[Edaily Reporter NA EUN-KYUNG ] HanmiPharm(128940)HanmiPharm has taken steps to collect receivables and strengthen internal controls regarding issues with its Chinese subsidiary, Beijing HanmiPharm. This comes after some institutional investors recently sent a shareholder letter pointing out the issue of uncollected receivables and requesting a special audit.

HanmiPharm announced on the 20th that it would address past management shortcomings at Beijing Hanmi and incorporate the proposals made in the Seohan into its internal control system.

This Seohan stemmed from the accounts receivable issue at Beijing Hanmi, which first came to light last July. At that time, concerns were raised in some quarters regarding the recoverability of receivables and the risk of losses, as the portion of Beijing Hanmi’s accounts receivable with extended collection periods continued to grow.

According to data released by HanmiPharm last July, Beijing Hanmi’s total accounts receivable decreased from approximately 900 million yuan (about 190 billion won) at the end of last year to approximately 670 million yuan (about 140 billion won) at that time. Conversely, receivables overdue for more than three months fell from approximately 320 million yuan (about 67 billion won) at the end of last year to 90 million yuan (about 19 billion won) in February of this year, only to rise again to approximately 430 million yuan (about 90 billion won) as of July.

At the time, HanmiPharm explained that Beijing Hanmi’s accounts receivable had historically followed a pattern of increasing during the year and being collected at the beginning of the following year. The company also stated that it could not classify these receivables as fully uncollectible or a loss solely because they had not been collected for more than three months. However, it said it would analyze the causes of the increase in long-term receivables and develop a collection plan and measures to prevent recurrence.

Subsequently, internal control issues came to the fore again when some institutional investors sent Seohan to HanmiPharm’s board of directors and audit committee, pointing out the problem of uncollected accounts receivable at Beijing Hanmi and requesting a special audit.

HanmiPharm explained that, in response to the concerns raised by shareholders, it has suspended all new transactions with Beijing Hanmi until the accounts receivable are collected. The company plans to implement a collection plan while simultaneously improving its transaction and accounts receivable management systems to prevent a recurrence of the same issue.

The company has also strengthened its corporate-level risk management organization. HanmiPharm established a Chief Risk Officer (CRO) position to oversee risk management and internal controls. The company plans to strengthen its system for identifying and responding to major risks that may arise not only from the Beijing Hanmi issue but also throughout its business operations.

Beijing Hanmi is a local subsidiary responsible for HanmiPharm’s business in China. These measures are focused on overhauling accounts receivable management and internal control systems rather than scaling back Beijing Hanmi’s operations. HanmiPharm plans to maintain the competitiveness of Beijing Hanmi’s existing business while pursuing debt recovery and measures to prevent recurrence.

A HanmiPharm official stated, “The matters proposed in this Seohan are already being vigorously pursued internally,” adding, “We will accept the shareholders’ proposals, improve any shortcomings, and establish internal control and management systems to address shareholders’ concerns.”

The official added, “We will work to further enhance both Beijing Hanmi’s business competitiveness and its management systems to sustain growth and strive to increase shareholder value.”