Best World International has released a detailed 37-page rebuttal to Bonitas Research. The Best World rebuttal also states the actions Best World will be taking, including pursuing court action in the Singapore High Court against Bonitas and its founder, Matthew Wiechert, for defamation.
|Bonitas is a professional short seller and has openly stated in the Report that it would profit from the decline in the Company’s share price. The Company strongly urges its shareholders and potential investors not to be deceived by the Report, which has undermined confidence in the Group and destroyed the value that the Company has created for its shareholders over the years.
The Company would also like to announce that the Company and its co-founders, Mdm. Dora Hoan Beng Mui (“Mdm. Hoan”) and Mdm. Doreen Tan Nee Moi (collectively, the “Founders”), have on 3 May 2019 commenced defamation proceedings against Bonitas and its founder in the High Court of Singapore.
(C) Independent Review
The Company has taken note of the position of SGX RegCo that an independent review on the allegations made in the Report should be undertaken. Certain allegations raised in the Report concern the Group’s previous financial statements which have been independently audited by two (2) reputable audit firms, RSM Chio Lim LLP (“RSM”) and EY.
Both RSM and EY have not withdrawn their unqualified audit opinions with regard to the Company’s financial statements for the periods they have each reviewed, RSM in respect of FY2014 to FY2016 and EY in respect of FY2017, after reviewing the Report and this announcement.
Notwithstanding that the Company has received unqualified audit opinions in respect of the Group’s audited financial statements for FY2014 to FY2017, the Company has voluntarily and in consultation with SGX RegCo decided to expand the scope of the Review by PwC11 to include reviews of:
|(a) the Group’s sales and inventory flow of the Export Model in China for the period from 1 January 2017 to 31 May 201812; and
(b) the Group’s historical cashflow of the Singapore entities of the Group from 1 January 2017 to 31 December 2018.
In connection with the expanded scope of the Review, the Company will request the Primary Import Agent to provide its audited financial statements for FY2017 to PwC for review.
Based on PwC’s interim update as of 12 April 2019, the Board and the Audit Committee understand that PwC has not identified any matters that may have a material impact on the Group’s unaudited financial statements for FY2018 13 . Work on the Review is progressing as at the date of this announcement.
(D) Share Buybacks
The Board has earmarked and approved the utilisation of part of the Company’s cash holdings to repurchase Shares traded on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) in accordance with the share buyback mandate approved on 30 April 2018 (the “Share Buybacks”). The Company will commence the Share Buybacks following the announcement of the Company’s unaudited financial results for the financial quarter ended 31 March 2019 (the “1Q2019 Results”) 14 and the expiration of the blackout period in relation to the 1Q2019 Results.
The Board believes that the Shares are currently undervalued following the decline in the prices of the Shares since February 2019, and that the recent prices of the Shares are no longer a fair reflection of the underlying value of the Company.
Accordingly, the Board believes that undertaking Share Buybacks at current Share prices will be an effective use of the Group’s cash and will enhance shareholder value by reducing the total number of Shares in circulation and increase the earnings per Share of the Company.
The Company intends to fund the Share Buybacks with the Group’s cash in excess of the Group’s short and medium term requirements.
|E) Statement to Shareholders
The Company would like to assure its shareholders that it has conducted all areas of its business ethically and in compliance with applicable laws and accounting standards.
The Board is of the view that (a) the explanations contained in this announcement; (b) the Group’s audited financial statements for FY2014 to FY2017 (and FY2018, once despatched to shareholders); and (c) the results of the Review, will provide comfort and assurance to the Company’s shareholders that the Report is without merit and intended to mislead shareholders and destroy the value of the Shares.
Click on SGX website link for the full Best World rebuttal.