SMM News: affected by the debt crisis, the former "lithium power giant" Jianruiwo loss continued to expand in 2018, the loss reached 3.92 billion yuan, once again become the loss king of Shaanxi listed companies. In addition, Kennedy was able to issue an audit opinion that could not be expressed by accounting firms during the reporting period, which was also questioned by the Shenzhen Stock Exchange.
On May 13, the Shenzhen Stock Exchange issued an inquiry letter to enquire about the 2018 annual report of Canon. The inquiry letter raised a total of 29 questions, mainly related to issues related to the inability of accountants to express their views and the impact of the debt crisis on companies.
"We are currently responding to the questions involved in the inquiry letter." The relevant person in charge of Kennedy Werner told reporters.
Issues related to the inability of accountants to express their views are the focus
According to the annual report, the company achieved 4 billion yuan in revenue in 2018, down 58.6 percent from the same period last year. The realization of the net profit attributable to the owner of the parent company was-3.92 billion yuan, compared with-3.68 billion yuan the previous year, and the margin of loss was expanded. It is worth noting that Kennedy was issued by the accounting firm during the reporting period with an audit opinion that was unable to express its opinion.
The Shenzhen Stock Exchange inquiry, but also more related to financial issues. The inquiry letter first stated that the failure of Kennedy to provide 26 subsidiary bank settlement accounts and accurate and complete correspondence information in coordination with the audit resulted in the failure of 42 bank accounts to implement correspondence certificates or reply letters. In this regard, the Shenzhen Stock Exchange asked Kennedy to explain in detail the specific reasons for failing to provide bank account and letter and certificate information, and that the above account involves the balance and specific composition of the main body and monetary funds. The relevant evidence, safeguard measures and rationality of the company and the board of directors to ensure the authenticity and proper presentation of monetary funds.
According to reporters, because of the debt crisis, a large number of Kenrewo assets have been seized. The inquiry letter pointed out that in the process of inventory audit, due to the closure of inventory and a large number of departures of relevant warehouse management personnel, the inventory procedure was not effectively implemented, involving a total amount of 394 million yuan, accounting for 15.95% of the inventory balance at the end of the year. The company failed to coordinate the issuance of commodities, commissioned processing materials and other remote inventory to carry out on-site inventory or successful implementation of letters, involving a total amount of 590 million yuan, accounting for 23.90% of the inventory balance at the end of the year. The letter of inquiry asked for a separate description of the situation.
According to the annual report, the book balance of Canon's ending inventory was $2.471 billion, and a reserve of $220 million was set aside for inventory decline during the reporting period. In this regard, the inquiry letter asked Kennedy Wo to explain whether the provision for inventory decline is sufficient and reasonable, as well as the calculation process, main assumptions and key parameters of the provision for inventory decline.
According to the annual report, in April 2019, Jianriwang signed an agreement with its subsidiary, Shenzhen Watma, to pay off its debts to the company with physical assets and claims. In this regard, the Shenzhen Stock Exchange asked Kennedy Wo to add to the timing of the signing of the agreement, the main contents, the current status of the debt-paying assets, whether there are restrictions on rights, whether the transaction requires the consent of Watma creditors or any other form of approval process, And ask the lawyer to express a clear opinion.
At the same time, the Shenzhen Stock Exchange asked Jian Ruiwo to explain the basis and rationality of recording all the performance compensation paid by Li Yao, a major shareholder, into the reporting period in accordance with the above agreement, and whether it conforms to the provisions of the Accounting Standards for Enterprises. State whether the above items have a significant impact on the accounting treatment of performance compensation and the net assets of the company at the end of the reporting period, and whether it is necessary to comply with the interim information disclosure obligations.
Among the questions asked, a number of questions related to the company's accounts receivable and bad debts, including the accounts of the company and other companies, such as Shenzhen Yuewo Technology Services Co., Ltd.
The inquiry letter also pointed out that at the end of the reporting period, the book value of Jianruiweneng fixed assets was 2.64 billion yuan, of which the book value of temporarily idle fixed assets was 1.169 billion yuan, and the number of leased fixed assets was significantly reduced to 395 million yuan compared with the beginning of the period. The book value of the project under construction is 503 million yuan, and a provision of 463 million yuan for impairment of fixed assets was made during the reporting period, but no provision was made for impairment of the project under construction. In this regard, the Shenzhen Stock Exchange asked Jianruiwo to provide additional information on this situation.
