Furen Group Pharmaceutical Co.Ltd(600781) ( Furen Group Pharmaceutical Co.Ltd(600781) ), who was judged to be financial fraud and the actual controller was banned from the securities market for ten years, once again stood on the edge of “delisting risk”. The former auditor resigned and the progress of the new auditor did not meet expectations, so that the listed company had to disclose the risk prompt announcement that it was expected to be unable to disclose the periodic report on schedule.
periodic reports that cannot be disclosed on schedule
Furen Group Pharmaceutical Co.Ltd(600781) originally scheduled to disclose the company’s annual report of 2021 and the report of the first quarter of 2022 on April 30, 2022, it may not come out.
On April 24, the company disclosed that Beijing Xinghua certified public accountants resigned on December 18, 2021 (did not carry out the company’s 2021 audit work) due to the work arrangement of the former audit institution, and the company hired Shenzhen xutai Certified Public Accountants (general partnership) as the audit institution of the company’s 2021 annual financial report, internal control and capital transactions of related parties on March 21, 2022.
However, due to the travel restrictions of covid-19 epidemic prevention and control in China and the arrangement of audit work, the new audit institution Shenzhen xutai certified public accountants Co., Ltd. has failed to meet the expected audit progress of the annual report so far, and the company may not be able to disclose the annual report of 2021 and the report of the first quarter of 2022 before April 30, 2022.
According to the relevant provisions of the Listing Rules of Shanghai Stock Exchange, Furen Group Pharmaceutical Co.Ltd(600781) if the audited annual report cannot be disclosed within the statutory time limit, the trading of the company’s shares will be suspended from the next trading day (May 5, 2022) after the expiration of the above-mentioned time limit.
If Furen Group Pharmaceutical Co.Ltd(600781) shares are still unable to disclose the 2021 annual report within 2 months of suspension, the company’s shares will disclose the announcement of delisting risk warning on the next trading day after the expiration of 2 months of suspension, resume trading on the next trading day and be subject to delisting risk warning.
If Furen Group Pharmaceutical Co.Ltd(600781) fails to disclose the 2021 annual report within 2 months after the delisting risk warning is implemented, the listing of the company’s shares may be terminated.
On March 22, 2022, one month ago, Furen Group Pharmaceutical Co.Ltd(600781) just released the announcement of changing the company’s accounting firm.
The announcement said that because the project schedule of Beijing Xinghua Certified Public Accountants (special general partnership) (hereinafter referred to as “Xinghua Institute”) could not meet the disclosure time requirements of the company’s 2021 annual report, it was unable to undertake the audit of the company’s 2021 annual financial report, internal control and related party funds. In view of this, the company plans to appoint Shenzhen xutai Certified Public Accountants (general partnership) (hereinafter referred to as “xutai Institute”) as the audit institution of the company in 2021.
Approaching the disclosure of the annual report, the new audit institution has just taken office. Once announced, it was immediately concerned by the exchange.
According to the relevant inquiry letter, Xinghua office has issued a qualified audit report on the annual financial report of Furen Group Pharmaceutical Co.Ltd(600781) 2020, which involves a number of matters, such as capital occupation, illegal guarantee, litigation cases, accounts receivable, sustainable operation ability and so on. It is required to explain whether the company has communicated with Xinghua on the audit matters in 2021 in combination with the specific matters involved in the above qualified opinion audit report and the progress of the company in eliminating the matters involved; Whether there are major differences between the company and Xinghua office on audit fees, audit opinions and audit work arrangements, and the specific reasons why Xinghua office will no longer serve as the company’s annual audit institution in 2021.
The company replied later that Xinghua office submitted the letter on canceling the audit business of 2021 annual report to Furen Group Pharmaceutical Co.Ltd(600781) on November 30, 2021. As of the date of cancellation, the audit matters in 2021 have not been carried out, and Furen Group Pharmaceutical Co.Ltd(600781) has not communicated with Xinghua office on the audit matters in 2021.
At that time, the inquiry letter put forward that Furen Group Pharmaceutical Co.Ltd(600781) plans to hold a general meeting of shareholders on April 6 to consider the appointment of xutai as the annual review organization. The holding date of the general meeting of shareholders is less than one month from the scheduled disclosure date of the annual report (April 30). Xutai office is required to explain whether there is sufficient time to ensure the smooth development of audit projects and the full implementation of key audit procedures, whether the relevant audit and review plans comply with relevant regulations, and whether there is a risk that the audit report cannot be issued on time, in combination with the specific time and personnel arrangement of the audit work, the audit plan, the understanding of key audit risk areas and the audit procedures to be implemented.
