Kolon Life Science, once one of the most promising bio-stocks, has been downgraded to an administrative issue.
The company put a public notice Wednesday, saying it received "qualified" opinion from an external auditor. Companies receive a qualified opinion if the evidence is insufficient or the balance sheets are not made according to auditing principles.
"The impact of asset impairment in the first half of the inventories, development costs and tangible assets in the financial statements at the end of last year and the impact it has on profit or loss could not be adequately reviewed," said EY (Ernst & Young) Hanyoung, Kolon Life Science's external auditor.
Also, sufficient review procedures could not be carried out for Kolon Tissuegene's holding securities and derivatives liabilities that were evaluated as underlying assets, it added.
Accordingly, the Korea Exchange designated the company as an administrative issue.
If Kolon Life Science fails to turn around by the end of this year, it will be subject to a fit-and-proper review for listing by KRX and receive a grace period before being officially delisted from the secondary bourse.
In response to the administrative issue, Kolon Life Science said, "The company commissioned and executed forensic work, and is re-auditing the accounts in question with EY Hanyoung. If the financial statements and review report are revised through the re-audit, we will immediately disclose them."
However, the administrative issue has not affected the company’s stock price, as its share price stood at 14,800 won ($12) as of 4:30 p.m. Friday, marking a mere 0.34 percent fall from the previous day.
<© Korea Biomedical Review, All rights reserved.>