Securities code: 002485 securities abbreviation: Cedar Development Co.Ltd(002485) Announcement No.: 2022-020 Cedar Development Co.Ltd(002485)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Cedar Development Co.Ltd(002485) (hereinafter referred to as ” Cedar Development Co.Ltd(002485) ” or “the company”) received the attention letter on Cedar Development Co.Ltd(002485) issued by the management department of listed companies of Shenzhen Stock Exchange on February 7, 2022 (company Department attention letter [2022] No. 120) (hereinafter referred to as “the attention letter”). According to the requirements of the letter of concern, the company has carefully analyzed and verified the relevant problems one by one, and now replies to the relevant questions as follows:
On January 29, 2022, your company disclosed the 2021 annual performance forecast (hereinafter referred to as the “performance forecast”), which shows that the net profit attributable to the shareholders of the listed company in 2021 is expected to lose 454 million yuan to 678 million yuan, The main reason for the performance loss is that the investment real estate held by the company plans to recognize the loss of large changes in fair value and the operation of the company’s cultural tourism business does not meet the expectations.
On the same day, your company disclosed the announcement on the reply to the letter of concern of Shenzhen Stock Exchange, Zhongxinghua Certified Public Accountants (special general partnership) (hereinafter referred to as “zhongxinghua Institute”), the original audit institution of your company, finds that the new supply chain business of your company in 2020 falls within the scope of 4.2 “matters related to deduction of operating income” of self regulatory guide No. 1 – business handling, and requires your company to deduct the income of supply chain business, Your company has different opinions on this. Our department is concerned about this. Please explain the following issues:
1. According to your company’s semi annual report of 2021, in the first half of 2021, your company’s operating revenue was 959 million yuan, including 785 million yuan of supply chain business revenue, which is the new business type of your company in 2020, and 102 million yuan of clothing business revenue.
(1) Please check whether your company has any operating income that should be deducted item by item in accordance with the relevant provisions of 4.2 “matters related to deduction of operating income” of the self regulatory guide No. 1 – business handling of the exchange, and whether the deduction has included the income generated by new trade business in 2021 and 2020. If yes, please specify the specific income type and deduction amount; If not, please specify the reason.
reply:
According to the guidelines for business handling of listed companies of Shenzhen Stock Exchange No. 12 – matters related to operating income deduction issued on November 19, 2021 According to the relevant provisions of 4.2 “matters related to operating income deduction” in the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – business handling (hereinafter referred to as the “new regulations on operating income deduction”) issued on January 7, 2022, the company has the following operating income that should be deducted in 2021, and the specific types and amounts are as follows:
Project deduction amount (10000 yuan)
Other business income other than normal operation (shop disposal, entrusted operation, etc.) 3548.23
Revenue from new trade business in this year and the previous fiscal year (supply chain business) 179409.60
Total deduction 182957.83
The above types and amounts of deducted income have not been audited, and the final types and amounts of deducted income shall be subject to the audit results of the annual audit accountant.
(2) Combined with the business model of your company’s clothing business and the main terms of the sales contract, explain the revenue recognition policy, recognition time point, specific basis and relevant amount of clothing business during the reporting period, and whether the relevant accounting treatment complies with the provisions of the accounting standards for business enterprises.
reply:
The clothing business of the company is mainly to sell suits, shirts and other clothing products, and undertake group purchase and customization of key customers, foreign trade export and other businesses.
During the reporting period, the company’s clothing business mainly served Chinese medium and large enterprise customers in finance, transportation, manufacturing and other industries, and maintained stable cooperative relations. The company suggests and determines the main fabric, color, style and other standards of clothing products with downstream customers through bidding and other means, and signs a long-term cooperation contract. During the cooperation period, according to the requirements of customers’ specific orders, the company purchases ready-made clothes that meet the quality requirements from qualified suppliers, and undertakes the obligation to deliver goods that meet the standards agreed in the contract to customers. According to the sales contract signed with the customer, “when all the goods reach the delivery site and pass the acceptance of Party A, the delivery shall be deemed to be completed. The risk of the goods shall be transferred to Party A from the completion of delivery”. According to the agreement of the contract, the company takes the time point of revenue recognition after the customer signs for acceptance and obtains the control right of goods.
