002072SZSE

Reply to the Inquiry Letter Regarding the 2019 Annual Report from the Shenzhen Stock Exchange

Kairuide Co., Ltd.·

✨ AI Summary

This announcement details the response of Kairuide Holdings Co., Ltd. to the Shenzhen Stock Exchange's inquiry regarding its 2019 annual report. Key issues addressed include the audit report's qualified opinion on receivables and provisions for bad debts, litigation liabilities, and the disposal of subsidiaries. The company provided clarifications on the financial status of its shareholder and the adequacy of its bad debt provisions, asserting compliance with accounting standards and risk management practices.

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Full Translation

AI Translation· azure_openai

Reply to the Inquiry Letter Regarding the 2019 Annual Report from the Shenzhen Stock Exchange

To the Management Department of the Shenzhen Stock Exchange's SME Board:

Kairuide Holdings Co., Ltd. (hereinafter referred to as "Kairuide" or "the Company") received your inquiry letter titled "Inquiry Letter Regarding Kairuide Holdings Co., Ltd.'s 2019 Annual Report" (SME Board Annual Report Inquiry Letter [2020] No. 80) on May 19, 2020. The Company has conducted a thorough study and verification of the issues raised in the inquiry letter and has requested opinions from the annual auditing firm. The responses to the inquiries are as follows:

1. Regarding the Qualified Opinion Matters

The Asia-Pacific (Group) CPA Firm (Special General Partnership) (hereinafter referred to as "the Auditor") issued a qualified opinion audit report on the Company's 2019 annual financial report. The matters leading to the qualified opinion include accounts receivable and bad debt provisions, litigation and estimated liabilities, and the disposal of subsidiaries. Please explain the following matters:

  1. As of the end of 2019, the Company had receivables of 249 million yuan from shareholder Zhang Peifeng, which arose from his assumption of the payable amount owed by De Mian Group Co., Ltd. (hereinafter referred to as "De Mian Group") for the disposal of textile asset packages. Due to restrictions on Zhang Peifeng's actions and De Mian Group's written response indicating that the asset handover was conducted according to the agreement, the Auditor did not have sufficient evidence to assess Zhang Peifeng's assumption of the debt and his repayment ability, nor could they reasonably determine whether adjustments to the aforementioned receivables and bad debt provisions were necessary, leading to the issuance of a qualified opinion.

(1) Please explain whether Zhang Peifeng has the ability to perform based on the specific reasons for the compulsory measures taken against him, the latest developments in the case involved, his personal asset and liability status, his status as a restricted consumer as listed by the court, any commitments from third parties to make payments on his behalf, any credit from banks or financial institutions (if any), and whether there are any other credit enhancement measures or performance guarantees.

Response:

  1. The situation regarding Mr. Zhang Peifeng's criminal case. According to information previously obtained by the Company, Mr. Zhang Peifeng has been subjected to compulsory measures due to suspected market manipulation. According to the Criminal Procedure Law of the People's Republic of China and other relevant legal normative documents, during the entire criminal procedure involving Mr. Zhang Peifeng's case, the Company, as an outsider, cannot obtain the latest developments in the case due to the requirements of the criminal investigation system and discipline.

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