced to the company through mutual business associates and will take up the new shares for investment purposes, NSG added. He is the chairman of ShanDong WeiDe Real Estate Group, a company incorporated in China.