Delay in hiring an annual audit accounting firm, Kodi Dairy received a letter of concern

Beijing News (reporter Guo Tie) on January 20, the Beijing News reporter learned that according to the announcement of Kodi Dairy (securities referred to as "*ST Kodi"), the Shenzhen Stock Exchange issued a letter of concern to it, requesting to explain the reasons why the 2021 annual audit accounting firm has not yet been hired, whether the new audit report of the 2016-2018 annual report has not yet been disclosed whether it affects the disclosure of the 2021 annual report, and prompts Kodi Dairy to make performance forecasts on schedule, and if there is a risk of termination of the listing of the stock, it should disclose the risk prompt in a timely and full manner.

According to the letter of concern, Kodi Dairy was issued an audit report that could not express an opinion due to the 2020 financial report, and the company's stock was delisted from May 6, 2021; due to the occupation of non-operating funds and illegal guarantees, Kodi Dairy's stock was subject to other risk warnings. As of now, Kodi Dairy has not hired an annual audit accounting firm for 2021.

The Stock Listing Rules of the Shenzhen Stock Exchange stipulate that if the company fails to disclose its annual report within the statutory period, there may be a risk that the company's shares will be terminated. A listed company may not fail to engage an accounting firm in a timely manner to influence the periodic disclosure of periodic reports. In this regard, the Shenzhen Stock Exchange asked Kodi Dairy to explain the reasons for not hiring an annual audit accounting firm, and whether there is a risk of not being able to disclose the annual report on time.

According to the Administrative Penalty Decision of the China Securities Regulatory Commission, Kodi Dairy's annual reports for 2016, 2017 and 2018 have inflated performance, provided funds and guarantees to the controlling shareholder, Kodi Group and its affiliates but failed to approve them in a timely manner. Cody Dairy has promised to cooperate with the accountants to complete the audit of the corrected financial statements as soon as possible, but as of now no new audit report has been disclosed. In this regard, the Shenzhen Stock Exchange asked Kodi Dairy to explain whether the relevant matters affected the disclosure of the company's 2021 annual report.

The Shenzhen Stock Exchange also reminded Kodi Dairy to make a performance forecast within one month from the date of the end of the fiscal year. Where there is a risk of termination of the listing of shares, the company's countermeasures should be explained and the risk warnings should be disclosed in a timely and full manner.

On September 8, 2021, Kodi Dairy received an administrative penalty and market ban prior notice from the Henan Securities Regulatory Bureau of the China Securities Regulatory Commission, and it was found that Kodi Dairy's 2016 annual report inflated income by 336.1977 million yuan and inflated profits by 118.4335 million yuan; the 2017 annual report inflated income by 210.1096 million yuan, with a total inflated profit of 68.6413 million yuan; and the 2018 annual report inflated income by 297.1374 million yuan and the total inflated profit by 112.7539 million yuan.

From 2016 to 2019, Kodi Dairy also provided funds and guarantees to the controlling shareholder, Kodi Group and its affiliates, without going through the decision-making approval process or authorization process, but did not trust it. Among them, in 2019, Kodi Dairy transferred out a total of 6.767 billion yuan, and only 4.792 billion yuan was transferred back in the current period, with a total amount of 45 million yuan for the two guarantees.

Beijing News reporter Guo Tie

Edited by Li Yan Proofreader Chen Diyan