TIANJUDIHE (02479.HK): Forensic Investigation and Internal Control Review Findings Published, All Three Investigation Matters Found to Have Commercial Substance, Shares Remain Suspended

NewTimeSpace News: On 14 September 2026, Tianju Dihe (Suzhou) Technology Co., Ltd. (stock code: 02479) published an announcement setting out the key findings of an independent forensic investigation report and an independent internal control review report. On 4 July 2025 the Company received resumption guidance from the Stock Exchange, which required it, among other things, to conduct an appropriate independent forensic investigation into the audit issues, assess their impact on the Company's business operations and financial position, publish the investigation findings and take appropriate remedial actions, and to conduct an independent internal control review to demonstrate that the Company has put in place adequate internal control procedures to discharge its obligations under the Listing Rules.

According to the announcement, during the audit of the Group's financial year ended 31 December 2024, the then auditors identified three matters requiring additional audit procedures and audit evidence, namely prepayments made to several suppliers for chip procurement, the investment in cash management notes, and prepayments made to a major supplier for the provision of mobile top-up services on the application programming interface (API) market. The Company appointed Grant Thornton Advisory Services Limited as the independent investigator, which issued its forensic report on 12 September 2026, and GRC Chamber Limited as the independent internal control adviser, which issued its internal control review report on 14 September 2026. On the chip prepayments, the Group paid approximately HKD 63,100,000 in prepayments to four chip suppliers during the 2024 financial year for the procurement of Nvidia chips, against a total original chip procurement amount of approximately HKD 123,000,000. Following repeated physical counts, the independent investigator confirmed that all chips and servers agreed to be delivered under the supplementary agreements had been received by the Company by 30 March 2025 and had all been deployed for business use, including AI model training, fine-tuning and multimodal experiments, as at the usage inspection conducted in August 2026. The independent investigator considered that the chip procurement arrangements were entered into to meet the Company's business development needs in maintaining market competitiveness and had a certain commercial rationale and commercial substance, and that the payment for the relevant chips and servers using the net proceeds from the initial public offering was consistent with the disclosures in the Company's IPO prospectus. It also identified internal control deficiencies in the Company's pre-contract due diligence on suppliers, contract management, seal management and project feasibility assessment processes, but found no relationship between the suppliers and the Company, its controlling shareholder, directors or senior management.

On the cash management notes, the Company subscribed in June and July 2024 for a note in the amount of USD 6,000,000 issued by The Reynold Lemkins Group (Asia) Limited and for two notes each with a principal amount of USD 2,000,000 issued by Kaufmann & Company Pan-Asia Limited, with an initial maturity of five years subsequently amended to one year. From the respective subscription dates to the date of the announcement, the note issuers had not made any repayment or distribution in respect of the cash management notes, and the Company has taken legal action against both note issuers, including issuing a statutory demand to the second note issuer and commencing legal proceedings against the first note issuer. The independent investigator considered that, taking into account the Company's liquidity position at the time, with the Group's working capital and cash levels at the material time supporting approximately 7.91 months of daily operations, and the contractual annualised return of approximately 3% to 4% on the cash management notes being higher than the actual annual interest rate of 1.5% to 2.8% on similar products held by the Company at the time, the cash management notes could be regarded as part of the Company's cash management and liquidity arrangements and had a certain commercial rationale and commercial substance. To eliminate the related financial risk and uncertainty, on 23 August 2026 the Company entered into a transfer deed with Zuo Lei, a former executive director, former chairman and current controlling shareholder holding approximately 48.1% of the Company's shares, to sell the cash management notes for a total consideration of USD 10,000,000 (equivalent to approximately RMB 67,000,000). As at the date of the announcement the Company had received the full consideration, and all conditions precedent to completion of the disposal other than the approval of the Company's independent shareholders had been fulfilled, with such shareholders' approval to be considered at an extraordinary general meeting to be held on 30 September 2026.

On the recharge service prepayments, the Company entered into a cooperation agreement with the recharge supplier on 7 August 2024 and made prepayments between August and October 2024 to secure resources. During the 2024 financial year, the Company made cumulative prepayments of approximately RMB 193,000,000 and RMB 88,000,000 to two recharge suppliers, while the recharge customer's actual usage amounted to approximately RMB 113,000,000 and RMB 60,000,000 respectively. The independent investigator found that the recharge suppliers refunded unused prepayments of approximately RMB 50,900,000 and RMB 77,800,000 respectively during the 2025 financial year and, after deducting further usage and offsetting against API business services provided, the remaining prepayment balances with the two recharge suppliers were approximately RMB 23,000,000 and RMB 7,000,000 respectively. The independent investigator considered that the prepayment arrangements with the recharge suppliers were supported by commercial rationale and commercial substance, that the use of the prepayments to procure recharge resources was in line with general industry practice, that the Group was able to settle the recharge service prepayments from its own internal resources without using the IPO proceeds, and that no relationship was identified between the recharge suppliers and the Company, its controlling shareholder, directors or senior management. The internal control adviser completed an independent full-scope review of the Group's internal control systems for the period from 1 January 2024 to 31 December 2025 and a follow-up review of the remediation measures implemented from 1 January 2026 to 10 September 2026, concluding that the Company had adopted all recommended internal control policies and implemented remediation and enhancement measures in respect of all identified control weaknesses. Save for the internal control procedures relating to cash management and investments, where no sample testing was available because the Company had not subscribed for any new cash management or investment products during the remediation follow-up review period, the internal control adviser considered that the Company has put in place adequate internal controls and procedures to discharge its obligations under the Listing Rules.

The audit committee and the Board considered that the remedial actions taken by the Company, namely the management changes under which Zuo Lei, Yang Yanjun and Shao Chuangye, who approved the investigation matters, resigned from all executive and management positions in the Group with effect from 30 August 2026, the disposal of the cash management notes and recovery of funds, and the strengthening of the internal control system, directly and substantively addressed the regulatory concerns, that the issues leading to the suspension of trading in the shares have been substantially resolved, and that the Company has put in place adequate internal controls and procedures to comply with its obligations under the Listing Rules. As for the trading status of the shares, trading in the Company's shares has been suspended on the Stock Exchange since 9:00 a.m. on 1 April 2025 pending the publication of outstanding financial results, and will remain suspended until the resumption guidance is met.

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