Announcement on the Reply to the Inquiry Letter Regarding the 2022 Annual Report of Shenzhen Stock Exchange
The company and all members of the board guarantee that the content of the information disclosure is true, accurate, and complete, without false records, misleading statements, or major omissions.
On May 10, 2023, the Shenzhen Stock Exchange's Listing Company Management Department sent an inquiry letter regarding the 2022 annual report of the company (Inquiry Letter No. [2023] 106) (hereinafter referred to as the "Inquiry Letter"). The board of directors attaches great importance to this matter and has conducted a serious review of the relevant issues. The response is as follows:
- The annual report shows that the company achieved a net profit of -1.901 billion yuan in 2022, continuing to incur significant losses following a loss of 3.41 billion yuan in 2021. During the reporting period, the company recognized additional asset impairment provisions totaling 1.233 billion yuan, mainly including provisions for bad debts of accounts receivable of 836 million yuan, provisions for impairment of long-term equity investments of 245 million yuan, provisions for bad debts of other receivables of 116 million yuan, and provisions for inventory depreciation of 30 million yuan, among others. The company recognized a provision for bad debts of accounts receivable of 836 million yuan this period, a significant increase from 467 million yuan in the same period last year. Among them, the provision ratio for individually assessed accounts receivable was 89.19%, a significant increase from the initial ratio of 40.88%; the provision ratio for collectively assessed accounts receivable was 29.44%, classified by wholesale and retail industry and commercial factoring industry, with provision ratios of 20.36% and 73.04%, respectively. The annual audit accountant believes that through implementation of confirmation letters, interviews, and document checks, they still cannot obtain sufficient and appropriate audit evidence regarding the recoverability of the above amounts, and therefore cannot determine whether adjustments to the relevant account balances and bad debt provisions are necessary.
The company is requested to: (1) Provide a list explaining the business background, aging situation, contract payment terms, reasons for delayed collection, and rationality of the accounts receivable for which bad debt provisions were individually assessed, as well as the collection measures taken or planned and their effects (if any). Indicate whether the transactions involved have commercial substance, whether there were any fictitious transactions in previous years, and provide the names of the customers involved in the aforementioned accounts receivable, explaining whether there are any related relationships with the company, its directors, supervisors, senior management, or shareholders holding more than 5%, or other relationships that may lead to conflicts of interest; (2) Explain the reasons and rationality for the significant increase in the provision ratio for bad debts of accounts receivable assessed individually compared to the beginning of the period, and whether the provisions for the relevant amounts in previous years were prudent and sufficient; (3) Explain the reasons and classification basis for the provision for bad debts of accounts receivable assessed collectively by wholesale and retail industry and commercial factoring industry, the method for determining the provision ratios, the reasons and rationality for the significant differences in provision ratios, and based on this, explain whether the relevant provisions are prudent and sufficient; (4) Explain the business background, operational status, and performance ability of the top five accounts receivable by debtor at the end of the period, and whether there are any related relationships with the company, its directors, supervisors, senior management, or shareholders holding more than 5%, or other relationships that may lead to conflicts of interest. The annual audit accountant is requested to verify the above issues and provide clear opinions.