Securities code: 002059 securities abbreviation: Yunnan Tourism Co.Ltd(002059) Announcement No.: 2022-005 Yunnan Tourism Co.Ltd(002059)
Reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete without false records, misleading statements or major omissions.
Yunnan Tourism Co.Ltd(002059) (hereinafter referred to as “the company” or ” Yunnan Tourism Co.Ltd(002059) “) received the letter of concern on Yunnan Tourism Co.Ltd(002059) issued by the second Department of management of listed companies of Shenzhen Stock Exchange (company department concern letter [2022] No. 125) (hereinafter referred to as “concern letter”).
According to the requirements of the attention letter, the company has carefully checked the problems in the attention letter, and now the reply is as follows: Question 1. In the early stage, your company had litigation disputes with 19 original shareholders of Jiangnan garden in the process of equity acquisition and performance. Please explain the calculation process and basis of accrued estimated liabilities in this period and whether the relevant accounting treatment meets the requirements of accounting standards in combination with the latest progress, judgment time and results of various lawsuits.
reply:
1. Latest progress, judgment time and results of various proceedings
In 2014, the company (Party A) purchased 80% equity of Jiangnan Garden Co., Ltd. (hereinafter referred to as “Jiangnan garden”) by issuing shares and paying cash. According to paragraph 4 of Article 11 of the agreement on issuing shares and paying cash to purchase assets, “Party A promises to announce the 2016 annual report in the listed company, and Party B will pay the compensation in accordance with the profit forecast agreement After fulfilling the obligation of compensation, Party B has the right to submit a written application to Party A for Party A’s acquisition of the remaining 20% equity of Jiangnan garden before December 31, 2017. Within 6 months from the date of Party B’s written application, Party A shall complete the acquisition of the remaining 20% equity of Jiangnan garden. The value of 100% equity of Jiangnan garden is valued at 11 times of the net profit attributable to the parent company after deducting non recurring profits and losses after the audit of Jiangnan garden in 2016. Finally, it is determined through consultation with the evaluation value of the evaluation report issued by the evaluation institution with securities qualification and filed by Yunnan SASAC.
In the process of performing the agreement, disputes arise due to the purchase price and purchase method, and the litigation involving this matter is as follows:
(1) Qin Wei v. dispute over equity transfer of the company
In early December 2018, the company received the notice of response, complaint and summons served by the people’s Court of Xinbei District, Changzhou City, Jiangsu Province. The plaintiff Qin Wei (holding 0.1% equity of Jiangnan garden) sued the company for the dispute over equity transfer, and the subject matter of the lawsuit was 1241226.80 yuan. On August 15, 2019, the people’s Court of Xinbei district made the first instance judgment: 1 Ordered the company to purchase the equity of Jiangnan garden held by Qin Wei at 1241226.80 yuan; 2. Compensate Qin Wei for the interest loss from October 14, 2017 to the date of completion of the acquisition based on 1241226.80 yuan. The company refused to accept the above judgment, and filed a second instance and retrial to the higher court according to the litigation procedure, and requested the Jiangsu Provincial procuratorate to start the trial supervision procedure. As of December 31, 2021, the company has completed the payment of equity transfer and interest loss of Jiangnan garden held by Qin Wei according to the court judgment, and the execution of this case has been completed.
(2) Yang Jianguo, Changzhou Zhongchi investment partnership (limited partnership) v. dispute over equity transfer of the company 1) in early May 2020, the company received two notices of response from Changzhou intermediate people’s Court of Jiangsu Province, Yang Jianguo (holding 10% equity of Jiangnan garden) and Changzhou Zhongchi investment partnership (limited partnership) (hereinafter referred to as “Changzhou Zhongchi”) (holding 7.39% equity of Jiangnan garden) sued the company for equity transfer disputes. The amount of the subject matter of the lawsuit is: Yang Jianguo 124122680 yuan; Changzhou Zhongchi 91726660.52 yuan.