In response to this, xutai also admitted that due to the uncertainty of the recent covid-19 epidemic prevention and control policy, the time cannot be made specific arrangements, so there is a risk that the audit report cannot be issued on time on the scheduled disclosure date (April 30).
sustainability risk still exists
In July 2019, Furen Group Pharmaceutical Co.Ltd(600781) was pushed to the cusp of public opinion due to failing to pay about 60 million yuan of dividends. At that time, the reporter of securities times · e company learned from a multi-party practical interview that under the background of disclosing the existence of 1.8 billion yuan of cash in the book, the pharmaceutical group, an important subsidiary of the company, had stopped production, and its subsidiaries in Beijing and other places had already stopped work and owed wages. Subsequently, Furen Group Pharmaceutical Co.Ltd(600781) was also investigated by the CSRC.
On October 27, 2020, the CSRC issued the decision on administrative punishment to the company, its controlling shareholder Furen group and the actual controller. In 2015 and 2016 Furen Group Pharmaceutical Co.Ltd(600781) provided monetary funds to the controlling shareholder Furen group and the parent company of Furen group Furen Group Pharmaceutical Co.Ltd(600781) did not record the funds provided to Furen group and Furen holding in the financial account book, nor did it disclose the non operating occupation of the funds of the listed company by Furen group and Furen holding, resulting in false records and major omissions in the disclosed annual reports of 2015 and 2016. In 2017, Furen Group Pharmaceutical Co.Ltd(600781) incorporated the Pharmaceutical Group acquired through reorganization into the consolidated statements. However, in 2017 and 2018, most of the funds provided by the prescribing group to Furen group and Furen holding in previous years had not been returned, and new occupation occurred, Furen Group Pharmaceutical Co.Ltd(600781) did not record the occupation of relevant funds, and did not disclose the non operating occupation of funds of listed companies by Furen group and Furen holding.
In addition, during the Furen Group Pharmaceutical Co.Ltd(600781) reorganization and acquisition of the Pharmaceutical Group in 2016, the balance of funds provided by the pharmaceutical group and its subsidiaries to Furen group and Furen holding was 349.5 million yuan and 503.7 million yuan respectively. The pharmaceutical group did not record the above transactions in the financial account book, resulting in the false monetary fund balance in the financial statements of the Pharmaceutical Group disclosed in the restructuring report.
With the fact that financial fraud has surfaced, the production and operation of Furen Group Pharmaceutical Co.Ltd(600781) is also deteriorating.
In the first half of 2021, Furen Group Pharmaceutical Co.Ltd(600781) achieved an operating revenue of 902 million yuan, a decrease of 32.65% over the previous year; The net profit was -294 million yuan, a decrease of 531.97% over the previous year. Among them, the income of pharmaceutical industry was 735 million yuan, a decrease of 36.07% over the same period of last year; Pharmaceutical business income was 167 million yuan, a decrease of 11.87% over the same period last year. The main reason is that the company’s capital turnover is tight due to the occupation of funds by major shareholders, and the production and sales of some products are affected. The operating income decreased significantly, the overall gross profit of the product decreased by 284 million yuan compared with the previous year, and the net profit also decreased significantly. In the third quarter of 2021, the company achieved an operating revenue of 378 million yuan, a year-on-year decrease of 45.45%; The net profit is – 238 million yuan, deducting non net profit of – 209 million yuan, with a large loss.
According to the relevant contents of the semi annual report of 2021 and the report of the third quarter of 2021, by the end of the third quarter of 2021, Furen Group Pharmaceutical Co.Ltd(600781) overdue debt was RMB 3.068 billion. In addition, the company’s capital liquidity is difficult, facing the financial pressure of overdue debts and joint and several compensation for external guarantees. At the same time, it involves many lawsuits and the freezing of some bank accounts and assets.
At the same time, Furen Group Pharmaceutical Co.Ltd(600781) deposit fund occupation and illegal guarantee risk.
As of April 1, Furen Group Pharmaceutical Co.Ltd(600781) provided the controlling shareholder Furen Pharmaceutical Group Co., Ltd. and related parties with a loan balance of 1.688 billion yuan. The company provided joint and several liability guarantee of 2.48 billion yuan to the controlling shareholder and related parties, with a guarantee balance of 1.747 billion yuan. The above matters without the approval of the company’s authorized decision-making body constitute the occupation of funds and illegal guarantee of related parties, which is expected to be unresolved within one month.
In addition, the equity of Furen Group Pharmaceutical Co.Ltd(600781) controlling shareholder is subject to freezing risk. Furen group holds 61358900 shares of listed companies, accounting for 9.78% of the total share capital of the company. All these shares have been sealed up and frozen by the judiciary, and there are many waiting for freezing.
