Thursday, 26 March 2009
Trading of China Sun Bio-chem Tech’s shares suspended
China Sun Bio-chem Technology Group has asked the SGX to suspend the trading of its shares. The move comes two days after the group asked for a trading halt on Mar 23. On Mar 21, the group’s independent auditor PricewaterhouseCoopers had informed the board that it had faced difficulties during the course of the FY2008 audit, and that it would not be able to complete the audit.
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China Sun Bio-chem Technology Group has asked the SGX to suspend the trading of its shares. The move comes two days after the group asked for a trading halt on Mar 23. On Mar 21, the group’s independent auditor PricewaterhouseCoopers had informed the board that it had faced difficulties during the course of the FY2008 audit, and that it would not be able to complete the audit.
Recounting the events that led to the trading halt and suspension, the board revealed in a statement to the SGX that in mid-February, PwC had informed the audit committee that it was unable to authenticate the existence of bank balances amounting to RMB592 million ($131 million). Chairman and Chief Executive Officer of the China Sun Bio-chem, Sun Guiji, later explained the amount had been remitted out of the group’s bank accounts on Dec 31, 2008, to purchase corn raw materials although this could not be verified by PwC.
PwC also said it could not verify the authenticity of the trade receivables in the course of its audit work and had difficulties establishing the existence of certain debtors among the accounts receivable balances amounting to RMB 337 million recorded in the books of the group as of Dec 31, 2008. Consequently, PwC indicated that it has not been able to ascertain the reliability of the sales revenue and trade receivables recorded by the group for the FY2008.
“The CEO while acknowledging that there might have been recording errors over the identities of some of the debtors, maintained that the sales revenue were correct and the trade receivables were collectible,” said the board.
“Despite the continuing efforts by the audit committee and PwC, the company had only managed to render very limited cooperation and assistance to PwC in connection with the audit procedures to resolve the exceptions. The progress was much too slow and the further information made available to PwC had not been able to satisfy PwC’s nor the audit committee’s requirements,” it added.
The board has appointed KPMG Advisory Services to conduct a review audit and to report to the audit committee and the SGX to speed up the finalisation of the FY2008 audit and ascertain the financial position of the group.
Meanwhile, all transfers or remittances by any member of the group for any sum exceeding RMB 5 million must be jointly approved by the board and the the CEO.
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