Securities code: 603169 securities abbreviation: Lanzhou Ls Heavy Equipment Co.Ltd(603169) Announcement No.: pro 2022-016 Lanzhou Ls Heavy Equipment Co.Ltd(603169)
Announcement on the provision for asset impairment in 2021
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. The 27th meeting of the 4th board of directors and the 22nd Meeting of the 4th board of supervisors of Lanzhou Ls Heavy Equipment Co.Ltd(603169) (hereinafter referred to as "the company") deliberated and adopted the proposal on withdrawing the provision for asset impairment in 2021. The specific situation is hereby announced as follows:
1、 Overview of the provision for asset impairment this time
In accordance with the relevant provisions of the accounting standards for business enterprises and the company's accounting policies, and based on the principle of prudence, the company has conducted impairment tests on receivables, inventories, contract assets, other current assets and other non current assets with signs of impairment as of December 31, 2021, and accrued relevant impairment reserves.
In 2021, the company made a total of 116037635.93 yuan of impairment provision and reversed 43184826.31 yuan, mainly including 44512223.48 yuan of bad debt provision for accounts receivable and 30750857.60 yuan; The provision for inventory falling price is 43479481.63 yuan, and 12433968.71 yuan is reversed. The provision for impairment has been audited and confirmed by Dahua Certified Public Accountants (special general partnership). The details are as follows:
2、 Provision for asset impairment this time
(I) receivables, contract assets, etc
1. Recognition method of bad debt reserves such as accounts receivable and contract assets
On the basis of expected credit loss, the company is responsible for the accounts receivable and contract assets formed by transactions regulated by the accounting standards for Business Enterprises No. 14 - income standards and excluding major financing components, as well as the notes receivable regulated by the accounting standards for Business Enterprises No. 22 - recognition and measurement of financial instruments, The provision for loss is always measured at an amount equal to the expected credit loss during the entire duration. For receivables and contract assets with significant financing components, the company chooses to always withdraw loss reserves according to the amount equivalent to the expected credit loss during the duration.
For financial assets with significantly different credit risks, the company shall individually assess the credit risk and confirm the bad debt provision: accounts receivable in dispute with the other party or involving litigation and arbitration; Receivables with obvious signs indicating that the debtor is likely to be unable to perform its repayment obligations or continue to perform the contract; Receivables of EPC project. In addition to the financial assets that individually assess the credit risk, the company divides the financial assets into different groups based on the common risk characteristics, evaluates the credit risk on the basis of combination, and recognizes the bad debt reserves.
The recognition of the company's expected credit loss rate is based on the historical loss rate calculated by the migration model and adjusted by forward-looking factors on this basis.
2. Provision and basis for bad debt reserves of accounts receivable
(1) In 2021, the bad debt provision of the company's accounts receivable was 16533847.38 yuan, which was reversed
25821368.15 yuan, affecting the current profit and loss (before tax) by 9287520.77 yuan.
Among them, the provision for bad debts of normal accounts receivable is -19831637.02 yuan according to the expected credit loss method, and the current profit and loss (before tax) is increased by 19831637.02 yuan; For the accounts receivable and EPC project accounts receivable involved in litigation and difficult payment recovery in the early stage, the credit risk is assessed individually. According to the payment recovery and litigation progress, it is judged that the bad debt provision is 36365484.40 yuan, 25821368.15 yuan is reversed, and the loss (before tax) of the current period is reduced by 10544116.25 yuan.
(2) The provision for bad debts of other receivables was 1116813.61 yuan, which affected the current profit and loss (before tax) and decreased by 1116813.61 yuan.
(3) The impairment test of long-term receivables was conducted separately, and the bad debt provision was 24702424.87 yuan, which was reversed by 4929489.45 yuan, affecting the current profit and loss (before tax) by 19772935.42 yuan.
(4) The provision for bad debts of prepayments was 52280.00 yuan, which affected the current profit and loss (before tax) by 52280.00 yuan.
(5) The bad debt provision of notes receivable was 2106857.62 yuan, which affected the current profit and loss (before tax) and decreased by 2106857.62 yuan.
3. Provision for bad debts of contract assets, other current assets and other non current assets
In 2021, the bad debt provision of the company's contract assets was 25066009.37 yuan, affecting the current profit and loss (before tax) by 25066009.37 yuan; The provision for bad debts of other current assets was 43695.74 yuan, which affected the current profit and loss (before tax) by 43695.74 yuan; The provision for bad debts of other non current assets was 2936225.71 yuan, which affected the current profit and loss (before tax) by 2936225.71 yuan.
