Yitong Century issued an announcement on the evening of the 11th, stating that the company received the "Notification of Case Filing" from the China Securities Regulatory Commission on the same day. Because the company's 2017 annual report was suspected of illegal information disclosure, the China Securities Regulatory Commission decided to impose legal sanctions on the company in accordance with the law. File a case.
The company promises that during the investigation period, it will actively cooperate with the China Securities Regulatory Commission in various tasks and strictly perform its information disclosure obligations in accordance with relevant regulations.
The announcement did not disclose the specific content of the suspected illegal information disclosure in the 2017 annual report.
The disaster occurred due to irregularities in information disclosure in the 2017 annual report
According to the announcement, the reason why Yitong Century was filed this time was that the 2017 annual report was suspected of illegal information disclosure. In April 2018, Yitong Century released the 2017 annual report issued by Lixin Accounting Firm. Data show that in 2017, the company achieved operating income of 2.582 billion yuan, a year-on-year increase of 41.82%; the net profit attributable to shareholders of listed companies was 231 million yuan, a year-on-year increase of 35.49%.
Yitong Century stated that during the reporting period, the company completed the merger and acquisition of Shenzhen Beta Health Measurement and Analysis Technology Co., Ltd. (hereinafter referred to as "Beita Health"), which will bring greater impact to the company's performance after the merger. Good contribution.
The reporter checked the company's operating conditions in the 2017 annual report and found that Yitong Century is very optimistic about the healthy development of Beitai and has high expectations.
Yitong Century stated that through the acquisition of Beta Health, the company has entered the Chinese radio and television market and enhanced its market and channel advantages. At the same time, mergers and acquisitions have also enriched the company's business lines, expanding from the telecommunications service industry to the smart medical industry.
The business plan proposed by the company is to "use the channel complementarity with Beta Health to promote Beta Health's products to the three major operators and accelerate the operation of smart medical care in Hunan."
Moreover, Yitong Century also said: "The company has completed the docking of Beta Health products and the basic platform, using the company's channel advantages in operators, docking Beta Health's overall solutions in primary care, and cooperating with operators To promote the implementation of hierarchical diagnosis and treatment plans, many projects are currently being launched and are expected to enter the implementation stage in 2018.”
Cross-border mergers and acquisitions costing 1 billion
Go back to October 2016. On the evening of September 9, Yitong Century released a restructuring report (draft). The company plans to purchase 100 shares of Beta Health held by 16 counterparties including Fang Yanlin through the issuance of shares and payment of cash, with a transaction consideration of 1 billion yuan.
In April 2017, the company completed the acquisition of 100 shares of Beta Health for 1 billion yuan, with a value-added rate of 476.76.
Beitai Health was founded in 1994. Its main business is the operation of integrated smart medical monitoring products such as health all-in-one machines and smart health kiosks, such as health scales, body fat scales, thermometers, sphygmomanometers, etc. There are smart treadmills, smart scooters, smart electric exercise bikes, etc.
The company issued a merger and acquisition plan at the end of September 2016, and received the approval document from the China Securities Regulatory Commission in early April 2017. The transfer was completed on April 17 of that year, and Beta Health became a wholly-owned subsidiary of the company.
The reporter found that during the merger and acquisition period, not only the listed companies were satisfied with the extended merger, but also securities firms such as Guosen Securities and Huachuang Securities were optimistic.
For example, Huachuang Securities said that after the merger and acquisition, the company's three major synergies in strategy, business, and channels will be obvious. In addition, the smart medical industry will grow at a considerable rate, and demand will increase with the acceleration of an aging society. It is optimistic. With the company's development in the field of Internet of Things and its deep penetration in the smart medical vertical industry, the acquisition of Beta Health is expected to become a new and sustainable growth point for the listed company's performance.
It only took one year for the acquisition to explode.
However, one year after the completion of the acquisition, Beta Health not only failed to fulfill its performance commitments, but also continuously exposed illegal loans, illegal guarantees, and illegal pledges. , debt litigation and many other problems have severely damaged the operating performance of Yitong Century.
After the transaction was completed, Yitong Century discovered that Fang Yanlin, the former actual controller of Beitai Health, had engaged in suspected criminal activities such as illegal external borrowing and guarantees, and reported the case to the public security organs.
On December 31, 2020, the Guangzhou Intermediate Court made the first-instance judgment. According to the verdict, the defendant Fang Yanlin used financial fraud to package the unprofitable targets of mergers and acquisitions into high-quality assets with bright performance, and deceived listed companies into paying obviously unreasonable high prices to purchase the targets of mergers and acquisitions, causing huge property losses to the listed companies. His behavior It has constituted the crime of contract fraud.
On February 21 this year, Yitong Century announced that it had received a "criminal ruling" from the Guangdong Provincial High Court on the contract fraud case, and the ruling upheld the original verdict.
Afterwards, Yitong Century filed a lawsuit with the Guangzhou Intermediate Court on June 24, requesting the cancellation of the purchase agreement and the supplementary agreement involved in the case, and ordering the defendants to return the property they acquired as a result of the purchase agreement, and The total amount involved in the case was approximately 580 million yuan to compensate the company for the losses it suffered.
Performance was affected and market value was wiped out
After the cross-border mergers and acquisitions broke out, the company's performance took a turn for the worse and its market value shrank significantly.
In 2018, Yitong Century made a goodwill impairment provision of 750 million yuan for Beta Health. Coupled with the bad debt losses and impairment of various assets caused by the acquisition, the net loss for the year was as high as 19.69 billion, a decrease of 951.37 compared with the same period last year.
In order to alleviate performance losses, in December 2019, Yitong Century decided to transfer Beitai Health to the outside world, with a transfer price of only 170 million yuan.
As a result, the company turned a loss into a profit in 2019, achieving a net profit of 31.7162 million yuan. However, as the audit agency for the company's 2019 financial report, Shun Lun Accounting Firm issued a qualified opinion on the company's financial report. The reasons included the inability to obtain sufficient and appropriate audit evidence for Beta Health's litigation matters and investigation matters.
Data shows that the company’s 2018 semi-annual report, 2018 annual report, 2019 annual report, and 2020 annual report all received inquiry letters from the Shenzhen Stock Exchange, among which issues surrounding Beitai Health are the main content of the inquiry letters. one.
The company’s market value once reached 17 billion yuan, and its latest total market value is only 2.7 billion yuan.