On February 7, Fujian Ideal Jewellery Industrial Co.Ltd(002740) (SZ: 002740) announced that due to the violation of Millennium jewelry, a wholly-owned subsidiary, it issued 194 million yuan invoices to two new energy Co., Ltd. in Jiangxi, with a tax of 25.23 million yuan and an illegal profit of 262800 yuan. The illegal income of 262800 yuan was confiscated by the tax bureau and a fine of 500000 yuan was imposed.
For this violation, on February 8, Shenzhen Stock Exchange issued a letter of concern, asking Fujian Ideal Jewellery Industrial Co.Ltd(002740) to explain the reason and purpose of illegal Invoicing, whether there is a real transaction, and whether the business involved is related to the main business of Millennium jewelry; Whether the shareholders and directors of listed companies are related to the two new energy companies in Jiangxi, and whether Millennium jewelry has financial fraud in fictitious business.
The performance of subsidiaries has changed
Previously, on January 28, Fujian Ideal Jewellery Industrial Co.Ltd(002740) had issued a performance forecast. In 2021, the company’s net profit attributable to the parent company lost 600-785 million yuan, compared with 1.571 billion yuan in the same period last year; The net profit deducted from non profits was 593-768 million yuan, with a loss of 1.311 billion yuan in the same period last year.
The announcement said that the loss was mainly due to the sharp decline in the company’s operating performance and the provision of bad debt losses for accounts receivable; The performance of wholly-owned subsidiaries Jiangsu Millennium Jewelry Co., Ltd. and Chengdu Shumao diamond Co., Ltd. did not meet the expectations, and the future performance is greatly uncertain due to the impact of epidemic and other factors. The financial forecast fully accrued the consolidated goodwill.
In 2017, Fujian Ideal Jewellery Industrial Co.Ltd(002740) issued an announcement to purchase 100% equity of Millennium jewelry and Chengdu Shumao with RMB 900 million and RMB 700 million respectively. However, due to the year-on-year decline in the net profits of the two companies in 2020, the two companies failed to meet the cumulative performance requirements from 2017 to 2020 at the end of the reporting period in 2020. According to the 2020 annual report, the company made provision for goodwill impairment of 223 million yuan for Millennium jewelry and 230 million yuan for Chengdu Shumao, totaling 453 million yuan.
Fujian Ideal Jewellery Industrial Co.Ltd(002740) prefers big acquisitions. In 2017, the value-added rates of Millennium jewelry and Chengdu Shumao were as high as 150.14% and 255.62% respectively. Prior to the acquisition of the two companies, Fujian Ideal Jewellery Industrial Co.Ltd(002740) also acquired 51% equity of Shenzhen Taipan Jewelry Co., Ltd. for a consideration of 255 million. According to the disclosure, the net assets of Taipan jewelry were 168 million yuan by the end of 2016. However, in March 2021, Fujian Ideal Jewellery Industrial Co.Ltd(002740) sold this part of the equity at the price of 1 million yuan.
In July 2020, Fujian Ideal Jewellery Industrial Co.Ltd(002740) announced that the company had lost its effective control over the large-scale jewelry. The reason is that the large-scale jewelry refused to hand over the official seal, license, account book and other materials, which fundamentally infringed and deprived the listed company of its control over the large-scale jewelry, resulting in the company’s inability to timely judge the achievement of the performance commitment of the large-scale jewelry in 2019, Unable to participate in the future operation and management of large-scale jewelry.
In March 2021, Fujian Ideal Jewellery Industrial Co.Ltd(002740) said in the announcement that according to the company’s public information query, there were many executed cases and tax arrears in the large market jewelry, overdue interest on loans from many banks, and there were already operational difficulties.
However, in the subsequent disclosure, it can be seen that the company was unable to complete the transfer registration procedures of 51% equity of large-scale jewelry due to the freezing of 51% equity of large-scale jewelry held by Fujian Ideal Jewellery Industrial Co.Ltd(002740) . And in January 2022, the large market of jewelry was applied for bankruptcy reorganization.
Behind the acquisition of 255 million yuan and the sale of 1 million yuan, the relationship between the large market of jewelry and Fujian Ideal Jewellery Industrial Co.Ltd(002740) is not simple. It has been reported by the media that the actual controller of the large market of jewelry is Su Jianming, the cousin of Su riming, the actual controller of Fujian Ideal Jewellery Industrial Co.Ltd(002740) . Fujian Ideal Jewellery Industrial Co.Ltd(002740) later, in response to the investor’s inquiry, he confirmed that Su riming and Su Jianming were cousins, and said that the trading of large-scale assets was carried out according to the corporate governance process.
company “out of control”
Not only is the market of jewelry out of control, Fujian Ideal Jewellery Industrial Co.Ltd(002740) is also in a “out of control” state. On November 12, 2021, Fujian Ideal Jewellery Industrial Co.Ltd(002740) announced that the shares held by Su riming, the company’s largest shareholder, and the persons acting in concert (DI ailing, Su Yongming, Su Qingxiang) had been completely frozen and judicial waiting for freezing, and some shares were still pledged. The company was changed to have no controlling shareholder and no actual controller.
Since the first loss of net profit of Fujian Ideal Jewellery Industrial Co.Ltd(002740) in 2019, the loss of Fujian Ideal Jewellery Industrial Co.Ltd(002740) has gradually expanded. The net profit attributable in 2019 was – 300 million yuan and – 1.56 billion yuan in 2020. Monetary capital will be reduced from 133 million yuan in 2019 to 18.99 million yuan in 2020. In the first half of 2021, Fujian Ideal Jewellery Industrial Co.Ltd(002740) had 10.86 million yuan of monetary capital, 747 million yuan of accounts receivable, 646 million yuan of short-term loans, 290 million yuan of accounts payable and 474 million yuan of other accounts payable.
However, under the background of high debt, the company is still providing guarantee for downstream dealers, which is opposed by many directors.
On November 19, 2021, the company held a meeting of the board of directors to consider and approve a number of guarantees, including providing guarantees for the loan of 4.75 million yuan for Siping Dingge Jewelry Co., Ltd., 33.97 million yuan for Siping Baotai Jewelry Co., Ltd. and 27 million yuan for Liaoning Dongxiang Jindian Jewelry Co., Ltd.
The reason given by the company is that the above-mentioned company is a downstream dealer. In order to solve the capital problems of some downstream dealers in the industrial chain in the business process, establish a stable product sales channel and enhance the stability of the company’s product supply chain, the company provides joint and several liability guarantee for them.
According to the disclosure, as of November 22, 2021, the actual external guarantee balance of the company and its subsidiaries was 834 million yuan, accounting for 91.80% of the company’s audited net assets attributable to the parent company in 2020.
Xu Xinxiong and Chen Maosen, the directors of the company, voted against the guarantee because Fujian Ideal Jewellery Industrial Co.Ltd(002740) company is currently in the stage of bankruptcy and reorganization, and they do not know the guarantee ability of the counter guarantee object of the guarantee business. Independent director Wang Chunhua also cast a negative vote because it is understood that from 2019 to 2021, the purchase volume of the three dealers from the company has decreased significantly compared with that before; According to the financial statements of the three dealers provided by the company as of September 30, 2021, the asset liability ratios of Dingge, Baotai and Dongxiang are 65%, 76% and 81% respectively.
The Shenzhen intermediate people’s court announced on November 30, 2021 that the reorganization of the company had been started.
