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Sakae mulls independent review of auditors’ disclaimer, adds new ID

SAKAE Holdings is considering an independent review of the auditors' disclaimer on its FY2019 financial statements, but it was a disagreement over what to do about the disclaimer that led to the resignation of independent director (ID) Foo Maw Shen, the company told the bourse on Friday.

The Singapore Exchange had asked Sakae to elaborate on the reasons for Mr Foo's resignation on Wednesday. In an earlier filing, Sakae had cited "differing views on the follow-up action" to the disclaimer its auditors issued. 

Sakae responded that the disclaimer opinion involved monies due from a company owned by the non-controlling shareholder of Cocosa Export, a Chilean firm Sakae had invested in. 

Sakae's board had believed that its investment would be unrecoverable and decided to fully impair goodwill and other receivables associated with Cocosa. But Sakae's independent auditors flagged a lack of audit evidence, and deemed that a full loss allowance on the receivables had not been made. 

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Sakae is now exploring follow-up options available, including independent review of the auditors' disclaimer opinion. The company did not elaborate on what the exact disagreement was with Mr Foo over the follow-up options.

The bourse also queried Sakae on why the auditors had initially issued their report on Oct 11, but subsequently, they issued a "revised Auditors comments" dated Oct 14.   

Sakae responded that the date was changed due to an amendment made to a note in its FY2019 financial statements relating to the receivable due from Cocosa. The change was made "to be consistent with management's understanding", Sakae said.

Separately, Sakae on Friday appointed a new ID, Nicholas Ngoh. Mr Ngoh works as the principal legal counsel at the Singapore Manufacturing Federation (SMF), where he is also the director for corporate and council affairs, and membership and industry groups. 

Sakae chairman Douglas Foo is the president of the SMF. But Mr Ngoh does not report to Mr Foo for his job, Sakae said in its filing. 

Shares of watchlisted Sakae last closed at S$0.09 before a trading halt was called on Thursday.