Reporter Chen Ting and Cao Xueping report from Shenzhen
On April 26, Jiuzhitang (000989. SZ, now "ST Jiuzhi") fell to the limit. The day before, Jiuzhitang announced that due to major deficiencies in internal control, the company was issued a negative internal control audit report.
According to the announcement, after Jiuzhitang's self-inspection, from 2022 to 2024, Mudanjiang Bobo Pharmaceutical Co., Ltd. (hereinafter referred to as "Bobo Pharmaceutical"), a second-level wholly-owned subsidiary of the company, used a non-company bank account to collect the deposit for the sales agency of Shuxuetong injection, and Jiuzhitang determined that Li Zhenguo, the company's controlling shareholder, actual controller and chairman, had non-operating capital occupation. At the end of 2022 and the end of 2023, Li Zhenguo occupied a balance of 37 million yuan, and the highest daily occupation was 45 million yuan.
Jiuzhitang said in the announcement that at present, the deposit of the agent collected by the non-company account has been returned, and the company account has been re-collected, and the funds and interest occupied by Li Zhenguo have all been returned to the company.
On April 28, Jiuzhitang said in an interview with a reporter from China Business News that the company's production and operation are normal. According to the requirements of the board of directors, the company will deal with the main responsible person and some core sales personnel of this matter internally, and determine it after the company has studied the internal management system, including but not limited to fines and confiscation of annual bonuses, internal notification of criticism, etc.
The actual controller has repeatedly violated the rules before
According to the announcement, recently, Jiuzhitang found in the self-inspection that from 2022 to 2024, Bobo Pharmaceutical's sales staff negotiated privately with agents, did not sign the deposit-related agreement, and used a non-company bank account to collect the deposit for the sales agency of Shuxuetong Injection. Among them, in 2022, there will be 18 transfer-in fund payment entities with a deposit amount of 49.2 million yuan, and in January 2024, there will be 7 transfer-in fund payment entities with a deposit amount of 6.7 million yuan.
After further verification, the above-mentioned non-company bank account that collected the deposit indirectly had a lending relationship with Li Zhenguo, so the company determined that Li Zhenguo had a non-operating capital occupation. Specifically, the occupied amounts from March to September 2022, September to October 2022, and October 2022 to March 2024 are 30 million yuan, 45 million yuan, and 37 million yuan, respectively.
Jiuzhitang said in the announcement that as of April 25, 2024, all the balance of the margin in the above-mentioned account has been fully returned to the agent or the actual controller of the agent, and Bobo Pharmaceutical and the above-mentioned relevant agents are re-signing the contract, and the account of Bobo Pharmaceutical Company will receive its deposit, and the above-mentioned fund occupation has been eliminated, and the interest of 2.1578 million yuan generated by the occupied funds at the interest rate of 3% (the loan interest rate agreed between Li Zhenguo and the relevant account) has been repaid to Bobo Pharmaceutical.
According to the relevant regulations, Jiuzhitang applied for a one-day suspension of trading on April 25, 2024, and resumed trading on April 26, 2024 and implemented other risk warnings, after the implementation of other risk warnings, the daily rise and fall limit of the company's stock trading was changed from 10% to 5%.
Bobo Pharmaceutical's sales management has been defective in 2022, why Jiuzhitang failed to find it in time?And in this self-inspection, how did Jiuzhitang find the relevant abnormalities? The reporter asked Jiuzhitang about this, and the other party only said that these problems involve information disclosure, and the announcement shall prevail.
It is worth noting that Li Zhenguo, as the actual controller of the company, previously received warning letters issued by regulators twice for violating relevant regulations in the production and operation of Jiuzhitang.
