Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
Suning.Com Co.Ltd(002024) (hereinafter referred to as "the company") received the attention letter on Suning.Com Co.Ltd(002024) issued by the management department of listed companies of Shenzhen Stock Exchange on January 29, 2022 (company Department attention letter [2022] No. 97, hereinafter referred to as "the attention letter"). The company attached great importance to it and gave the following specific replies to the relevant issues of the attention letter:
1、 During the reporting period, your company accrued the expected credit loss on the accounts receivable of Suning convenience supermarket (Nanjing) Co., Ltd. and its subsidiaries. Please specify the transaction background of the accounts receivable between the customer and your company, including but not limited to the time, content, amount, aging, historical payment collection, whether the customer and your company form a related relationship Whether the transaction has fulfilled the corresponding information disclosure obligations and review procedures, and in combination with the operation of the customer during the reporting period, explain the basis and time point of the significant increase of the above credit risk, and explain the basis and rationality of your company's choice to withdraw the expected credit loss during the reporting period.
reply:
(I) Suning convenience supermarket (Nanjing) Co., Ltd. (hereinafter referred to as "Suning store") is a related party of the company. The proposal on joint capital increase with related parties was deliberated and adopted at the 42nd meeting of the sixth board of directors on May 17, 2019. The subsidiary of the company holds 35% equity of Suning smart life, Mr. Zhang Kangyang, an affiliated natural person of the company, indirectly holds 65% equity of Suning smart life through his subsidiary and is its controlling shareholder. In June 2019, Suning Smart Life transferred the equity of Suning convenience supermarket (Nanjing) Co., Ltd. (hereinafter referred to as "Suning store") and its subsidiaries held by the company through its 100% controlled domestic company. According to the stock listing rules of Shenzhen Stock Exchange, Suning store and its subsidiaries are related parties of the company.
(II) related party transactions between Suning store and the company
1. Overview of related party transactions
Suning store is mainly engaged in community convenience store business. It provides users with commodity sales and services through offline community convenience stores and online Suning store app. At the same time, relying on the company's strong supply chain, logistics and it capabilities, Suning store and the company carry out business cooperation in commodity procurement, logistics after-sales service, information technology consulting service, store leasing, etc.
The details of the amount of related party transactions are as follows:
RMB: 100 million yuan
Content of related party transactions July December 2019 2020 2021 (note)
Selling goods and providing related services 12.92 18.54 5.34
Provide logistics after-sales and labor outsourcing services 0.67 1.23 0.12
Provision of information technology consulting services 0.58 0.88-
Provide marketing services -- 0.04
Lease - Suning.Com Co.Ltd(002024) as lessor 0.17 0.16 0.01
Total 14.34 20.81 5.51
Note: the transaction data excluding tax in 2021 is the preliminary statistics of the company's financial department, and the final data is subject to the company's annual report in 2021. 2. Information disclosure obligations and review procedures performed by the company
The 45th meeting of the sixth board of directors and the second extraordinary general meeting of shareholders in 2019 passed the proposal on the prediction of daily connected transactions; The 12th meeting of the 7th board of directors of the company deliberated and approved the proposal on the daily connected transaction with Suning Smart Life in 2021. Suning store cooperated with the company in commodity procurement, logistics after-sales service, store leasing, information technology consulting service and other aspects, and fulfilled the review procedures of related party transactions. The above-mentioned connected transaction companies have been disclosed in the interim announcement (announcement on the prediction of daily connected transactions No. 2019-064, announcement on the prediction of daily connected transactions in 2021 No. 2021-040) and periodic reports (2019 annual report, 2020 semi annual report, 2020 annual report and 2021 semi annual report).