(II) inventory
1. Withdrawal principle of inventory falling price reserves
At the end of the reporting period, the company conducts a comprehensive inventory of inventories and withdraws or adjusts the inventory falling price reserves according to the lower of the cost and net realizable value of inventories.
The net realizable value is determined according to the estimated selling price of the inventory minus the estimated cost to be incurred at the time of completion, the estimated selling expenses and relevant taxes. When determining the net realizable value, based on the conclusive evidence obtained, the purpose of holding inventory and the impact of events after the balance sheet date shall be considered.
After the provision for inventory falling price is made, if the factors affecting the previous write down of inventory value have disappeared, resulting in the net realizable value of inventory being higher than its book value, it shall be reversed from the amount of inventory falling price provision that has been made, and the reversed amount shall be included in the current profit and loss.
2. Provision and basis of inventory falling price reserves
At the end of 2021, the company made a comprehensive inventory of inventory, verified the completion progress of products, and conducted impairment test on various assets based on the sales contract, combined with the sales bidding quotation, completion hours and relevant information of the business department. The provision for inventory falling price was 43479481.63 yuan, which was reversed to 12433968.71 yuan, affecting the current profit and loss (before tax) by 31045512.92 yuan:
Raw materials: at the end of the year, the inventory falling price reserves of 1233896.09 yuan were withdrawn for general materials and raw materials that cannot be used by product modification or upgrading below the market price, and the raw materials with rebound value were transferred back to 10974739.92 yuan, affecting the current profit and loss (before tax) by 9740843.83 yuan.
Products in process: at the end of the year, the net realizable value of products in process is determined based on the estimated selling price of finished products minus the estimated cost to be incurred at the time of completion, estimated selling expenses and relevant taxes. The provision for falling price of goods in storage is 41477265.95 yuan based on the amount that the net realizable value is lower than the cost, and 1459228.79 yuan is reversed due to the increase of contract amount, The impact on current profit and loss (before tax) decreased by 40018037.16 yuan.
Inventory goods: at the end of the year, the provision for inventory falling price of pre invested products that cannot be sold due to changes in market demand is 768319.59 yuan, which affects the current profit and loss (before tax) and decreases by 768319.59 yuan.
3、 The impact of the current provision for asset impairment on the company
The company made a total of 116037635.93 yuan of provision for impairment of various assets in the current period, reversed 43184826.31 yuan, and reduced the total profit of 2021 by 72852809.62 yuan. The provision for impairment has been audited and confirmed by Dahua certified public accountants.
4、 Explanation of the board of directors on the rationality of the provision for asset impairment this time
The board of Directors believes that the company's provision for asset impairment based on the actual situation is in line with the provisions of the accounting standards for business enterprises and the company's financial management system, reflects the company's asset status fairly and accurately, and agrees to withdraw the provision for asset impairment this time.
5、 Opinions of independent directors on the provision for asset impairment this time
The independent directors believe that the provision for asset impairment of the company is in line with the accounting standards for business enterprises and relevant regulations and the actual situation of the company's assets, reflects the company's financial situation and asset value more objectively and fairly, helps to provide investors with true, complete and reliable financial data and accounting information, and the decision-making process is legal and effective, There is no situation that damages the interests of the company and shareholders, especially minority shareholders. We agree that the company shall make provision for asset impairment according to relevant accounting policies.
6、 Opinions of the Audit Committee on the provision for asset impairment
The Audit Committee believes that the company's provision for asset impairment in accordance with the relevant provisions of the accounting standards for business enterprises and the company's accounting policies is in line with the actual situation of the company and can more fairly reflect the company's financial situation and asset value, and agrees to withdraw the provision for asset impairment this time.
7、 Opinions of the board of supervisors on the provision for asset impairment this time
The board of supervisors believes that the company's provision for asset impairment this time can fairly reflect the asset value, make the company's accounting information more authentic and reliable, the relevant decision-making procedures comply with the provisions of laws and regulations, and there is no damage to the rights and interests of the company and all shareholders. We agree to withdraw the provision for asset impairment this time.
8、 Documents for future reference
1. Resolutions of the 27th meeting of the 4th board of directors of the company;
2. Resolutions of the 22nd Meeting of the 4th board of supervisors of the company;
3. Independent opinions of independent directors on matters related to the 27th meeting of the Fourth Board of directors; 4. Special opinions of the board of supervisors on matters related to the 22nd Meeting of the Fourth Board of supervisors; 5. Written review opinions of the audit committee of the board of directors.
It is hereby announced.
Lanzhou Ls Heavy Equipment Co.Ltd(603169) board of directors
February 19, 2022
