Financial News Agency, December 20 (Reporter Chen Kang) This evening, Zhongbai Group (000759.SZ) announced that a warning letter was issued by the Hubei Securities Regulatory Bureau due to the company's failure to promptly disclose employee embezzlement and information disclosure in a timely manner.

Judging from the timeline, on July 22 of this year, Zhongbai Warehouse Supermarket, a wholly-owned subsidiary of Zhongbai Group, discovered that financial officer Shao was suspected of embezzling the company's funds and immediately reported the case to the public security authorities; on October 13, the public security authorities arrested all of the relevant suspects; the case is currently in the investigation stage. Preliminary estimates of the amount of capital embezzled are about 219 million yuan, yet the company did not promptly disclose it in accordance with the “Administrative Measures on Information Disclosure of Listed Companies”. The announcement was delayed until the evening of December 19.

According to an announcement issued by the company, the amount of capital embezzlement is expected to increase the original value of the company's other receivables by about 219 million yuan, accounts payable to increase by about 219 million yuan, and preliminary estimates for other receivables to accrue bad debt preparations of about 210 million yuan. As a result, the total profit for 2023 was reduced by about 50 million yuan, and the total profit for the previous year was reduced by about 160 million yuan.

Zhongbai Group lost 44 million yuan in the first three quarters of this year. If we add the reduction in total profit of 50 million yuan due to the case, excluding factors from the fourth quarter, Zhongbai's losses this year are already close to 100 million yuan.

According to the announcement, Mr. Shao discovered and used loopholes in the supplier settlement system. In response to the special nature of the procurement and settlement of fresh non-standard products, Mr. Shao maliciously misappropriated huge sums of money from the company through concealed methods such as falsifying acceptance documents, falsifying approver signatures, and inflating suppliers. The case is under further investigation and recovery of stolen goods. Looking at it now, it is not yet known how much damage can be recovered.

Zhongbai Group is a leading supermarket chain enterprise in Hubei Province. It has various business formats such as hypermarkets and integrated supermarkets (Zhongbai Storage), community supermarkets (Zhongbai supermarkets), convenience stores (Zhongbai Lawson), department stores (Zhongbai Department Store), and electrical appliance stores. The stores are distributed in Hubei, Chongqing, and Hunan, with a total of 1,718 stores as of the first half of this year.

The company's revenue began to decline in 2019. Net profit lost 0.2 million yuan and 320 million yuan respectively in 2021 and 2022, and lost 44 million yuan in the first three quarters of this year, and may become the third year of losses.

Like its peers, Zhongbai is also actively reforming this year, including opening its Zhongbai supermarket for the first time in early August this year in an attempt to expand the market; on December 5, it officially opened the first membership discount section for Zhongbai Warehouse in Wuhan to test the current popular membership discount method. So far, there have been no obvious results.