2) On April 27, 2021, Changzhou intermediate people’s Court of Jiangsu Province made a judgment of first instance, which was as follows: 1 Yunnan Tourism Co.Ltd(002059) according to the price of RMB 124122680, purchase 10% equity of Jiangnan Garden Co., Ltd. held by Yang Jianguo by issuing shares within 30 days from the effective date of this judgment; If the defendant fails to issue shares on schedule, he shall pay the plaintiff Yang Jianguo an equity transfer payment of RMB 124122680. 2. The defendant Yunnan Tourism Co.Ltd(002059) shall pay the overdue interest of the plaintiff Yang Jianguo within 30 days from the effective date of this judgment (based on RMB 124122680, from April 28, 2020 to the date of acquisition and payment of consideration, calculated according to the loan market quotation interest rate published by the national interbank lending center). 3. The defendant shall pay the plaintiff Yang Jianguo liquidated damages of RMB 12412268 within 30 days from the effective date of this judgment; 4. Reject other claims of the plaintiff Yang Jianguo.
3) On April 27, 2021, Changzhou intermediate people’s Court of Jiangsu Province made a judgment of first instance, which was as follows: 1 Yunnan Tourism Co.Ltd(002059) according to the price of RMB 91726660.52, purchase 7.39% equity of Jiangnan Garden Co., Ltd. held by Changzhou Zhongchi by issuing shares within 30 days from the effective date of this judgment; If the defendant fails to issue shares on schedule, he will pay the plaintiff Changzhou Zhongchi an equity transfer payment of RMB 91726660.52. 2. The defendant Yunnan Tourism Co.Ltd(002059) shall pay the plaintiff Changzhou Zhongchi overdue interest within 30 days from the effective date of this judgment (taking RMB 91726660.52 as the calculation base, from April 28, 2020 to the date of acquisition and payment of consideration, calculated according to the loan market quotation interest rate published by the national interbank lending Center). 3. The defendant shall pay the plaintiff Changzhou Zhongchi liquidated damages of RMB 9172666 within 30 days from the effective date of this judgment; 4. Reject other claims of the plaintiff Changzhou Zhongchi.
4) On May 20, 2021, Yunnan Tourism Co.Ltd(002059) appealed the above two judgments to the Jiangsu Provincial High Court.
5) As of December 31, 2021, the above two cases are in the stage of second instance litigation. While actively seeking new evidence to respond to the lawsuit, the company has communicated with the plaintiff for many times. Both parties have expressed their willingness to settle, and there is the possibility of out of court settlement.
(3) Hu Jiuru, Lu Ying, Hu Na, Lu Shuyan, Xu Xiaozhong, Xu Gang, Luo Haifeng, Mao Hui and Yang Xiaofang sued the company for equity transfer disputes
1) At the beginning of May 2020, the company received nine notices of response from the people’s Court of Xinbei District, Changzhou City, Jiangsu Province. The plaintiffs Hu Jiuru, Lu Ying, Hu Na, Lu Shuyan, Xu Xiaozhong, Xu Gang, Luo Haifeng, Mao Hui and Yang Xiaofang were nine, and the amount of the subject matter of the lawsuit was 29541197.84 yuan.
2) As of December 31, 2021, the case is in the stage of first instance litigation.
(4) As of December 31, 2021, there are still 6 former minority shareholders (holding 0.13% of the total shares and the amount of the underlying equity is 1.6136 million yuan) who have not filed a lawsuit.
2. Calculation process and basis of accrued estimated liabilities in the current period
According to the asset appraisal report [Beijing Yachao Ping Bao Zi (2020) No. A194] issued by Beijing Yachao Asset Appraisal Co., Ltd., the assessed value of shareholders’ equity of Jiangnan garden is close to the book net assets. Therefore, based on the unaudited book net assets of Jiangnan garden of RMB 90.93 million as of December 31, 2021, a loss of RMB 270.52 million has been recognized for 19.90% of the subject equity of Jiangnan garden (including 17.39% of the equity lost in the first instance, 2.38% of the equity in the first instance and 0.13% of the equity without litigation), Among them, the asset impairment loss corresponding to the equity part is 228.91 million yuan (recognized according to the difference between the consideration paid by the court and the book net assets of the corresponding equity of Jiangnan garden), and the interest, liquidated damages and case acceptance fee included in non operating expenses are 41.61 million yuan.