3. Aging and collection of accounts receivable
RMB: 100 million yuan
December 31, 2019 December 31, 2020 December 31, 2021
Balance of accounts receivable 6.23 6.01 11.74
Accounts receivable aging - within one year 6.23 6.01 6.07
Accounts receivable aging - 1-2 years - 5.67
During the reporting period, the operation of Suning small stores was greatly affected by the epidemic, and the number of stores decreased from 567 at the beginning of the year to 139 at the end of the year. At the same time, the management of Suning small stores made changes to the business strategy of Suning small stores, gradually changed from direct stores that focus on assets to franchise stores that ignore assets, and the sales mode changed from C-end sales to b-end supply. In 2021, Suning store failed to pay the payment in time due to its own business difficulties. After repeated communication and coordination by the company, the last payment was made on September 29, 2021. After that, Suning store did not continue to pay. Since September, the company has also stopped supplying Suning stores.
Therefore, the company believes that the credit risk of the accounts receivable from Suning small store has increased significantly, the credit impairment has occurred, and there is no collateral and guarantee. Therefore, at the end of the reporting period, the company evaluated the expected recoverable cash flow under different scenarios by referring to the experience of credit loss in similar industries, combined with the current situation and the prediction of future economic conditions, According to the difference between it and the cash flow receivable under the contract, the credit impairment loss of accounts receivable from Suning store is fully accrued. However, the company will still fully promote the recovery of the above accounts receivable.
2、 During the reporting period, your company made an impairment provision of about 1.3 billion yuan for intangible assets such as trademarks and domain names related to Tiantian express logistics and about 1 billion yuan for goodwill of Carrefour China. Please explain the reason and rationality of your company's choice to make an impairment provision for its goodwill in 2021 in combination with the operation of Tiantian express logistics and Carrefour in recent three years, Whether there is centralized large amount provision for impairment.
reply:
(I) about Daily Express
Since 2018, the company has integrated the daily express logistics business with the original logistics transportation and distribution business, and has begun to benefit from the synergy of this integration. Therefore, the company allocates all the goodwill formed by the acquisition of Tiantian express logistics business to the Suning logistics transportation and distribution asset group combination composed of Tiantian express logistics business and the group's logistics transportation and distribution business.
In 2019, in order to improve the customer experience of Tiantian express, the company continued to promote the integration of Tiantian express franchisees into direct marketing, optimized the types of express service packages and increased delivery subsidies, resulting in large phased investment. In 2019, Tiantian express achieved an operating revenue of 2.078 billion yuan and an annual loss of 1.786 billion yuan. Through the goodwill impairment test, the company compared the book value of Suning logistics transportation and distribution asset group (including goodwill) with its recoverable amount in 2019, and the relevant difference accrued goodwill impairment provision of about 217 million yuan.
In 2020, the company's external business environment was seriously affected by the epidemic. Although the market consumption boom rebounded slowly quarter by quarter, the overall development was under pressure, and the total retail sales of social consumer goods decreased year-on-year. The company's express business was affected by the overall operation, and the operation results were not as expected. In 2020, the daily express achieved an operating revenue of 2.444 billion yuan and a loss of 1.226 billion yuan, The provision for impairment of goodwill in the current year was about 1.033 billion yuan.
In the second half of 2021, the company accelerated the adjustment of loss making business and stopped the operation of Tiantian express logistics business. As the value of the previous acquisition of Tiantian express and the corresponding goodwill synergy no longer exist, the corresponding provision for goodwill impairment is about 800 million yuan and intangible assets impairment is about 1.3 billion yuan, totaling about 2.1 billion yuan, The total impact on the net profit attributable to the parent company is about 1.775 billion yuan.
(II) about Carrefour China
At the end of September 2019, the company completed the acquisition of 80% equity of Carrefour China. From the purchase date to the end of 2019, Carrefour China's EBITDA in the fourth quarter of 2019 was 53 million yuan. Affected by the covid-19 outbreak in 2020, Carrefour China's fresh food and daily necessities business advantages were highlighted. Especially relying on Carrefour's supply chain capacity and Suning's Internet operation capacity, Carrefour's home business achieved rapid growth. At the same time, combined with the continuous high CPI, Carrefour China's performance was good, although affected by the epidemic, In 2020, the company achieved an operating revenue of 25.57 billion yuan, a slight decrease year-on-year, and the EBITDA was 25 million yuan. At the end of 2019 and 2020 respectively, the company did not make impairment provision for goodwill arising from the acquisition of Carrefour according to the results of goodwill impairment test.
