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Under public condemnation, holding a public apology, and changing the semi-annual report, what happened to the company?
On September 21, Qinshang announced that it had been informed on September 20, 2017, by the Shenzhen Stock Exchange regarding a "Decision on the Public Condemnation of Dongguan Qinshang Optoelectronics Co., Ltd. and Related Parties" (referred to as the "disposition"). The company has now officially disclosed the details of this decision, as follows:
It was found that Dongguan Qinshang Optoelectronics Co., Ltd. and its related parties violated several regulations. In October 2016, the company released its third-quarter report for 2016, estimating a net profit of between RMB 47 million and RMB 54 million. However, in February 2017, the company issued a performance report stating the net profit for 2016 was RMB 47.87 million.
Then, on April 14, 2017, the company released an amended results announcement and an asset depreciation provision notice, revising the 2016 net profit from RMB 47.87 million to a loss of RMB -396 million. Finally, when the audited 2016 annual report was published on April 22, 2017, the actual net profit was reported as -RMB 4.227 billion.
The company failed to correct its performance forecast within the required timeframe, and the final audited net profit significantly deviated from the initial forecast. The difference amounted to -RMB 474 million, which represented 111% of the absolute value of the audited net profit from 2015. Similarly, the audited 2016 net profit also differed greatly from the data in the performance report, with a difference of -RMB 475 million, again accounting for 111% of the 2015 audited net profit.
These actions were deemed to have violated Articles 2.1, 11.3.3, and 11.3.7 of the Stock Exchange Listing Rules (2014 Revision). Chen Yonghong, the Chairman and General Manager, and Deng Junhong, the Chief Financial Officer, were found to have failed in their duties of integrity and diligence, violating Articles 2.2 and 3.1.5 of the same rules. They were held responsible for these violations.
On the same day, Qinshang announced that it would hold a public apology meeting via an online platform, as required under the "Guidelines for the Standardized Operation of Listed Companies of the SME Board of Shenzhen Stock Exchange." The event was scheduled for September 26, 2017, from 15:00 to 17:00, hosted by Shenzhen Panorama Network Co., Ltd. Investors could participate through the "Panorama Roadshow World" platform.
Attendees included Mr. Chen Yonghong, Chairman and General Manager; Mr. Deng Junhong, Director and CFO; and Mr. Qi Xinhua, an Independent Director.
According to Gaogong LED's observation, Qinshang also released its 2017 semi-annual update report on September 21. During the reporting period, the company achieved operating revenue of RMB 865 million, a 93.94% increase compared to the same period in the previous year. Net profit attributable to shareholders, after deducting non-recurring gains and losses, reached RMB 78.14 million, up 146.69% year-over-year.