3. Whether the relevant accounting treatment meets the requirements of accounting standards
According to Article 2 of the accounting standards for Business Enterprises No. 13 – contingencies, “contingencies refer to uncertain events formed by past transactions or events, and the results must be determined by the occurrence or non occurrence of some future events.” And Article 4 “if the obligations related to contingencies meet the following conditions at the same time, they shall be recognized as estimated liabilities: (I) the obligation is the current obligation undertaken by the enterprise; (II) the performance of the obligation is likely to lead to the outflow of economic benefits from the enterprise; (III) the amount of the obligation can be measured reliably.”
In view of the fact that this matter is a lawsuit dispute between the company and 19 original shareholders of Jiangnan garden during the acquisition of Jiangnan garden, according to the court’s judgment in 2021, the company is required to undertake the obligation of equity acquisition, and the performance of this obligation is likely to lead to the outflow of economic benefits from the enterprise. At the same time, the amount of this obligation can be measured reliably and meet the conditions for the recognition of estimated liabilities.
To sum up, the company recognizes the non contractual interest expense and the non contractual liability that meet the requirements of the above accounting standards, and recognizes the non contractual interest expense of the company in 2021.
Question 2. In combination with question 1, please explain the rationality of your company’s provision of large estimated liabilities in the current period, and whether there is insufficient provision in the previous period and improper earnings management in the current period.
reply:
According to paragraph 4 of Article 11 of the agreement on issuing shares and paying cash to purchase assets, “Party A promises to announce the 2016 annual report in the listed company, and Party B will pay the compensation in accordance with the profit forecast agreement After fulfilling the obligation of compensation, Party B has the right to submit a written application to Party A for Party A’s acquisition of the remaining 20% equity of Jiangnan garden before December 31, 2017. Within 6 months from the date of Party B’s written application, Party A shall complete the acquisition of the remaining 20% equity of Jiangnan garden. The value of 100% equity of Jiangnan garden is valued at 11 times of the net profit attributable to the parent company after deducting non recurring profits and losses audited by Jiangnan garden in 2016. Finally, it is determined through negotiation with reference to the appraisal value of the appraisal report issued by the appraisal institution with securities qualification and filed by Yunnan SASAC. Party A will acquire the remaining 20% equity of Jiangnan garden by issuing shares. The shares of the listed company obtained by the counterparty shall not be transferred within 12 months from the date of listing according to the provisions of Shenzhen Stock Exchange, and there will be no further locking period. Party A will no longer agree on performance compensation terms when acquiring the remaining 20% equity. “
According to the terms of the above asset purchase agreement, the price for the acquisition of the remaining 20% equity of Jiangnan garden needs to be negotiated and determined by all parties, and the approval and filing procedures shall be performed. Secondly, in the case of equity dispute between the company and Yang Jianguo and Changzhou Zhongchi, Changzhou intermediate people’s court made the first instance judgment only in 2021. Before that, the company could not judge the final judgment result of the court and failed to meet the conditions for confirming the estimated liabilities. In 2021, the company recognized the estimated liabilities based on the principle of prudence according to the first instance judgment of Yang Jianguo and Changzhou Zhongchi case and the accounting standards.
Question 3: other matters that your company thinks should be explained.
reply:
With regard to the equity dispute litigation between the company and Yang Jianguo and Changzhou Zhongchi, the company actively sought new evidence to respond to the lawsuit, communicated with the plaintiff for many times, and actively sought out of court settlement to minimize the adverse impact of equity dispute litigation on listed companies.
It is hereby announced
Yunnan Tourism Co.Ltd(002059) board of directors
February 15, 2022