According to the annual report, Kennedy was able to achieve revenue of 3.997 billion yuan in 2018. The inquiry letter asked Kennedy to distinguish between debt deductions, such as inventory, and other forms of sales, adding to the details of the realization of operating income. Including the type of product sold, the amount of money sold, the basis of pricing, the reason and rationality of very low or negative gross profit, the counterparty to the transaction and whether there is a relationship with the company, and the status of repayment up to now, It also explains whether there are any anomalies in the corresponding ways of income recognition and cost measurement. Whether there is a situation of sales return or compensation due to product quality during the reporting period, if so, it is necessary to add whether the amount of product sales, whether the lawsuit is involved, the amount of corresponding compensation and whether the corresponding product quality deposit is sufficient.
The inquiry letter pointed out that the company's 2018 financial statements were issued by accountants with an audit opinion that was unable to express an opinion. Related to monetary funds, inventory, accounts receivable, fixed assets and construction in progress, income and costs, performance compensation, contingent matters, transfer of claims and liabilities and other related matters. The company is requested to provide further clarification in the light of the specific circumstances in which it is unable to express its views on the matter and the responses to the above-mentioned questions.
The inquiry letter also asks about the provision for impairment of the goodwill of subsidiary Daming Technology Co., Ltd., part of the purchase and sale contract signed between Shenzhen Waterma and its customers, non-recurrent profit and loss, and so on.
In this regard, the Shenzhen Stock Exchange requires accountants to explain, on a case-by-case basis, the specific audit procedures, audit measures or alternative measures taken in connection with the failure to express their views, as well as their adequacy and completeness. Unable to obtain the specific performance, key factors and reasonableness of adequate and appropriate audit evidence, and to verify and express clear views on many of the above-mentioned issues.
The impact of the debt crisis is of concern
Production has largely stalled as a result of the continuing debt crisis. In this regard, the Shenzhen Stock Exchange asked Jian Ruiwo to add to the specific situation of the company so far, the overall operating rate, the operating rate of each subsidiary and its calculation method, the corresponding output; The operating income, net profit, number of employees, number of R & D personnel and their year-on-year changes achieved by the subsidiary during the reporting period. And asked whether the above situation will have a significant adverse impact on the company's sustainable operating capacity, market competitiveness and the subsequent introduction and resumption of production by strategic investors.
During the reporting period, the total amount of debt repaid by the company was about 1.196 billion yuan. In response to this, the Shenzhen Stock Exchange asked the company to specify in detail the specific time when the debt of the above-mentioned related party occurred, the nature of the debt, the amount of the debt, the specific time of repayment, and so on. Combined with the debt repayment method, it further explains the reason and rationality of almost all the related party debt paid off during the reporting period.
At the same time, the inquiry letter inquired about the low rate of execution of the major sales contracts signed by the company and some of them had exceeded the time limit for the execution of the contracts, and asked the company to provide additional information on the implementation of the major sales contracts during the reporting period. In the light of the company's capital chain or supply capacity, product technical indicators, customers, etc., explain whether significant changes have taken place in the above-mentioned contract, whether it has been substantially terminated, the liability for breach of contract that has not been performed in accordance with the agreement, and the specific impact on the company, Whether there is a need to fulfil the interim disclosure obligation.
During the reporting period, the company added 9 subsidiaries, disposed of 4 subsidiaries, and added 1 subsidiary after the acquisition. In this regard, the Shenzhen Stock Exchange asked the company to add to the above subsidiary changes in the specific circumstances.
In addition, as a result of the debt crisis, the company was involved in 536 major litigation and arbitration matters, a large number of assets were closed and most bank accounts were frozen. The Shenzhen Stock Exchange also asked questions about this. In addition, the inquiry letter also related to Watma's management and decision-making mechanism, the major shareholder Li Yao's 5.2 billion yuan performance compensation and other issues.
The Shenzhen Stock Exchange asked Kennedy to respond by May 17. "We will organize responses based on the above questions." The relevant person in charge of Kennedy told reporters, but because there are more problems involved, need a process, "after the completion of the response work, we will disclose it as soon as possible."