Investment holding firm New Silkroutes Group is sinking its teeth even deeper into the local dental clinic market - even as it faces thorny questions from its own auditors over the very different business of transporting iron ore.
The firm said its unit Healthsciences International (HSI) will acquire a 70 per cent stake in three dental clinics in Singapore in a share deal worth about $3.2 million.
The move is part of efforts by New Silkroutes to accelerate its growth in the healthcare business, and comes just four months after HSI acquired majority control of six dental clinics and two dental supplies companies in Singapore. New Silkroutes acquired HSI in December last year in a deal that valued the healthcare firm at $4.25 million.
The three clinics to be acquired operate under The Dental Hub brand and are in Bedok North Street 4, PSA Building in Alexandra Road, and Yew Tee Point in Choa Chu Kang. In total, they generated about $2.7 million in revenue and $500,000 in earnings in their last financial year.
After this acquisition, which is expected to be completed by the end of this month, HSI would be one of the fastest-growing dental chains in Singapore, New Silkroutes said.
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 about 7.2 million new shares at 44 cents apiece for The Dental Hub clinics.
New Silkroutes chief executive Goh Jin Hian 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... HSI aspires to be a regional healthcare player in time to come."
Separately, New Silkroutes said in a statement late on Tuesday that its external auditing firm, Foo Kon Tan, had in an 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 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 to buy iron ore fines - that is, a finer granulated form of iron ore. 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 June 30," 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 e-mail: "The group will continue to take all necessary steps to rectify this issue of prepayments to the supplier. We will keep shareholders informed."
The spokesman declined to name the supplier.