Yuzhou Group’s auditor EY has resigned due to concerns about the developer’s accounting processes, as per an exchange filing. The filing notes that the progress of the 2021 audit was significantly behind the original pre-agreed timetable, due to which EY is not in a position to precisely estimate the cost and resources needed to complete the audit. GMT Research said that it was “virtually unheard of for an auditor to resign this late in a December year-end audit” and added, “It recognized full-year revenue of just RMB10bn ($1.6bn) in 2020, having booked RMB14bn ($2.2bn) in the first half of the year. Unconvincingly blamed auditor, covid and inexperienced staff”. Yuzhou said that it has resolved to appoint UniTax Prism (HK) CPA Limited as the new auditor and that the new appointment will not impact the annual audit of the Group.
Separately, in another exchange filing, Yuzhou said that it has arranged for the remittance of ~$20.64mn for the payment of interest on two of its bonds – the 6% 2022s and 8.625% 2022s. Yuzhou’s dollar bonds are trading at distressed levels of 17-18 cents on the dollar.