Chinese flexible display maker Royole has delayed paying salaries to employees for months after the money-losing company ditched its initial public offering (IPO) plan in Shanghai’s Nasdaq-like STAR Market in February.
On Wednesday, a web user who claimed to be “Royole HR” left a message to the secretary of Longgang District Party Committee of Shenzhen, saying that the firm had been in arrears with his salary for three months, and some grassroots employees such as security guards and cleaning staff had even been in arrears for half a year.
According to Caixin’s report, several Royole employees said that they didn’t receive their October salary. The company usually pays monthly wages on the 10th day of the following month, but many employees were told on October 10 that only part of their September payments could be made, and October salaries would be delayed until November 30.
On the afternoon of November 30, Liu Zihong, Royole’s CEO, held a meeting to communicate the company’s financial situation to all employees. Liu said that the company’s financing is in progress, and it is expected to obtain fresh funds in December. Salaries will be paid at the end of December or in January 2022, but there are still uncertainties.
Founded in 2012, Royole has offices in Shenzhen, Beijing and Hong Kong, in addition to the Silicon Valley in the United States, the Netherlands and Tokyo. Royole is a manufacturer of flexible displays and sensors that can be used in a range of human-machine interface products, including foldable smartphones and other smart devices.
It has only been ten months since Royole withdrew its IPO application.
In November 2020, Royole shelved its listing plan in the United States and turned instead to Shanghai’s Sci-Tech Innovation Board (STAR Market) board, as it disclosed in its prospectus on the last day of 2020. However, it withdrew its IPO application in February this year.
Royole originally planned to issue no more than 120 million shares, and planned to raise 14.434 billion yuan ($2.27 billion).
According to the prospectus, in 2017-2019 and the first half of 2020, Royole achieved operating income of 65 million yuan, 109 million yuan, 227 million yuan and 116 million yuan, respectively. During the same period, net losses reached 359 million yuan, 802 million yuan, 1.073 billion yuan and 961 million yuan, respectively.
Royole attributed the net loss increase to the R&D expenses growth. Its R&D expenses from 2017 to the first half of 2020 were 160 million yuan, 490 million yuan, 590 million yuan and 580 million yuan, respectively.
On November 21, Liu Shuwei, an independent director of Royole, issued a message via Wechat, responding to the public query of her position, and the reasons for withdrawing the IPO application.
Liu said that the reason why she chose to be the independent director was that Royole has mastered the international leading flexible electronics technology, and its R&D capability is strong. Regarding the withdrawal of the IPO application, Liu said that the main reason is that the company has “three types of shareholders” that may not comply with listing requirements.