April 25, 2024

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[THE INVESTOR] Celltrion Healthcare, the marketing affiliate of Celltrion, faces a major setback as its financial accounts have come under scrutiny ahead of its planned initial public offering, according to the firm and other sources on March 20.

The Korean Institute of Certified Public Accountants which conducts an audit review before the country’s bourse operator completes its listing eligibility review for firms pursuing an IPO, began a detailed audit on Celltrion Healthcare’s accounting practices on March 13 after it found profit overstatement of approximately 10 billion won (US$8.94 million).
 

Park Hyun-koo/The Investor

A detailed examination by the KICPA is typically done to unravel suspected fraud, where there may be a few fraudulent transactions hidden amongst a mass of legitimate transactions.

The KICPA and Celltrion Healthcare have been in disagreement over how to reflect performance balance-related payments from a deal with European distributors in 2015.

This has come as a stumbling block for Celltrion Healthcare which was highly expected to go public in April.

Industry watchers now have concerns over the time a detailed audit will take and the firm’s IPO schedule.

In fact, the company failed to submit its registration statement to the Financial Supervisory Service by March 17 after receiving a preliminary approval to list on the KOSDAQ this month.

“If the KICPA finds auccounting issues, getting listed within six months is unlikely,” an official at a financial banking company said.

The Celltrion affiliate, on the other hand, said it has had enough discussions to settle the issue, assuring investors that the IPO will be launched before mid-September.

“We have submitted a large volume of data to the KICPA since May 2015. The audit process is expected to be completed soon and it won’t have an impact on the listing plan,” the firm said on its website.

The company seeks to raise up to 1 trillion won through the IPO.

Celltrion Healthcare markets, sells and distributes Celltrion’s biosimilar drugs, copycats of global pharma firms’ blockbuster medications.

By Park Han-na (hnpark@heraldcorp.com)