China Sky Chemical Fibre to change auditors

Shareholders worry Baker Tilly's resignation could affect process of trading resumption

Nylon fibre maker China Sky Chemical Fibre is set to change its auditor after what it described as a difficult working relationship and a proposed increase in audit fees.

The China-based company told the Singapore Exchange (SGX) on Tuesday night that Baker Tilly TFW resigned as its auditor on July 8.

"The board, after rounds of discussion with the management and due consideration of all circumstances, requested and accepted the resignation of Baker Tilly," it said.

China Sky added it has approached another firm, RT, to replace Baker Tilly, which had been appointed in September 2013, after previous auditor Deloitte quit.

Baker Tilly's resignation follows the departure of China Sky's financial controller, Mr Lee Chong Ping, who left the firm in May to "pursue other career opportunities".

Shares of the troubled S-chip are still suspended from trading after the company was embroiled in a public spat with SGX in 2011.

CONCERN OVER CHANGE

The board is fully aware of the shareholders' concern, whether the change of auditors at this stage will affect the process of trading resumption.

CHINA SKY CHEMICAL FIBRE

China Sky had defied an SGX directive to appoint a special auditor to investigate its financial dealings before eventually complying.

SGX had raised the alarm over events surrounding a planned land acquisition in China's Fujian province that was later cancelled as well as deals the firm conducted with one of its independent directors.

In February, SGX said China Sky could resume trading once it fulfils certain conditions. This was after former chief executive Huang Zhong Xuan admitted to breaking capital markets laws under the Securities and Futures Act.

He agreed to pay a $2.5 million civil penalty and to surrender 10 per cent of his shareholding in the firm under a settlement agreement.

China Sky said in the statement on Tuesday: "The board is fully aware of the shareholders' concern, whether the change of auditors at this stage will affect the process of trading resumption."

It added it has started on the process of appointing new auditors and will hold an extraordinary general meeting to seek the approval of shareholders "in due course".

China Sky said it is able to complete the audit for financial statements for the period ended Dec 31 last year but added that it is committed to holding its annual general meeting by Aug 31, in line with an SGX deadline.

The firm said it has completed 90 per cent of work on outstanding accounting matters and is "working towards trading resumption".

It posted a net profit of 72.8 million yuan (S$16 million) last month for the 12 months to Dec 31, up from a net loss of 68.1 million yuan a year earlier. Revenue grew 4.78 per cent to $2.08 billion for the year.

A version of this article appeared in the print edition of The Straits Times on July 16, 2015, with the headline 'China Sky Chemical Fibre to change auditors'. Print Edition | Subscribe