atans1

Hyflux: Sue those with money

In Accounting, Corporate governance on 16/04/2019 at 10:47 am

This means going after the directors and mgrs (Remember MD Oliver Lum has a Dalvey Rd house and her motorcycles), the auditors, and the valuers of Tuaspring.

I was inspired to suggest this after reading the very droll Mr Lombard

Get claws in to auditors

A probe into Grant Thornton’s audit of collapsed contractor Interserve suggests a scandalous anomaly, and a possible deterrent. Advisers to the company were paid more in fees than its market value before administration. It happened at Carillion and Patisserie Valerie, too. If fees could be clawed back in the event of shareholders being wiped out, it might improve the quality of both audits and advice.

Here’s why the directors, mgrs and auditors could be liable:

So in the light of the loss in 2017, it’s reasonable to ask why the book value of Tuaspring was not looked at again before the auditors blessed the 2017 accounts in March 2018,

Hyflux directors, mgt & auditors kooning from 2016 onwards?

Here’s why the valuers are worth shaking down.

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

Hyflux fiasco shows why “book value” is BS

But

“This valuation [Done in 2018 which showed that the book value was BS: my comment]  is based on the most recent market study conducted by K4K Training & Advisory SL, the same consultant who did a similar market study in 2016 (which supported the valuation then). The view taken in this most recent market study is significantly different from that in 2016 due to . . . the losses in the electricity market in the recent years and the projected lower spark spreads for the remaining concession period.”

Noting that the current valuation is “significantly lower” than that adopted in 2016, Hyflux said that it intends to commission a further valuation to be undertaken by a different valuer for the purposes of finalising the 2018 full-year financial results.

“As the carrying value is a reflection of the current depressed market, in the event that the Singapore power market recovers to provide generation companies with sufficient spark spread margins, the valuation might then be revised.”

Hyflux as reported by BT

Hopefully, ACRA do more than watching (but don’t hold yr breath): Hyflux: “going concern” BS/ KPMG again and again.

 

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