Revenue recognition policy: during the reporting period, the downstream customers of the company are mostly concentrated in China’s financial, transportation, manufacturing and other large and medium-sized enterprise customers, and have the obligation to deliver qualified commodities that meet the standards agreed in the contract, settle accounts and issue invoices to customers, and bear the risk of sales collection. In order to control the cost, the company submits the links such as garment quality inspection, logistics transportation and after-sales dry cleaning to the suppliers, but the company is directly responsible for the final delivery quality of the products. Since the company handed over the whole process of garment products from delivery to delivery to customers to the supplier in a package, the company, out of consideration of prudence and in combination with the requirements of revenue recognition for commodity control in the new revenue standard, recognized the income of garment business in the form of net amount method after the customer accepted and signed for goods control. The recognized amount of clothing revenue in 2021 was 64.3395 million yuan (Unaudited).
In conclusion, the accounting treatment of the company’s clothing business complies with the provisions of the accounting standards for business enterprises.
(3) Based on the above situation, check the specific amount of your company’s operating income after deduction in 2021 and whether there is any situation that the operating income after deduction is less than 100 million yuan.
reply:
In 2021, while actively restoring the cultural tourism business, the company continued to develop the clothing business steadily, rapidly developed supply chain management and comprehensive services, and achieved certain results. The annual operating revenue increased compared with that in 2020. The operating income and deduction of the company in 2021 are as follows:
Project amount (10000 yuan)
Total operating income 198141.46
The total operating income deducted is 182957.83
Operating income after deduction 15183.63
In conclusion, according to the preliminary calculation of the company’s financial department, the company has no business income less than 100 million yuan after deduction.
The amount of the above operating income before and after deduction has not been audited, and the final audit result of the annual audit accountant shall prevail.
2. According to the reply, your company plans to hire Zhongxi Certified Public Accountants (special general partnership) (hereinafter referred to as “Zhongxi Institute”) due to significant differences of opinion with ZTE on the deduction of operating income.
(1) Please explain whether your company’s proposal to replace the external audit institution is a proposal put forward to the board of directors after the audit committee has formed a deliberation opinion. If yes, the audit committee is requested to explain the verification and deliberation procedures performed on the replacement of the external audit institution, the specific replacement suggestions, reasons and deliberation opinions, and whether the proposal for the replacement of the external audit institution is improperly influenced by the major shareholders, actual controllers, directors, supervisors and senior managers of the listed company. If not, please explain your company’s internal motion and deliberation procedures for replacing the external audit institution, and check whether it violates articles 2.2.9 and 2.2.10 of the self regulatory guidelines No. 1 – standardized operation of listed companies on the main board of the exchange.
reply:
On January 21, 2022, the first meeting of 2022 held by the audit committee of the board of directors of the company considered and approved the proposal on changing the accounting firm. The audit committee formed a written audit opinion on the matters related to changing the accounting firm and agreed to appoint Zhongxi accounting firm (special general partnership) as the external audit institution of the company in 2021, Be responsible for the company’s 2021 financial report and relevant special audit, and submit it to the company’s board of directors and general meeting of shareholders for deliberation.
Opinion of the board of Auditors:
Based on the principle of seeking truth from facts and being diligent and responsible, the audit committee of the company has paid attention to the annual operation and annual audit progress of the company since December 2021, communicated with the management of the company for many times on the guiding spirit of the revenue deduction guide, learned about the relevant situation, and communicated with zhongxinghua Certified Public Accountants (special general partnership) (hereinafter referred to as “zhongxinghua office”) Communication and verification of Zhongxi Institute.
Due to the different understanding of the rules between the company and zhongxinghua Institute, and the change of the chief reviewer of the original project team of zhongxinghua Institute, the pre-trial work was not carried out in time, resulting in the slow progress of the annual review. After friendly negotiation, the company will not renew the appointment of zhongxinghua Institute as the company’s external auditor in 2021. The company has communicated with zhongxinghua Institute in advance on this matter and obtained its understanding and support.
