Kangmei: 30 Billion in Missing Cash is Tip of Iceberg

iFeng: 深夜连发九则公告!康美药业300亿谜案展现冰山一角
Sogou: Nine announcements in the middle of the night! Kangmei Pharmaceutical's 30 Billion Mystery Shows the Tip of the Iceberg
The "disturbing" fraud by Kangmei Pharmaceutical seems to be far from over!

On the night of May 28, Kangmei Pharmaceutical (now ST) made nine announcements in succession in response to inquiries from the Shanghai Stock Exchange, media concerns and stock price fluctuations. Conmee replied to the regulatory letter of Shanghai Stock Exchange, saying that after verification, due to major defects in corporate governance and internal control, the company did not accurately reflect the receipt and payment of money due to the use of false documents and business vouchers, resulting in the failure to truly reflect the company's monetary funds. This is almost tantamount to admitting that the company has financial misconduct in performance.

However, this is only the tip of the iceberg and the whole picture of the problem has not been fully revealed. Kangmei Pharmaceutical has only partially responded to the previous inquiries of the exchange. The company said that there are still some issues that need further comprehensive verification and will make a supplementary announcement after verification. In the early days, Shanghai Stock Exchange issued supervision letters and inquiry letters in response to the correction of accounting errors of Kangmei Pharmaceutical, and conducted a comprehensive and detailed inquiry on the corrected accounting errors. The company is still under investigation.

The company admitted to overstating bank deposits and income

At the end of April and the beginning of May, Kangmei Pharmaceutical became the absolute leading role in the market. However, the taste of the protagonist is not good. How to face the 30 billion fraud cases, how to face the regulatory pressure, how to deal with the company's plight, etc., are estimated to make major shareholders and management uncomfortable. Subsequently, the Shanghai Stock Exchange issued a regulatory letter demanding that Comac Pharmaceutical elaborate on the matter. On May 28, Kangmei Pharmaceutical finally answered some questions.

The Shanghai Stock Exchange has asked the company to carefully check the specific matters involved in the correction of the previous accounting errors, including but not limited to the transaction background involved in the error adjustment, the object and its associated relationship, the time point when the accounting errors occurred, the specific reasons for the errors and the persons responsible, etc. Kangmei Pharmaceutical said in its reply that due to major defects in corporate governance and internal control, the company used false documents and business vouchers, resulting in over-counting of bank deposits and income and failure to accurately reflect payment. The company adopted retrospective restatement method to correct early errors in financial reports and made retrospective adjustments to the 2017 consolidated financial statements accordingly.

In addition to the adjustment of the 2007 financial statements, the company also stated in the announcement that the 2016 financial report will also be adjusted retroactively, reducing undistributed profits by 1,668,852,400 yuan, of which 6,498,587 yuan will be reduced in operating income, 6,355,236 yuan will be reduced in operating cost, 526,323 yuan will be increased in sales cost, 151,193 million yuan will be increased in financial cost, 206,412 million yuan will be increased in impairment loss of assets, and 31,446,200 yuan will be reduced in income tax-deferred income tax.

Will actively withdraw funds to resolve the debt problem

In response to the debt problem, kangmei pharmaceutical said that as of March 31, 2019, the company's short-term loan was 14.494 million yuan, other current liabilities were 2.75 million yuan, long-term loan was 690 million yuan, bonds payable were 16.783 million yuan, and the balance of monetary funds was 1.04801 million yuan, of which the limited monetary funds were 66.7626 million yuan.

In the past half year, the company has completed the payment of 2 short-term financing bonds, 3 ultra-short-term financing bonds and related financing interest on schedule, totaling 9.420 billion yuan. For the subsequent debt payment arrangement, the company will collect and repay the funds through a variety of ways, including but not limited to the sale of shares in CGB Fund and the return of funds from business income. Due to the above-mentioned fund collection measures such as equity sale and business collection, there are multiple factors in the implementation process, resulting in certain uncertainties in the final fund collection.

On the 28th, Kangmei Pharmaceutical Co., Ltd. issued nine companies, but did not complete the "30 billion financial puzzle". Kangmei Pharmaceutical said in a notice that after receiving the "Annual Report Inquiry Letter", the company actively organized relevant personnel to analyze the issues involved and implement them item by item. As some issues involve matters that need further confirmation and opinions from relevant intermediary organizations. Upon application to the Shanghai Stock Exchange, the company will postpone its reply to the "Annual Report Inquiry Letter" no later than June 5, 2019. What kind of answer will kangmei pharmaceutical give the public? Let's wait and see.

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