China Sports: Yet to begin annual audit; independent directors unable to ascertain state of affairs

China Sports International CEO Lin Shaoxiong (pictured, in 2007) was away on a business trip was away during the time of the cash audit, preventing auditors from making the observations required.
China Sports International CEO Lin Shaoxiong (pictured, in 2007) was away on a business trip was away during the time of the cash audit, preventing auditors from making the observations required.PHOTO: THE BUSINESS TIMES

SINGAPORE - China Sports International will suspend its shares after revealing that it has yet to begin its annual audit almost five months after its fiscal year-end and that its independent directors have not been able to ascertain the company's state of affairs.

Responding to queries by the Singapore Exchange on Monday (Nov 27), the sportwear maker, said that it has not begun its audit process for the year ended June 30. A cash audit has not begun either, because the company chief executive Lin Shaoxiong was away on a business trip to Suzhou, preventing auditors from making the observations required for the cash audit.

The company said that independent director Leow Yong Kin had visited the factory in June and July 2017, and saw that the factory was operating.

After the company failed to convene its annual general meeting for FY17 on time - it sought and failed in October to get an extension of time to hold the meeting - Mr Leow visited the factory again earlier this month to try to understand the company's operating financial position and to witness the cash audit process.

Since Mr Lin was away on a business trip during the November visit, Mr Leow was unable to form any conclusion on the company's state of affairs.

Mr Lin, however, stated that he will welcome the independent directors to visit again.

The company said that it has identified and expects to engage a financial controller and a non-executive director with a financial background by the end of the week ending Dec 10 to expedite the audit process and to convene the shareholders' meeting.

In the meantime, the board has declared its view that the company will be able to operate as a going concern, and that all material information has been disclosed to the market.

Neverthless, the board said that the company's shares should be suspended until the audit is complete and the board is clear about the company's state of affairs.