Tianhe Chemicals reported Thursday that the auditor of its 2014 financial results resigned after failing to reach a resolution with directors over questions about last years finances.
Tianhe still has not filed an annual report for 2014, which it should have done by the end of March, according to Hong Kong Stock Exchange rules. Trading of the companys stock has been suspended nearly six months because of its failure to meet that deadline.
The report has been delayed because the companys auditor, Deloitte Touche Tohmatsu, requested additional information on several aspects of 2014 activities. Tianhe has said that it provided extensive information but was unable to answer all of the Deloittes questions, partly because third party companies refused for policy reasons to disclose some of the requested information. Tianhe suggested Deloitte was applying more than normal scrutiny because of accusations by a shadowy private watchdog organization, Anonymous Analytics, that Tianhes initial public stock offering last year was fraudulent – accusations that the company has denied.
In August Tianhe said Deloitte had suggested that the 2014 report be published with a note stating that Deloitte declined to vouch for its accuracy.
In a filing with the stock exchange Thursday, Tianhe said its Audit Committee and Board of Directors decided not to accept Deloittes suggestion after concluding that the information it did provide should have sufficed. It cited a wide range of work performed and inter-locking confirmations received from various independent third parties…. After the companys decision, Deloitte submitted its resignation Sept. 15.
Thursdays filing provided no information about what steps Tianhe plans next.
Tianhe is based in Jinzhou city, Liaoning province, China, and claims to be Asias largest lubricant additive supplier.
Last month the company announced that it had missed another deadline for financial results it is required to report as a condition of having its stock listed on the Hong Kong exchange. This time it did not report interim results for the first six months of 2015, as required by Aug. 31, and the company said it will also not be able to publish an interim report for the same time period as required by Sept. 30.
The company did report unaudited first half results, including profits of 1.4 billion (U.S. $227 million), which represented a decrease of 2.3 percent from the same period of 2014.
Two stock market indexing organizations – Hang Seng Indexes in Hong Kong and London-based FTSE International – removed Tianhe from several indices of Chinese stocks in recent months. Both organizations said the decisions were pro forma actions taken solely because of the length of lapse in trading of Tianhes stock. The organizations also said Tianhe could be restored to their indices if trading of its stock resumes.
If trading of their stock starts back up again, thats something we would consider, said Harry Stein, spokesman at FTSE.