Notice on Xiamen Zhongchuang Environmental Technology Co.Ltd(300056) gem notice [2022] No. 97 Xiamen Zhongchuang Environmental Technology Co.Ltd(300056) board of directors:
On the evening of January 28, 2022, your company disclosed the annual performance forecast for 2021. It is estimated that the net profit attributable to the shareholders of the listed company in 2021 (hereinafter referred to as “net profit”) will be a loss of 380 million yuan to 490 million yuan, and the net profit loss of the company in the first three quarters of 2021 will be 38.59 million yuan. The company disclosed that it was mainly affected by the large amount of goodwill impairment of Jiangxi Xiangsheng Environmental Protection Technology Co., Ltd. (hereinafter referred to as “Xiangsheng environmental protection”), the full amount of bad debt provision for the performance compensation receivable from Chen Rong, the sharp rise in the price of raw materials, the failure of civil air purification equipment to effectively explore the market and other factors. Our department is concerned about this. Please verify and explain the following matters:
1. According to the performance forecast, your company plans to fully withdraw the impairment of Xiangsheng environmental protection’s goodwill with a book value of 276.77 million yuan. In October 2019, your company acquired 51% equity of Xiangsheng environmental protection through asset replacement, with a transaction price of 460 million yuan. The counterparties Chen Rong, Zhang Bingguo and Liao Yuhua promised that the net profit of Xiangsheng environmental protection in 2020, 2021 and 2022 would not be less than 80 million yuan, 96 million yuan and 104 million yuan respectively. In 2020, the net profit of Xiangsheng environmental protection was 45.9675 million yuan, and your company made a provision for goodwill impairment of 57.9723 million yuan. On March 29, 2021, your company paid 90 million yuan to Hangzhou Yitong investment partnership (limited partnership) (hereinafter referred to as “Hangzhou Yitong”) to purchase the equity of Xiangsheng environmental protection, holding 63.71% of the equity of Xiangsheng environmental protection in total. (1) Please supplement and disclose the main parameters of the goodwill impairment test of Xiangsheng environmental protection, including income, gross profit margin, period expense rate, discount rate and other information in the forecast period, and in combination with your company’s previous reply to our relevant inquiry letter, the business development, operation status, industry change trend of Xiangsheng environmental protection after it is included in the scope of the company’s consolidated statements Analyze and explain the valuation basis of the company’s previous acquisitions of Xiangsheng environmental protection equity, whether the setting of previous evaluation parameters is reasonable and prudent, the reasons and rationality of major changes (if applicable) before and after, the reasons and rationality of the changes of relevant factors that the company failed to foresee in the previous transactions and replies, and whether the relevant information disclosure and replies are true and accurate;
(2) Please check and explain whether the provision for goodwill impairment at the end of 2020 is timely and sufficient;
(3) Whether the board of directors and the corresponding senior managers are diligent and responsible in the Prudential investigation and decision-making performed in the transaction planning and deliberation, and whether there are cases that damage the interests of the listed company, such as intentional high price acquisition and interest transfer;
(4) In combination with the above reply, please explain the reasons why the company’s business situation changed significantly in a short time after the acquisition of the equity of Xiangsheng environmental protection.
2. According to the performance forecast, in view of the significant weakening of Chen Rong’s repayment ability and willingness, the net book value of the remaining performance compensation receivable from Chen Rong is 47.41 million yuan, and the bad debt provision is fully accrued. On September 18, 2020, after the aforesaid asset replacement was completed, the company disclosed that it had received a letter of commitment from Chen Rong and other counterparties, promising to lock the company’s shares indirectly held by them as a guarantee for the performance commitment compensation obligation. Since then, the relevant shares have been frozen and forced to close positions by the pledgee. (1) Please explain the specific measures taken by your company to evaluate the performance compensation ability of counterparties Chen Rong, Zhang Bingguo and Liao Yuhua when purchasing Xiangsheng environmental protection, as well as their rationality and sufficiency, and the reasons for failing to foresee the change of counterparties’ performance compensation ability;
(2) The specific measures taken and proposed to be taken by the company to recover the performance compensation and their timeliness, sufficiency and rationality, the possibility of recovery of performance compensation and its judgment basis;
(3) Calculation basis, process, timeliness and rationality of impairment provision;
(4) Whether the company carries out internal accountability for relevant losses and its reasons, and whether there is any intentional delay, waiver of rights and other situations that transfer benefits to the counterparty in a disguised form.
Please make a written statement on the above matters, submit the relevant explanatory materials to our department for disclosure before February 10, 2022, and send a copy to the listed company supervision division of Xiamen securities regulatory bureau. At the same time, remind your company that listed companies must earnestly and timely fulfill the obligation of information disclosure in accordance with national laws and regulations and the Shenzhen Stock Exchange GEM Listing Rules. All members of the board of directors of a listed company must ensure that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions, and bear individual and joint liabilities for their guarantee.
This is to inform you.
Gem company management department
January 29, 2022
