Tianhe Perceives End of Two-year Probe

Share

Tianhe Chemicals Group said it has shored up internal controls and is preparing to release delinquent financial results in hopes of resuming trade on the Hong Kong Stock Exchange after nearly two years of suspension.

Tianhe said in a Jan. 11 filing to the Hong Kong exchange that its compliance advisor, Zhonghui Anda Risk Services Ltd., recently completed an internal control review that found several practices that fail to meet exchange requirements.

The deficiencies extended beyond the issue that got Tianhe suspended from trading in March 2015, which was its failure to file financial results from its full-year 2014 period due to its auditor not vouching for the results accuracy.

Zhonghui Anda was concerned by some Tianhe subsidiaries lack of record-keeping; its failure to insure property still under construction; and employees unauthorized use of particular computer applications. Tianhe said it addressed each issue to the satisfaction of Zhonghui Anda – mainly in the form of assurances that it will keep more scrupulous records and enforce tighter management practices in the future.

Tianhe is ready to resume its bid to be relisted on the exchange, and its next step is to file financial results from 2014 and 2015 full-year and interim periods, which Zhongui Anda has now audited and is preparing to file. Having carefully reviewed the findings and results of the internal control review conducted by [Zhonghui Anda], the board is of the view that the groups financial reporting procedures and internal control systems are sufficient to meet the obligations under the [exchanges] listing rules.

Tianhes trouble with financial reports began in early 2015 when former auditor Deloitte Touche Tohmatsu raised questions about the 2014 results, delaying release of the 2014 annual report and triggering the current suspension, which began in March 2015. Deloitte resigned its position in September 2015, and Zhongui Anda took over.

The Hong Kong exchange also required Tianhe to subject itself to a forensic investigation, which was successfully wrapped up by American firm Grant Thornton in October. The review probed questions about Tianhe subsidiaries tax records and financial reporting related to an ongoing capital project described as a plant that will upgrade base stocks. Grant Thornton completed its review having found no faults.

Tianhe has claimed to be Asias largest lubricant additive supplier. The Liaoning province firms main lube additives production facility is in Jinzhou. Last year it expanded into Japan and built facility in the United Arab Emirates.

Photo: Tianhe Chemicals

Related Topics

Asia    China    Disruptions    Plants & Equipment    Plants & Facilities    Region