Catalist-listed Allied Technologies, whose auditor had flagged concerns with its financials, has recommended that its trading halt be converted to a voluntary trading suspension with immediate effect.
The suspension should stay in place until the concerns raised by its auditor have been satisfactorily resolved, and a special audit completed, it said yesterday.
A trading halt was requested by the company last Friday. Its shares last traded at 1.1 cents last Thursday.
This comes after Allied Tech's chief financial officer Andrew Wong left the company in January this year - barely two months into his new job. He had raised concerns over expenses classification, documentation processes, and an audit of Asia Box Office (ABO) - an e-commerce ticketing platform that Allied Tech invested in last year.
Its auditor Ernst & Young (EY), which is in the midst of finishing the group's audit for FY2018, has now also raised key concerns and observations to the board.
One example involves transactions between ABO and an event financier for a concert last year that was later cancelled. According to the financing agreement, the deposit should have been returned to ABO within seven business days.
But a $1.7 million deposit had not been refunded by the event financier to ABO as of Dec 31 last year. Instead, the funds were transferred from ABO to another company, Platform Capital Asia (PCA) Singapore, which in turn transferred $1.68 million to the event organiser.
Among other things, the auditor questioned PCA's involvement, and the fact that ABO did not charge interest to the event financier.
EY added there has been a "high volume of transactions", including advances and repayments, between ABO and PCA, though it did not see sufficient supporting documents.
Allied Tech had acquired a 51 per cent stake in ABO for $30 million on April 4.
Among other issues, EY also noted that the valuation report of ABO referred to certain contracts as having been entered into, though they have yet to be signed.
In addition, the auditor pointed out that of the group's total cash and bank balances of $43.6 million as of Dec 31 last year, some $1.09 million from ABO and $33.4 million from Allied Tech were held in trust and/or in escrow by Singapore law firm JLC Advisors. Ms Pok Mee Yau, an independent director of Allied Tech, is a salaried partner of the law firm.
Although ABO's $1.09 million had been returned as of April 2 this year, EY raised concerns over the business rationale for maintaining the funds with the law firm, when there is no clear purpose for the move.
In a regulatory filing yesterday, Allied Tech said it is in the process of appointing a special auditor to undertake a "special review" and further analysis on concerns identified by its auditors. This appointment will be made in consultation with the Singapore Exchange Regulation, it said.
The company added that the Singapore Exchange has granted it a two-month extension to hold its FY2018 annual general meeting by July 1, and a 11/2-month extension to release its FY2019 first-quarter financial results by the same date.
