Home decoration listed company Filinger inflated revenue using "fake acceptance certificates," with financial reports "fudged" over four years

A home improvement industry listed company, Funder (603226.SH, share price 35.73 yuan, market cap 12.70 billion yuan), has released an announcement that exposes a financial mess lasting four years.

According to the announcement, Funder made accounting error corrections and retrospective adjustments to its financial statements and notes for fiscal years 2021 through 2024. Among them, there are two core adjustments: first, reclassifying the Lingang fund and the Hainan fund it holds from “investments in other equity instruments” to “other non-current financial assets”; second, making cross-period adjustments to the 23.3834 million yuan of revenue already recognized in 2024, with 7.0346 million yuan moved to 2023, 15.1128 million yuan deferred to 2025, and 1.2360 million yuan offset.

A reporter from The Daily Economic News (hereinafter referred to as “NBD reporter”) noted that Funder said that this error correction would not cause the company’s operating revenue—after deducting other income unrelated to its main business or lacking commercial substance—for fiscal years 2023 and 2024 to fall below 300 million yuan. It would also not lead to any change in the profit-and-loss nature of the periodic reports the company has already disclosed. On April 3, the company disclosed that the Shanghai Securities Regulatory Authority issued it an administrative regulatory measures decision letter, directly pointing to false records in its annual report.

On the morning of April 7, Bai Wenxi, deputy secretary-general and vice director of the China Enterprise Capital Alliance, said in an interview with reporters that Funder will recognize more than 60% of its cross-period revenue in 2025. In 2024, revenue was “precisely” set at 304 million yuan, only more than 4 million yuan above the delisting red line—such “dancing on the edge of a knife” is absolutely no coincidence.

Funder’s watered-down financials have once again brought the problem of financial non-compliance in the home improvement industry to the surface.

Inflating revenue with**“fake acceptance reports”****

On the evening of April 3, Funder released an announcement stating that it received the administrative regulatory measures decision letter from the Shanghai Securities Regulatory Authority, which clearly listed three major violations.

Reporters noticed that Funder tried to come up with crooked ideas in recognizing revenue from engineering projects to beautify its performance. Specifically, the company mainly fabricated in three ways: forging acceptance reports, requiring Party A to cooperate by issuing acceptance reports in advance, and deferring revenue recognition by citing internal approval procedures.

Using these methods, the company included the revenue from nine engineering projects that should not have been recorded in 2024 into that year’s financial statements, resulting in false records in the 2024 annual report.

In Bai Wenxi’s analysis, home improvement engineering typically uses the “acceptance report” as the revenue recognition time point. This model gives companies significant room to maneuver; “fake acceptance reports” are extremely easy to fabricate. Meanwhile, through cross-period adjustments, the signing date of the acceptance report can be manipulated, allowing revenue to be shifted freely between adjacent accounting periods—providing room for “performance laundering” or “shell maintenance.”

After reviewing Funder’s recent announcements, reporters learned that, since 2021, Funder has violated rules in its classification of financial assets. In that year, when the company invested in two funds—Lingang and Hainan—because the two funds did not meet the definition of equity instruments, changes in their fair value during the holding period were recorded in the “other comprehensive income” account. This led to false records in Funder’s annual reports for four years from 2021 to 2024.

In fact, regulators’ attention toward Funder showed early signs.

Earlier this year, in February, the Shanghai Stock Exchange issued a regulatory inquiry letter focusing on the company’s revenue recognition issues. It listed four key questions and required the company to respond one by one. For example, it required the company to distinguish between business segments to explain the compliance of revenue recognition, and whether there is any situation of recognizing revenue early or across periods to evade the risk warning for delisting, among other things.

In response to the inquiry, Funder said, “The company follows the relevant provisions of the Accounting Standards for Business Enterprises. During the reporting period, there has been no change to its revenue recognition policies. Revenue recognition is compliant, and there is no situation of evading the delisting risk warning by recognizing revenue early or across periods.”

It is worth noting that the company’s then chairman, Ugen Funder, for two consecutive years did not “stand behind” the annual reports as “not authentic.” For the 2024 annual report, he explicitly stated that he could not guarantee the truthfulness, accuracy, and completeness of the report contents. The reason was that the company had illegal and non-compliant matters, such as failing to fulfill the approval procedures for related-party transactions as required.

Bai Wenxi’s analysis said that the former chairman of Funder repeatedly refused to endorse the annual report for two consecutive years, which is a rare and severe governance failure among A-shares. It reflects issues such as ineffective internal controls, senior executives “shifting blame to protect themselves,” and the audit institution’s failure—effectively becoming a “rubber stamp.”

Suspicion of**“precise shell protection”****

Now, Funder is also mired in suspicion of “shell protection.”

After the adjustments, the company’s operating revenue in 2024 after deducting income unrelated to its main business and lacking commercial substance was only 304 million yuan. This is only more than 4 million yuan away from the A-share market’s “delisting red line” of 300 million yuan.

With such “precision,” it is hard for the market not to wonder whether this is a deliberately planned “shell protection” play behind the scenes.

Bai Wenxi’s analysis stated that one of the key considerations behind Funder’s move may be to evade delisting risk: to make 2024 revenue “real and fixed” at 304 million yuan to avoid “wearing a hat,” while also keeping income reserves. At the same time, by smoothing performance through cross-period adjustments, it attempted to conceal worsening operations and tried to use technical adjustments to avoid major illegal delisting risks.

You should know that Funder’s performance has been declining for many years, and operational difficulties have become increasingly apparent.

The 2024 annual report shows (Note: data before company corrections) that for the full year, the company’s revenue was 336 million yuan, down 14.86% year on year; and its net profit attributable to shareholders was a loss of 37.3071 million yuan, placing it in the dilemma of “revenue declining and losses widening.”

The 2025 performance forecast shows that it is expected that net profit attributable to shareholders will be a loss of 65 million yuan to 85 million yuan, and non-recurring profit or loss (net profit after excluding non-recurring gains and losses) will be a loss of 70 million yuan to 90 million yuan. Although revenue is expected to rebound somewhat, after deducting unrelated income it would still only be between 3.3 billion yuan and 3.6 billion yuan, meaning it still faces substantial operating pressure.

Even more thought-provoking is that, just as financial doubts cast a shadow and the sword of delisting hung overhead, in mid-2025 Funder suddenly planned a change of ownership and, by September of that same year, quickly completed the change in control.

According to the announcement, Angyi Qing Technology Partnership Enterprise (Limited Partnership) and its actual controller, Jin Yawei, transferred 25% of the shares held by the former actual controller Ding Furu and his persons acting in concert. That share percentage is below the triggering line for the mandatory tender offer obligation.

Meanwhile, Funder Holdings, the company’s single largest shareholder, transferred its 27.22% equity interest to institutions such as He Ronglian Fund. As for Ding Furu, although he still held 19.56% equity, he pledged to “give up the pursuit of control.”

Funder previously responded to regulators by saying that the transferee has no relationship with Ding Furu, and the exit of the German shareholders was voluntary.

Regarding the financial chaos in the home improvement industry, Bai Wenxi suggested that at the technical level, an engineering progress evidence preservation system based on blockchain + IoT (Internet of Things) technology could be used to ensure that acceptance data cannot be tampered with. At the institutional level, industry associations should unify revenue recognition rules, improve percentage-of-completion measurement rules, and conduct third-party verification for large-sum engineering revenue. At the regulatory level, exchanges should strengthen inquiries into revenue recognition and carry out mandatory on-site inspections for companies with abnormal circumstances and for companies whose directors have issued “not endorsed as authentic” statements for two consecutive years.