High Rise Holdings Co., Ltd.
Stock Code: 000971
Stock Abbreviation: *ST High Rise
Announcement No.: 2024-48
High Rise Holdings Co., Ltd. (hereinafter referred to as "the Company" or "the Listed Company") and all members of the Board of Directors guarantee that the content of this information disclosure is true, accurate, and complete, without any false records, misleading statements, or major omissions.
On May 20, 2024, the Company received the Shenzhen Stock Exchange's inquiry letter titled "Inquiry on High Rise Holdings Co., Ltd." (Company Department Inquiry Letter [2024] No. 96). After careful review of the relevant issues, the Company is responding in writing to the questions listed in the inquiry letter as required by the regulatory authority. The responses to the relevant questions are as follows:
- The reply letter indicates that as of now, the Company's subsidiary, Beijing High Rise Data Systems Co., Ltd. (hereinafter referred to as "Beijing High Data"), and Kezuohouqi Urban Investment and Operation Co., Ltd. (hereinafter referred to as "Kezuohouqi Urban Investment") have established two project companies in Inner Mongolia with paid-in capital of 14.75 million yuan and 11.40 million yuan, respectively. Among them, Beijing High Data's paid-in contributions are 6.75 million yuan and 1.4018 million yuan, accounting for only 9.83% and 11.40% of the registered capital. In 2023, the Company's net profit after deducting non-recurring gains and losses was -377 million yuan, marking six consecutive years of losses. As of the end of Q1 2024, the Company's net assets were -65.75 million yuan, with cash and cash equivalents of only 7.284 million yuan, insufficient to cover short-term debts, resulting in a debt-to-asset ratio of 105.73%.
(1) According to the reply letter, the project companies need to raise financing to commence operations. Please explain the Company's financing situation, financing capacity, and financing methods in light of the Company's continuous losses and insolvency, including whether there is a risk of debt default or a break in the capital chain if the Company continues to incur debt.
Response: The Company's net profit for the last three accounting years, whether before or after deducting non-recurring gains and losses (hereinafter referred to as "net profit"), has been negative, and the audited net assets for 2023 were negative. In 2021, the Company reported a net profit of -556.7684 million yuan, which included an impairment loss of goodwill and other long-term assets of 341.8106 million yuan; in 2022, the net profit was -536.0325 million yuan, including an impairment loss of goodwill and other long-term assets of 161.6748 million yuan; in 2023, the net profit was -377.1091 million yuan, including an impairment loss of goodwill and other long-term assets of 114.8754 million yuan.
As of the end of 2023, the Company's retained earnings were -3,874.7414 million yuan, leading to a net asset value attributable to shareholders of the listed company of -312.580 million yuan, which has taken into account the cumulative impairment provision for goodwill of 2,910.7961 million yuan from 2018 to 2023, cumulative management expenses of 80.9262 million yuan, and estimated liabilities due to illegal guarantees, joint loans, and pending litigation of 197.5994 million yuan. As of the end of Q1 2024, the retained earnings were -4,332.2903 million yuan, and the net assets attributable to shareholders of the listed company were reduced to -65.7539 million yuan.