Subsidiaries refuse to cooperate with the continuous fermentation of audit events!
On the evening of December 28, Shanghai Kehua Bio-Engineering Co.Ltd(002022) received a letter of concern from Shenzhen Stock Exchange, asking to explain whether Tianlong lost control of the company and whether it was necessary to retroactively adjust the previous financial report.
On the evening of December 27, Shanghai Kehua Bio-Engineering Co.Ltd(002022) announced that Tianlong company refused to cooperate with the financial report audit. On the 28th, Shanghai Kehua Bio-Engineering Co.Ltd(002022) shares fell sharply, closing down 6.46% on the same day. According to the announcement, Tianlong’s contribution to the performance of Shanghai Kehua Bio-Engineering Co.Ltd(002022) can be described as “pivotal”.
Is out of control attracting attention
According to the concern letter, Shenzhen stock exchange requires Shanghai Kehua Bio-Engineering Co.Ltd(002022) to explain four aspects.
Specifically include: whether it has lost control of Tianlong company (Suzhou Tianlong and Xi’an Tianlong are collectively referred to as Tianlong company); Impact on the preparation scope of the company’s consolidated statements; Whether retroactive adjustment is required for previous reports; If the control over Tianlong company is lost, combined with the existing main financial data of Tianlong company and its proportion in the corresponding subjects of the company, explain the impact on the production, operation and finance of the company, and fully prompt relevant risks.
According to the Shanghai Kehua Bio-Engineering Co.Ltd(002022) announcement, Xi’an Tianlong realized an operating revenue of 1.214 billion yuan and a net profit of 596 million yuan in the first half of the year; Shanghai Kehua Bio-Engineering Co.Ltd(002022) the operating revenue was 2.4 billion yuan and the net profit attributable to the parent company was 479 million yuan.
Source: Announcement
In addition, the Shenzhen Stock Exchange also requires Shanghai Kehua Bio-Engineering Co.Ltd(002022) to explain whether Tianlong will use the funds raised by the issuance of 738 million yuan of convertible corporate bonds in July 2020; It is required to disclose the latest progress of the dispute arbitration case between Shanghai Kehua Bio-Engineering Co.Ltd(002022) and Peng niancai, Li Ming, Miao Baogang and others as of the reply date of the concern letter.
the fault of too good performance?
On the evening of December 27, Tianlong announced that it was unable to cooperate with Shanghai Kehua Bio-Engineering Co.Ltd(002022) pre-trial accounting statements and follow-up audit for three reasons: Shanghai Kehua Bio-Engineering Co.Ltd(002022) the dispute arbitration case with Peng niancai, Li Ming, Miao Baogang and Xi’an Yujing Tongyi enterprise management partnership (hereinafter collectively referred to as the applicant) resulted in the freezing of 62% of the equity of Tianlong company held by Shanghai Kehua Bio-Engineering Co.Ltd(002022) ; Xi’an Weiyang District People’s court has ruled to prohibit Shanghai Kehua Bio-Engineering Co.Ltd(002022) from exercising all shareholders’ rights of 62% equity of Xi’an Tianlong; There is a risk of disclosure of trade secrets when opening financial data to Shanghai Kehua Bio-Engineering Co.Ltd(002022) .
Shanghai Kehua Bio-Engineering Co.Ltd(002022) believes that the so-called “reasons” of Tianlong company are completely lack of factual and legal basis, and the company expresses its strongest indignation and condemnation. There are two reasons: the company holds 62% equity of Tianlong company according to law, and the latter is included in the scope of consolidated statements; According to the investment agreement signed, Tianlong company and its directors and senior managers shall comply with relevant regulations and management requirements of the company.
In fact, the arbitration case has a long history. The announcement on July 14 mentioned that according to the arbitration application changed on July 9, 2021, the applicant proposed that on June 8, 2018, the company and the company agreed that the company would acquire the equity of Tianlong company in cash.
The acquisition was completed in two stages. In the first stage, Shanghai Kehua Bio-Engineering Co.Ltd(002022) acquired 62% equity with RMB 554 million; In the second stage, Shanghai Kehua Bio-Engineering Co.Ltd(002022) pay the remaining 38% of the equity consideration according to the relevant calculation methods of the net profit of Tianlong company in 2020.
38% equity price, whichever is higher: scheme 1 is RMB 900 million; Scheme 2 is to deduct 25 times of the audited non net profit of Tianlong company in 2020. In 2020, affected by epidemic factors, Tianlong’s revenue and profit increased explosively.
In May 2021, the applicant proposed that the non net profit deducted from the audit of Tianlong company in 2020 was RMB 1.106 billion, requiring Shanghai Kehua Bio-Engineering Co.Ltd(002022) to pay the equity consideration price of RMB 10.504 billion. Since then, the applicant considered that Shanghai Kehua Bio-Engineering Co.Ltd(002022) refusal to pay constituted a breach of contract, so it filed an arbitration.
Shanghai Kehua Bio-Engineering Co.Ltd(002022) believes that the explosive growth of Tianlong’s revenue and profit in 2020 due to the impact of objective factors such as covid-19 pneumonia has obviously constituted the “change of circumstances” stipulated by law. Under the above circumstances, the company, as the adversely affected party, has the right to require re negotiation according to law to change or terminate the terms of further investment transactions, and the company has also put forward the request for re negotiation to the applicant according to law.
The announcement on July 14 disclosed that 38.4524 million yuan of Xi’an Tianlong and 1.609 million yuan of the company’s bank account were frozen due to the above arbitration. Xi’an Tianlong’s equity was frozen only to restrict the right of equity transfer.
Source: Announcement
Since then, the arbitration has become a “series” for various reasons.
apply for court proceedings as soon as possible
Shanghai Kehua Bio-Engineering Co.Ltd(002022) the announcement on the evening of December 27 said that as of the disclosure date of the announcement, Shanghai International Economic and Trade Arbitration Commission had twice arranged a hearing of the case, which had to be cancelled due to the applicant’s reasons, resulting in the failure of the hearing of the arbitration case so far.
On December 27, the board of directors of Tianlong company held a meeting. There were 7 directors who should attend the meeting, and 4 directors actually attended the meeting. Peng niancai, Li Ming and Miao Baogang, the applicant for arbitration and directors of Tianlong company, were absent from the meeting. The board of directors of Tianlong company deliberated and adopted the proposal on requiring cooperation in the annual audit of listed companies by more than half of all directors, and decided to instruct the financial department and relevant personnel of Tianlong company to fully cooperate with and support Lixin accountant in the audit of the financial report of Tianlong company in 2021.
Shanghai Kehua Bio-Engineering Co.Ltd(002022) said that the applicant put pressure on the company in a disguised form. The company requested the arbitration tribunal to identify the “delay strategy” adopted by the applicant and arrange formal court proceedings as soon as possible.
(China Securities Journal)
