New Silkroutes buys The Dental Hub's three clinics; auditor flags prepayments to a supplier

Dr Goh Jin Hian,  group chief executive officer of investment holding company New Silkroutes Group.
Dr Goh Jin Hian, group chief executive officer of investment holding company New Silkroutes Group.PHOTO: SGX

SINGAPORE - Investment holding company New Silkroutes Group said its subsidiary, Healthsciences International Pte Ltd (HSI), will acquire a 70 per cent stake in three dental clinics in Singapore for about S$3.2 million in shares as part of efforts to accelerate its growth in the healthcare business.

The move comes just four months after HSI completed the acquisition of majority control of six dental clinics and two dental supplies companies in Singapore. New Silkroutes acquired HSI in December 2016 in a deal that valued the healthcare company at S$4.25 million.

The three clinics to be acquired currently operate under The Dental Hub brand and are located at Bedok North Street 4, PSA Building at Alexandra Road, and Yew Tee Point at Choa Chu Kang. Collectively, they generated about S$2.7 million in revenue and S$0.5 million in earnings in their last financial year.

Following this acquisition, which is expected to be completed by Oct 30, 2017, HSI will have nine dental clinics and two dental supplies companies, which New Silkroutes said makes it one of the fastest-growing dental chains in Singapore.

Besides the dental business, HSI also has two clinics in Singapore providing complementary integrative therapies based on Western standards of medical care. HSI, in which New Silkroutes has a 69.35 per cent stake, also operates clinic and pharmacy management systems in Singapore and China.

New Silkroutes will issue approximately 7.2 million new shares at 44 Singapore cents each as consideration for The Dental Hub clinics, which are currently equally owned by two dental practitioners, Dr Ainsley Toh and Dr Foong Siew Hong.

Said Dr Goh Jin Hian, its group chief executive officer, said: "We are beginning to establish our healthcare services platform, which will eventually include medical specialist services and hospital management. Although we are starting with small steps in Singapore, HSI aspires to be a regional healthcare player in time to come."

Separately, New Silkroutes said that its external auditor, Foo Kon Tan, had in its independent auditor's report dated Oct 10 included a qualified opinion on the group's financial statements for the year ended June 30.

The auditor said that it was "unable to obtain sufficient appropriate audit evidence" on the recoverability or utilisation of prepayments made by the group to a certain supplier.

These prepayments were for the purchase of iron ore fines. Specifically, prepayments of US$500,494 and US$4.4 million (S$5.9 million) made by two group subsidiaries were included in the prepayments stated on the face of the consolidated statement of financial position as at June 30.

"Consequently, we were unable to satisfy ourselves as to the appropriateness of the carrying amount of the prepayments to the supplier as at 30 June 2017," the auditor said.

Asked by The Straits Times to explain why the auditor was unable to obtain sufficient audit evidence, a New Silkroutes spokesman said by email: "The group will continue to take all necessary steps to rectify this issue of prepayments to the supplier. We will keep shareholders informed."