Ultrapower Rents Real Estate to Related Parties Below Market Price
Ccstock.cn, 11/26/12
Chinese stock news site CCstock.cn reports that Beijing-based IT solutions provider Ultrapower Software Co., Ltd. (300002.SZ) failed to disclose in its financial reports that it rented real estate to Beijing-based software developer CITIC Application Service Provider, an affiliated company, at rents far below market rates.
In its mid-year 2012 financial report, Ultrapower reported that it had rented ninth-floor office space in Shouzuo Plaza to CITIC Application Service Provider, but no information regarding the rental was reported in the company's mid-year or annual reports for 2011. Ultrapower has also not made timely disclosures regarding the details of other rentals to affiliated companies.
CITIC Application reportedly rented a total of 2,220.54 square meters of space from Ultrapower. Ultrapower confirmed that it had received RMB 1.36 mln in profits from the rental in H1 2012. Over the 182 days of H1 2012, this works out to roughly RMB 3.36 per meter per day.
A source working in the real-estate industry said that Xinjiyuan Building 2, next to Shouzuo Plaza, had per-square-meter rental price (including property management fees) of RMB 8.3 this year, noting that Shouzuo Plaza's proximity to the road and higher property management fees would likely make rents in the building higher.
In a March 2010 filing, Ultrapower announced that it would acquire floors 7-22 in Shouzuo Plaza for RMB 421 mln, of which RMB 210 mln in funds would be used to acquire floors 7-14. Ultrapower and its subsidiaries use less than two floors of this space; the remaining six floors have all been rented out.
Keywords: scandal wireless Ultrapower 300002.SZ IT services WVAS
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