Controversies

Noncompliant Goodwill Impairment Tests and Accounting Error Corrections; Two Warning Letters in Two Years

In 2023, the Guangdong Securities Regulatory Bureau issued warning letters (〔2023〕No. 153) to Ruizhi Pharmaceutical and Chairman Zeng Xianwei and others over information disclosure and other issues. In September 2024, it again issued warning letters (〔2024〕No. 145) to the company and six people including Zeng Xianwei and WOO SWEE LIAN over noncompliant goodwill and long-term asset impairment testing (involving revenue forecasts, discount rates and capital expenditure assumptions for the Shanghai Ruizhi asset group), nonstandard internal control and information disclosure. The company subsequently corrected its 2022 and 2023 annual reports, making additional impairment provisions of approximately RMB 15.96 million and RMB 22.02 million respectively, and in 2024 recognized another RMB 139 million in goodwill impairment. Warning letters were issued, and financial reports were retrospectively corrected.