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Explanation of Financial Matters in the Audit Inquiry Letter Regarding the Application for Issuance of Shares to Specific Targets by Shandong Mine Machinery Group Co., Ltd.
Document No.: Zhonghuan Zhuanzi (2026) No. 3700039
Shenzhen Stock Exchange:
We have received the "Audit Inquiry Letter Regarding the Application for Issuance of Shares to Specific Targets by Shandong Mine Machinery Group Co., Ltd." (Audit Letter [2025] No. 120013, hereinafter referred to as the "Inquiry Letter") forwarded by Lianchu Securities Co., Ltd. We have prudently reviewed the financial matters concerning Shandong Mine Machinery Group Co., Ltd. (hereinafter referred to as "Shandong Mine Machinery," the "Issuer," or the "Company") mentioned in the Inquiry Letter and report as follows:
Note 1: The abbreviations used in this response are consistent with those defined in the Prospectus.
Note 2: If there are discrepancies between the sum of the sub-items and the total in this explanation, they are due to rounding.
Question 1
During the reporting period, the Company's operating income was 2,285.6389 million yuan, 2,404.9984 million yuan, 2,697.5725 million yuan, and 1,708.4554 million yuan, respectively. The net profit after deducting non-recurring gains and losses attributable to the parent company was 33.4441 million yuan, 96.5499 million yuan, 137.2933 million yuan, and 93.5244 million yuan, respectively, with a year-on-year decline of 52.80% in the most recent period. The Issuer explained that this was due to a decline in demand in the coal mining equipment industry, intensified competition, and a significant decline in revenue from coal machinery and equipment.
At the end of each period of the reporting period, the Company's accounts receivable balances were 988.3336 million yuan, 1,219.3930 million yuan, 1,523.4199 million yuan, and 1,458.1761 million yuan, respectively. The proportions of accounts receivable with an aging of over one year were 31.39%, 29.40%, 29.62%, and 33.41%, respectively. Bad debt provision amounts were 238.8804 million yuan, 248.7185 million yuan, 274.6220 million yuan, and 222.2894 million yuan, respectively. Accounts receivable turnover rates were 3.35, 2.80, 2.43, and 1.38, respectively. The Issuer explained that this was due to the implementation of credit policy adjustments such as extending credit periods and relaxing payment terms. During each period of the reporting period, the net cash flow from operating activities was 32.8405 million yuan, -203.3290 million yuan, -185.6618 million yuan, and 146.2839 million yuan, respectively. The Issuer explained that this was due to lower-than-expected collections and accounts receivable being recorded as cash inflows from financing activities after bill discounting.
At the end of each period of the reporting period, the book value of the Company's inventory was 606.0445 million yuan, 718.2039 million yuan, 746.3664 million yuan, and 866.1812 million yuan, respectively, with goods dispatched growing rapidly, amounting to 73.3883 million yuan, 147.6071 million yuan, 283.2031 million yuan, and 305.1790 million yuan, respectively. The Company's contract liabilities were 180.5265 million yuan, 226.5076 million yuan, 275.5692 million yuan, and 339.9103 million yuan, respectively, representing prepayments from customers. In 2022, the Company signed the "Supply and Installation Contract for Tubular Belt Conveyors" (hereinafter referred to as "Hongxu Belt Installation Business") with Zouping County Hongxu Thermal Power Co., Ltd., with an amount of 226.10 million yuan. The construction of this project was delayed due to the impact of crossing a railway. As of the end of September 2024, it involved 139.1132 million yuan in goods dispatched; the application materials indicate that the project is expected to complete acceptance by the end of the first quarter of 2025.