According to the announcement, in January 2019, Li Zhenguo was taken by the Hunan Securities Regulatory Bureau to issue a warning letter because Jiuzhitang failed to identify the transaction as a related party transaction and disclose it in the process of transferring the equity of Beijing Kexin Virtue Biomedical Technology Co., Ltd., nor did he perform the related party transaction review procedure, and did not fully disclose the related relationship between the counterparty and Li Zhenguo, and was taken by the Hunan Securities Regulatory Bureau to issue a warning letter and recorded it in the integrity file of the China Securities Regulatory Commission. In April 2020, Jiuzhitang failed to reflect the sales return of nearly 40 million yuan in the financial report of its wholly-owned subsidiary, Mudanjiang Youbo Pharmaceutical Co., Ltd. (hereinafter referred to as "Youbo Pharmaceutical"), and failed to announce the revision of Youbo Pharmaceutical's sales policy and its possible impact, and the Hunan Securities Regulatory Bureau issued a warning letter to Li Zhenguo and related executives.
Retrospective adjustment of net profit for the current period
It is worth noting that Li Zhenguo acquired Jiuzhitang with his equity in Youbo Pharmaceutical and the shares of the original controlling shareholder of Jiuzhitang. Up to now, Li Zhenguo is still the legal representative and chairman of Youbo Pharmaceutical, and Bobo Pharmaceutical is a wholly-owned subsidiary of Youbo Pharmaceutical.
According to Jiuzhitang's disclosure, Youbo Pharmaceutical's owner is Shuxuetong Injection, which is also the product involved in Bobo Pharmaceutical's case, and it is also the first echelon product in Jiuzhitang's product line. In the first half of 2023, Jiuzhitang's Shuxuetong Injection has a good growth trend, and in the second half of the year, due to changes in the industry environment, sales declined, but the annual sales revenue of this product still exceeded 100 million yuan, which is the representative product of the company's traditional Chinese medicine injection varieties.
At the same time as announcing the occupation of Li Zhenguo's non-operating funds, Jiuzhitang corrected and retrospectively adjusted the company's accounting errors in the previous period.
According to the announcement, before the approval of Jiuzhitang's 2022 annual financial report, Bobo Pharmaceutical did not account for the margin collected through non-company accounts, and there was a financial misstatement. After retrospective adjustment, other receivables of 43.415 million yuan, deferred income tax assets of 571,250 yuan, and other payables of 45.7 million yuan were increased accordingly on December 31, 2022, and the credit impairment loss in 2022 was increased by 2.285 million yuan, and the income tax expense in 2022 was reduced by 571,250 yuan, which had no impact on the retained earnings at the beginning of 2022 and affected the net profit of -1.71375 million yuan in the current period in 2022. After adjustment, Jiuzhitang's revenue in 2022 will be about 3.033 billion yuan, and its net profit will be about 358 million yuan.
In 2023, Jiuzhitang's revenue will be about 2.961 billion yuan, a year-on-year decrease of 2.38%, net profit will be about 297 million yuan, a year-on-year decrease of 16.92%, and the net cash flow from operating activities will be about 109 million yuan, a year-on-year decrease of 78.23%. In the first quarter of 2024, the company's revenue decreased by 0.89% year-on-year to 1.08 billion yuan, net profit decreased by 10.66% year-on-year to 145 million yuan, and the net cash flow from operating activities was about -302 million yuan, a year-on-year decrease of 134.15%.
Jiuzhitang told reporters that the company will continue to carry out internal control improvement work, and the company's board of directors and internal audit department have formulated a detailed internal control rectification and review plan. The Board of Directors, the Audit Committee, the independent directors and the management of the Company will continue to pay attention to the implementation of the rectification plan, and the Company will disclose the progress in a timely manner when the information disclosure standards are met according to the rectification situation. In terms of production and operation, the company will complete the target in strict accordance with the production and operation plan this year, combine production and marketing, strengthen the creation and promotion of key single products, and actively promote the increment of second-echelon products, adhere to brand marketing, cultural marketing, and academic promotion, and strive to achieve steady improvement in business performance.
(Editor: Cao Xueping Review: Tong Haihua Proofreader: Yan Jingning)