SINGAPORE (THE BUSINESS TIMES) - Tee International late on Monday night (Oct 12) said independent auditor Foo Kon Tan LLP issued a disclaimer of opinion on the group's financial statements for the financial year ended May 31, 2020.
Foo Kon Tan LLP said in its report that it was not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements.
Although the work of internal and external investigators appointed to investigate the facts and circumstances surrounding the group's unauthorised remittances made in the previous financial year concluded, there has been no further update on the probe started by the Commercial Affairs Department (CAD) of the Singapore Police Force as at the date of the auditor's report.
Tee International in March said its former CEO Phua Chian Kin had been interviewed by the CAD, which had requested certain documents and assistance in its investigations. The company's external investigator, PricewaterhouseCoopers Risk Services, had earlier released a report that said Mr Phua had admitted to taking company funds to repay his own debts as well as satisfy margin calls from stock brokers.
"The outcome of the CAD investigation could provide other information or findings that may have an impact on the financial statements," Foo Kon Tan LLP said on Monday. As such, it is not able to determine any adjustments that may be required and whether there will then be an impact on the accompanying financial statements.
Unauthorised remittances totalling about $6.6 million were made in fiscal 2019. Of this amount, about $3.6 million was repaid in the same year and the remaining $3 million was repaid in fiscal 2020.
Next, the auditor was not able to obtain sufficient appropriate audit evidence on Tee International's statements of financial position as at June 1, 2019, as well as components making up former subsidiary Tee Land's contribution of $30.8 million to losses for the fiscal year.
Tee International had disposed of Tee Land during the fiscal 2019 year to a unit of Malaysia's Amcorp Group for $50.6 million in cash.
Lastly, the outcome of various claims made against Tee International in the engineering segment, as well as counterclaims "cannot be determined with reasonable certainty".
Foo Kon Tan LLP said it was not able to obtain sufficient appropriate audit evidence on the amount of any liability arising, or to quantify if the provision for defects liability, contract assets and cost of sales was appropriately stated in the financial statements.
Consequently, it was not able to ascertain whether the going concern basis of preparation of the financial statements was appropriate.
Tee International on Monday separately gave notice that it recorded pre-tax losses for three consecutive years. Its six-month average daily market capitalisation is $19.4 million as at the same day.
According to bourse listing rules, mainboard-listed companies will be placed on the watch list under the financial entry criteria if they record pre-tax losses for the three most recently completed consecutive financial years, and fail to maintain an average daily market cap of at least $40 million over the last six months.
Shares of mainboard-listed Tee International closed flat at three cents on Monday, before these announcements.