Through the understanding of the comprehensive situation of Zhongxi Institute, Zhongxi Institute has the audit qualification related to securities and futures business, has the experience and ability to provide audit services for listed companies, has good investor protection ability, independence, professional quality and integrity, and can provide real and fair audit services for the company. Considering the company’s business development and audit work arrangement, the company appointed Zhongxi as the company’s external audit institution in 2021.
To sum up, the company’s change of accounting firm is not unduly influenced by the major shareholders, actual controllers, directors, supervisors and senior managers of the listed company.
On January 21, 2022, the 12th meeting of the 5th board of directors and the 5th meeting of the 5th board of supervisors held by the company deliberated and adopted the proposal on changing the accounting firm. The independent directors approved and expressed their consent in advance, which was deliberated and adopted by the second extraordinary general meeting of 2022 held by the company on February 11, 2022.
Through self-examination, the company changed its accounting firm to perform the review and disclosure procedures in strict accordance with the relevant provisions of Shenzhen Stock Exchange (hereinafter referred to as “Shenzhen Stock Exchange”), and there was no violation of articles 2.2.9 and 2.2.10 of the guidelines for self discipline supervision of listed companies No. 1 – standardized operation of listed companies on the main board.
(2) Please check the deduction of the company’s operating income and explain whether there is any disagreement with the company and ZTE. If yes, please specify.
reply:
Opinions of China Hi Tech Research Institute:
1、 Deduction of operating income
We accepted the entrustment to start the audit in late January 2022. The time is short and coincides with the Spring Festival holiday, and there are a large number of auditees. Based on the principle of prudence, the project team needs to conduct detailed audit on the operating income of all entities, obtain sufficient and appropriate audit evidence and review before issuing the verification results of relevant operating income deduction. As the audit is still in progress, it is impossible to draw relevant accurate conclusions for the time being.
2、 Whether there is disagreement with the company and zhongxinghua on the deduction of operating income
In January 2022, we communicated with the company’s management, the board of directors and the Audit Committee on the understanding of the new regulations on the deduction of revenue consulted by the company, and said that it was consistent with the professional judgment of ZTE.
After the audit entered the site, the company had many communications and discussions with the company. The company also further understood the document spirit of the new regulations on revenue deduction by learning the new regulations on revenue deduction for many times and participating in the special training of 2021 annual report held by Shenzhen Stock Exchange. At present, the company said that it accepted and adopted the professional opinions of the accountants of the Institute, and there was no difference of opinion.
(3) In combination with the above situation, your company is requested to check whether there is any situation of purchasing special verification opinions of audit institutions to avoid delisting risk warning, and ask independent directors to express clear opinions.
reply:
When the original annual audit institution fails to carry out the pre-trial work in time and the annual audit progress is slow, the company timely prepares to replace the accounting firm and selects an external audit institution with qualified qualification and professional ability to ensure the smooth implementation of the annual audit. Therefore, Zhongxi Institute was appointed as the company’s external audit institution in 2021 to be responsible for the company’s 2021 financial report and related special audit work.
Zhongxi Institute has the audit qualification related to securities and futures business, has the experience and ability to provide audit services for listed companies, has good investor protection ability, independence, professional quality and integrity, and can provide real and fair audit services for the company.
There is no significant difference between Zhongxi office and zhongxinghua office on the special deduction of the company’s revenue. The company does not purchase special verification opinions of audit institutions to avoid delisting risk warning.
Opinions of independent directors:
Based on the principle of seeking truth from facts and being diligent and responsible, since December 2021, the independent directors have paid attention to the company’s annual operation and annual audit progress, communicated with the company’s management for many times, learned the reasons for changing the external audit institution, and communicated and verified with ZTE and Zhongxi respectively.
After fully understanding the above situation, we believe that the company does not buy special verification opinions of audit institutions to avoid delisting risk warning.
3. According to the performance forecast, the profit and loss range of changes in the fair value of investment real estate held by your company in 2021 is expected to be – 600 million yuan to – 480 million yuan. Please list the name, source and name of investment real estate item by item
