A few days after it was revealed that the subsidiary issued invoices in violation of regulations, Fujian Ideal Jewellery Industrial Co.Ltd(002740) (002740. SZ) revealed that the subsidiary falsely increased its operating income.
The Fujian securities regulatory bureau has not issued a “warning letter on major litigation matters” in at least three months since the “0022} notice on major litigation” was issued by Fujian securities regulatory bureau “Special matters of non-public offering subscription money and usufruct are not disclosed” and “relevant expenses are paid out of the account through the employee’s personal bank account and falsely increase the operating income”.
continuous violation of relevant provisions of letter phi
According to the data, Fujian Ideal Jewellery Industrial Co.Ltd(002740) was listed on Shenzhen Stock Exchange on January 22, 2015. Its main business is “jewelry product design, production and processing, brand chain”, and its legal representative is Li Yong.
According to the data, from 2015 to 2020, Fujian Ideal Jewellery Industrial Co.Ltd(002740) ‘s operating revenue increased from 840 million yuan to 1.514 billion yuan, but the net profit attributable to the parent changed from 67 million yuan to a loss of 1.559 billion yuan.
On January 29, 2022, Fujian Ideal Jewellery Industrial Co.Ltd(002740) issued the performance forecast for 2021. It is estimated that the net profit loss attributable to the parent company in 2021 will be about 600 million yuan to 785 million yuan, mainly due to the provision of impairment loss for corresponding assets.
After the Spring Festival, Fujian Ideal Jewellery Industrial Co.Ltd(002740) revealed that its wholly-owned subsidiary Jiangsu Millennium Jewelry Co., Ltd. (hereinafter referred to as Millennium jewelry) recently received the decision on tax administrative punishment issued by the third Inspection Bureau of Nanjing Taxation Bureau of the State Administration of taxation because Millennium jewelry issued invoices totalling about 194 million yuan to two new Energy Co., Ltd. in Jiangxi Province in violation of regulations, The illegal profit was about 260000 yuan.
Subsequently, the Shenzhen Stock Exchange issued a letter of concern for Fujian Ideal Jewellery Industrial Co.Ltd(002740) , asking the company to clarify, “is there any financial fraud in Millennium jewelry?”?
Who would have thought that Fujian Ideal Jewellery Industrial Co.Ltd(002740) soon received the warning letter from Fujian securities regulatory bureau before it had time to reply to the above concern letter.
The 21st Century Business Herald reporter noted that according to the warning letter, as of April 30, 2020, Fujian Ideal Jewellery Industrial Co.Ltd(002740) had not disclosed 20 litigation and arbitration matters for 12 consecutive months, with a total amount of 257 million yuan, accounting for 16.03% of the company’s audited net assets in 2018, in violation of the relevant provisions of the measures for the administration of information disclosure of listed companies of the CSRC.
At the same time, the warning letter also shows that Fujian Ideal Jewellery Industrial Co.Ltd(002740) disclosed the report on non-public development bank stock issuance and listing announcement on December 30, 2016. The company issued 30586904 non-public shares to five shareholders including Di ailing, and the non-public shares were listed on January 3, 2017. “After investigation, among the non-public offering shares subscribed by Di Ailing and other four shareholders, 12.094533 million shares were signed with a number of employees and customers of the company. The employees and customers paid for the shares, and the stock usufruct belonged to the employees and customers.”
However, these news, Fujian Ideal Jewellery Industrial Co.Ltd(002740) did not disclose the above information in the report on the issuance of shares of non-public development banks and the listing announcement and the regular reports from 2016 to 2020, which violated the provisions of Article 2 of the measures for the administration of information disclosure.
falsely increasing revenue through employee bank account
Worse than concealing litigation and holding on behalf of others, Fujian Ideal Jewellery Industrial Co.Ltd(002740) actually paid the company’s expenses through the personal bank account of the company’s employees and falsely increased its operating income.
The above warning letter shows that Fujian Ideal Jewellery Industrial Co.Ltd(002740) pays various expenses outside the company’s account through the personal bank account of employee su.
In 2017, Su’s bank account was Fujian Ideal Jewellery Industrial Co.Ltd(002740) and paid a total of 3.9701 million yuan of various expenses, including 3.4261 million yuan of employee salary, 366600 yuan of customer sales rebate and 177400 yuan of rental fees. In 2018, Su’s bank account was Fujian Ideal Jewellery Industrial Co.Ltd(002740) and paid a total of 3.7753 million yuan of relevant expenses, including 3.4814 million yuan of employee salary, 104300 yuan of customer sales rebate and 189600 yuan of rental fee. These circumstances led to Fujian Ideal Jewellery Industrial Co.Ltd(002740) 2017 and 2018 profits of 3.9701 million yuan and 3.7753 million yuan respectively.
In addition, Shenzhen Taipan Jewelry Co., Ltd. (hereinafter referred to as Taipan jewelry), the holding subsidiary of Fujian Ideal Jewellery Industrial Co.Ltd(002740) , also pays relevant off account funds through the bank accounts of its employees and is used to falsely increase operating income.
From June to December 2017, Jiang’s bank account paid a total of 22500 yuan of salary and bonus, 3671200 yuan of reimbursement expenses, 2304900 yuan of rental fees, health expenses, withdrawal funds and 2.9796 million yuan of interest expenses. In 2018, Jiang’s bank account once again paid a total of 7.4718 million yuan for all kinds of expenses outside the jewelry account, including 3.0527 million yuan of reimbursement expenses, 470800 yuan of rent and rental expenses and 3.9483 million yuan of interest expenses.
At the same time, the large-scale jewelry also falsely increased its operating income through Jiang’s bank account, The main method of application is “Jiang’s bank account transfers money to the personal bank accounts of relevant principals and purchasers of large-scale jewelry customers, and relevant customers then transfer the money to the corporate bank account of large-scale jewelry through their corporate bank account as the collection of accounts receivable formed by large-scale jewelry selling goods (actually not sold) to relevant customers.”
According to the above warning letter, Fujian Ideal Jewellery Industrial Co.Ltd(002740) and its holding subsidiary’s large-scale jewelry paid various expenses outside the personal bank account of employee Su and falsely increased the operating income, resulting in an increase of the company’s total profits of 16.7639 million yuan and 14.5777 million yuan in 2017 and 2018 respectively, accounting for 17.88% and 18.65% of the company’s total regular reported profits in 2017 and 2018 respectively.
After the Millennium jewelry violation, the Shenzhen Stock Exchange asked Fujian Ideal Jewellery Industrial Co.Ltd(002740) to explain in the attention letter, “whether there are similar matters in other subsidiaries of the company.” For Fujian Ideal Jewellery Industrial Co.Ltd(002740) with continuous violations, how many problems remain unsolved? Everything remains to be seen.
