Tue, Oct 08, 2019 – 11:42 PM
THE Singapore Exchange (SGX) on Tuesday queried watch-listed USP Group on why it did not disclose that independent director Wong Peng Wai, who was appointed in January, had a prior commercial relationship with the company.
In a previous filing on Sept 23, USP had disclosed that back in 2014, it bought three eco-fuel machines from Giantway Management, a company solely owned by Mr Wong.
He was subsequently appointed an independent director of USP in January 2019. The Jan 3 filing on his appointment said that he did not have any prior relationship with the company or its management.
In response to SGX’s query, USP said after purchasing the machines in 2014 and making the last payment in June 2016, it only had one dealing with Mr Wong. In November 2018, Giantway agreed to waive the remaining S$1.36 million due for the purchase of the third machine.
As at his appointment on Jan 2, Mr Wong was deemed independent because he and Giantway did not have any dealings with USP for the prior 30 months, USP said in its response. It repeated this statement in response to SGX’s query about how USP’s board assessed that Mr Wong met the requirement of being “independent”.
Separately, SGX also noted that USP wrote off S$14.1 million for FY2019 ended March, in relation to the eco-fuel business. The sum represented the full carrying value of the machines and a S$4.5 million deposit for the third machine which had yet to be delivered.
Despite purchasing the machines in 2014, USP never commenced any eco-fuel production, SGX highlighted. It queried why USP had then purchased a third machine from Giantway.
USP responded that the third machine was contracted together with the second machine in December 2014. The company said that it deferred the receipt of the third machine due to the fluctuating oil prices.
On a related note, SGX further queried USP on why it had made what efforts it made to recover the S$4.5 million deposit, which represented 77 per cent of the machine’s purchase cost.
USP said that it had decided to abort the eco-fuel business in October or November 2018 due to falling oil prices and that Mr Wong had no part in this decision.
The new board, which was recently reconstituted to just two members, is currently looking into this matter, USP added. It appointed a new chief executive in September, days after auditors flagged material uncertainties in its FY2019 results.
Shares of USP closed flat at S$0.04 on Tuesday.