*ST Carey Received Another Letter In Half A Month And Was Asked To Hire An Audit Office As Soon As Possible.

In the two fiscal year, audited net profit has been negative for a long time, and net assets remain negative in the first three quarters of this year. *ST SZ (002072, a month), whose shell remained for more than a month, was again received the letter of concern from the exchange.

In November 12th, the management department of the SME Board of the Shenzhen Stock Exchange issued a letter of concern to *ST Kerry, asking *ST Kerry to appoint the 2019 annual audit agency as soon as possible, and cooperate with the audit institutions to complete the annual audit work, and publish the annual report in time within the statutory time limit.

Reporters noted that in June 4th this year, *ST Kerry 2018 annual shareholders' meeting, the company "renewal of the 2019 audit institutions motion" was rejected by the shareholders' meeting. Up to now, *ST Kerry has not yet appointed the annual audit institution in 2019.

The Shenzhen Stock Exchange requested *ST Kerry to hire audit institutions as soon as possible.

As a listed company, audit institutions must be employed. According to the provisions of article 6.8 of the stock listing rules (November 2018), the accounting reports in the annual reports of listed companies must be audited by accounting firms with qualifications for securities and futures related businesses.

For this reason, the Shenzhen stock exchange sent second letters of concern to *ST Kerry in November. It requested the company to appoint the 2019 annual audit agency as soon as possible, cooperate with the audit institutions to complete the annual audit work, and publish the annual reports within the statutory time limit.

*ST Kerry's last audit institution was China CPA accounting firm. Prior to this, *ST Kerry's 2018 financial report was audited by an accountant, unable to express his opinion. The daily economic news reporter read *ST Kerry's 2018 audit report found that the limited audit scope is the primary reason for the audit institutions to issue non-standard opinions.

In the view of CPA, *ST Kerry did not provide relevant evidence for the accounts receivable and other receivables' bad debts, and did not provide sufficient evidence for the reassessment of residual receivables. Audit institutions are unable to obtain relevant audit evidence, nor can they give evidence to obtain valid evidence or substitute audit procedures.

However, for the limited scope of audit referred to by audit institutions, *ST Kerry is also suffering, because the company's financial information has been detained by former major shareholder Shandong decotton Group Co., Ltd. (hereinafter referred to as the cotton group) for more than half a year.

In November 1st, *ST Kerry disclosed the lawsuit announcement that in March 2019, the German cotton group refused *ST Kerry staff to enter the Office No. 18 of Shun he road, Decheng District, Dezhou, and seized all the accounting documents, account sets and financial software data of the company.

It has been more than six months since the incident occurred in March, and *ST Carey did not make any announcement. During the period, *ST Carey 2018 annual report audit report, because the audit scope is limited, the audit institutions issued non-standard opinions.

For no announcement reasons, in November 1st, a *ST Kerry executive told the daily economic news that the company did not want to have excessive confrontation and had been communicating with the other side, but "until he prosecuted us, we realized that there was no room for communication."

However, all the accounting documents, account sets, financial software data and other business information of *ST Kerry are detained by decotton group, which may result in the company unable to issue the financial report in 2019. If the financial report continues to be audited by the auditor in 2019, the company's stock will be suspended from listing until delisting.

The financial information has not been retrieved?

Before *ST carry filed a lawsuit against the German cotton group, the former shareholder had taken *ST Kerry to court. *ST Carrey received the "Notice of complaint" delivered by the people's Court of Decheng District in Dezhou in October 30, 2019. The decotton group filed a lawsuit against the company in Dezhou City People's Court on the grounds of reputation infringement, referring to the fact that *ST Carey fabricated his debts.

However, a week later, the German cotton group withdrew its indictment against *ST Kerry. In November 8th, *ST Kerry released the announcement of the progress of the complaint. In November 6th, the company received the "civil ruling" of the people's Court of Decheng, Dezhou, and allowed the decotton group to withdraw its action against the company.

Although the German cotton group withdrew its litigation matters, *ST Kary did not disclose the financial information of the German cotton group. But in November 1st, the Shenzhen Stock Exchange issued a letter to *ST Kerry, asking for an explanation of the debt and detained financial information of the mutual loan between the German cotton group and *ST Carey.

The exchange requested *ST Kerry to submit the explanatory material to the management department of the SME Board of the Shenzhen Stock Exchange before November 8th and disclose it to the public. However, in November 8th, *ST Carey announced that as the letter of concern was more involved, the company was unable to complete its reply and disclosure within the prescribed time, so it applied for a letter of extension to the Shenzhen Stock Exchange. The company will strive to complete the letter of reply 13 days ago and fulfill its duty to disclose information.

It is worth noting that, whether or not it can successfully get back the financial information, *ST Kerry has arrived at the critical moment whether the shell can be guaranteed.

Due to negative net profit for two consecutive years in 2017 and 2018, and negative net assets at the end of the audited period of 2018, this was mainly related to the evaluation of *ST Kary's accounts receivable, the reasonableness of goodwill impairment, and the fact that financial data of many subsidiaries could not be judged.

The audit firm has issued an audit report which can not express its opinion on the company's 2018 financial report, and the listed company has been warned of delisting risks. The company's 2016 and 2017 two years have been issued an audit report with emphatic paragraph reservations. In addition, *ST Kerry was also investigated by the SFC for information disclosure suspected of violating the securities law.

*ST Kerry three quarterly report shows that as of September 30th, the net assets attributable to shareholders of listed companies amounted to -2.08 billion. At the end of the three quarter, the total assets of the company were 418 million yuan, while the consolidated balance sheet showed that other receivables were about 300 million yuan.