Since 2021, Carrefour's main business in China has been affected by many adverse factors, such as the expansion of community group purchase at low prices, the continuous decline of food CPI, the slowdown of consumption, the recurrence of epidemic and so on. From the perspective of peers, they are facing great challenges. According to public information query, Yonghui Superstores Co.Ltd(601933) and Jiajiayue Group Co.Ltd(603708) supermarkets' net profits fell sharply year-on-year in 2021, and the development of the supermarket industry is facing unprecedented challenges. Carrefour China took the initiative to take measures to adjust its business strategy, further increase the adjustment and optimization of hypermarket business, and explore the development of member store business, but the effect still needs time. According to the company's operation and management decision in 2021, Carrefour China closed 7 hypermarkets, 8 convenience stores and 3 select stores in the second half of 2021. The number of stores at the end of the year decreased compared with that in 2020. In 2021, the overall operating revenue of Carrefour China decreased by more than 10% year-on-year, and the expected EBITDA also decreased year-on-year. When preparing the profit forecast at the end of 2021, based on Carrefour's future business strategy, the company made a provision for goodwill impairment of about 1 billion yuan at the end of 2021 according to the preliminary results of goodwill impairment test. Carrefour China will give full play to its advantages in commodity supply chain, customers and services, actively expand its 020 business by actively expanding its member stores, creating a new store format, continuously cultivating its hypermarket business, expanding its B2B business, and taking advantage of its localization advantages.
To sum up, the company does not have the situation of centralized large amount provision for impairment.
3、 During the reporting period, your company recognized an investment loss of about 3.5 billion yuan for the net loss share of the associated company Shanghai Xingtu Financial Services Group Co., Ltd. (hereinafter referred to as "financial services company"), and made an impairment provision for long-term equity investment of about 8.2 billion yuan for financial services company according to the equity method. In combination with the operation of the financial services company during the reporting period, explain whether the recognition basis of the above investment profit and loss and the provision for impairment of long-term equity investment comply with the provisions of relevant accounting standards.
reply:
In September 2019, the company held 50.1% of its subsidiaries. The financial services company completed the c-round capital increase and share expansion including third-party strategic investors. After the capital increase, the company's shares in the financial services company were diluted from 50.1% to 41.15%. After the capital increase, the financial services company improved its corporate governance and established a board of directors. The resolution mechanism of the board of directors was adopted by more than half of the votes, The directors nominated by the company shall account for no more than half of the seats on the board of directors of the financial services company. Therefore, on September 27, 2019, the company lost control over the financial services company and changed its investment to the investment accounting of associated companies. According to the accounting standards for Business Enterprises No. 33 - consolidated financial statements, if an enterprise loses its control over the investee due to the disposal of part of its equity investment, when preparing the consolidated financial statements, the remaining equity shall be re measured according to its fair value on the date of loss of control. Therefore, in September 2019, the company's long-term equity investment in financial services company was reconfirmed with a value of about 23.4 billion. In 2019 and 2020, the company recognized the long-term equity investment income of RMB 202 million and RMB 648 million respectively in accordance with the accounting standards for Business Enterprises No. 33 - consolidated financial statements.
In recent years, various policies of the Internet financial service industry where the financial services company is located have been issued and improved one after another. The industry as a whole is in the adjustment cycle, and the scale of assets and liabilities of the financial services company has decreased; At the same time, the quality of loan assets of factoring companies and small loan companies under financial services company decreased. Based on the principle of prudence, financial services company actively and fully accrued various impairment reserves according to the systematic measurement of risk management and expected loss model. Affected by the above factors, the financial services company suffered a loss in 2021. The company recognized the investment loss of 3.5 billion yuan in accordance with the accounting standards for Business Enterprises No. 2 - long term equity investment.
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