Singapore-listed United Food Holdings has temporarily stopped producing soya-bean products.

It halted production on July 5 and has depleted its soya-bean inventory "pending a review of the business operating environment and its financial position", it said in a filing to the Singapore Exchange last Friday.

The Chinese firm told the exchange: "The management has decided against permanently laying off the affected employees as it may be difficult to re-hire those experienced workers when the group recommences its soya-bean products production business."

More than 90 per cent of the production workers, or 571 people, in the soya-bean product business have been asked to go on enforced leave.

The estimated monthly cost for the firm would be 571,000 yuan (S$124,000), noted the firm.

Each affected employee will be paid 1,000 yuan monthly, following "the local China government's recommendation".

The firm also said 35 full-time staff will be retained at an estimated monthly cost of 183,000 yuan.

The audit committee has appointed the firm's external auditor, EY, to conduct an independent review of the circumstances that led to the group's losses for its second quarter and six months ended June 30.

It raised a red flag on a "significant loss" likely for the second quarter two weeks ago, partly because of a pollution crackdown in China.

The local government in Linyi, Shandong province - where its operations are based - had ordered more than 50 companies in the region involved in heavy industries and power generation to stop production due to pollution.

The firm said more details will be given when the group releases its second-quarter and half-year results before Aug 14. It advised shareholders to trade with caution.

Rachael Boon