Stock Code: Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) stock abbreviation: ST Chengxing No.: pro 2022056 Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) to Shanghai Stock Exchange
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 integrity of its contents Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) (hereinafter referred to as “the company”, “the company” or “Chengxing shares”) received the inquiry letter on matters related to ST Chengxing financial data (szgh [2022] No. 0112) (hereinafter referred to as “the inquiry letter”) issued by Shanghai Stock Exchange on February 7, 2022. After receiving the inquiry letter, the company actively organized relevant departments to carefully check and implement the questions raised in the inquiry letter together with directors, supervisors, senior managers, specific relevant personnel and subsidiaries, and with Suya Jincheng Certified Public Accountants (special general partnership), the annual report auditor. On March 12, 2022, the company disclosed the reply announcement of Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) to some questions of Shanghai Securities Exchange on matters related to the company’s financial data (see announcement: pro 2022054 for details). The reply to the inquiry letter is hereby announced as follows:
On January 29, 2022, your company issued the annual performance forecast for 2021. According to the performance forecast, the company expects an operating revenue of 3.747 billion yuan and a net profit of 79 million yuan to 118 million yuan. According to the third quarterly report of the company in 2021, the non net profit deducted by the company in the first three quarters was 57 million yuan, turning losses into profits; Only in the third quarter, the operating revenue was 1.011 billion yuan, and the deduction of non net profit was 94 million yuan. According to preliminary calculation, the company’s net profit deducted from non net profit decreased sharply in the fourth quarter of 2021. In view of the fact that the authenticity and accuracy of the company’s financial data have a significant impact on investors’ decisions, in accordance with article 13.1.1 and other relevant provisions of the stock listing rules of the exchange, your company is requested to further verify and supplement the disclosure of the following matters.
1、 Please fully explain the reasons for the significant difference between the data and operating performance of the fourth quarter and the third quarter of 2021 in combination with the trend of the bulk product industry related to the company’s business in 2021. The company’s accountants are invited to express their opinions.
reply:
1. From the first half of 2021 to the end of June, the phosphorus chemical market remained stable, and the company’s related yellow phosphorus Market
The market price is basically stable at about 180 Tecon Biology Co.Ltd(002100) 0 yuan / ton; Starting from July in the third quarter of 2021, the price of phosphorus chemical products in the phosphorus chemical market has risen sharply due to the impact of commodity supply side reform, power restriction, environmental protection inspection and other factors. The market price of yellow phosphorus related to the company has risen to about 7000073000 yuan / ton before the National Day holiday at the end of September 2021, which has driven the price of phosphorus chemical raw materials to rise sharply; In the fourth quarter of 2021, after the National Day holiday, the market price of yellow phosphorus related to the company quickly fell to less than 45000 yuan / ton, and then continued to decline. By the end of 2021, the price was about 3400037000 yuan / ton, with a minimum of 28000 yuan / ton during the period.
As a chemical enterprise, the company generally continues to produce and maintains a certain amount of inventory of raw materials and products. Therefore, during the rapid rise of the market price of yellow phosphorus in the third quarter of 2021, the company’s performance shows a sharp rise in profitability. On the contrary, during the rapid decline of the market price of yellow phosphorus in the fourth quarter of 2021, The company’s performance showed a sharp decline in profitability.
However, the market price trend of phosphorus ore in 2021 is not exactly the same as that of yellow phosphorus. Before the end of June 2021, the price of mainstream quality phosphate rock purchased by the company is about 360 yuan / ton. In the third quarter of 2021, when the market price of yellow phosphorus rises rapidly, the price of mainstream quality phosphate rock purchased by the company rises rapidly to about 650 yuan / ton, In the fourth quarter of 2021, when the market price of yellow phosphorus fell rapidly, the price of mainstream quality phosphate rock purchased by the company continued to rise. By the end of 2021, the market price was about 780 yuan / ton, which also led to a sharp rise in the production cost of the company in the fourth quarter.
2. On July 25, 2021, our holding subsidiary Yunnan Maitreya phosphorus Power Chemical Co., Ltd. (hereinafter referred to as “Maitreya phosphorus power”) and Honghe Power Supply Bureau of Yunnan Power Grid Co., Ltd. (hereinafter referred to as “Honghe Power Supply Bureau”) signed the agreement on supplementary payment of basic electricity fee and system standby fee, the main contents of which are as follows:
Honghe Power Supply Bureau, in accordance with the provisions of the notice of Yunnan Provincial Price Bureau transmitting the documents of the national development and Reform Commission on reducing general industrial and commercial electricity prices (yjgj (2018) No. 53) and the notice on issues related to the further implementation of differential electricity price policies in our province (yjgj [2007) No. 338), Calculate the supplementary payment of 5724432343 yuan of basic electricity and 2462058825 yuan of system standby fee for Maitreya phosphorus power from June 17, 2019 to February 28, 2021 respectively, with a total of 8186491168 yuan (in words: eighty-one million eight hundred and sixty-four thousand nine hundred and eleven yuan and sixty-eight cents) (hereinafter referred to as the fee). Both parties sign a supplementary payment agreement on the payment of the above expenses.
(1) From July 2021, Maitreya phosphorus power will pay the above fee of 343000000 yuan (in words: three million four hundred and thirty thousand yuan) to Honghe Power Supply Bureau before the 25th of each month until the fee agreed under this agreement is paid off.
(2) Maitreya phosphorus power pays the fees under the agreement to Honghe Power Supply Bureau in the form of bank acceptance and 50% in cash (including bank transfer and remittance).
(3) Maitreya phosphorus power shall pay all the above fees to Honghe Power Supply Bureau before June 25, 2023. (4) After signing the agreement, if Maitreya phosphorus power obtains the relevant policies of basic electricity fee and system standby fee issued in the form of legal documents from the national or provincial price management authority department, Honghe Power Supply Bureau agrees to re approve the basic electricity fee payable by Maitreya phosphorus power for the period from June 17, 2019 to February 28, 2021 according to the applicable period of the relevant policies System backup fee. At that time, both parties will deal with the principle of refunding more and making up less according to the re approved basic electricity fee and system standby fee. During the period when both parties re approve the basic electricity fee and system standby fee according to the relevant policies, Maitreya phosphorus power shall pay the basic electricity fee and system standby fee in accordance with Clause 1 of the agreement.
(5) If Maitreya phosphorus power fails to fulfill the agreement and pay the basic electricity fee and system standby fee in full and on time every month, Honghe Power Supply Bureau may suspend the power supply of Maitreya phosphorus power according to the relevant procedures.
The above is the main content of the supplementary payment agreement. Maitreya phosphorus power needs to pay 8186491168 yuan of electricity fee and system standby fee for the period from June 17, 2019 to February 28, 2021.
The original power supply contract of Maitreya phosphorus power (Contract No.: 160303 Zhejiang Int’L Group Co.Ltd(000411) 0032) expires on June 16, 2019. After the expiration of the contract, Honghe Power Supply Bureau proposed to sign the power supply contract according to the new charging standard. Due to the dispute between the two sides over the charging method, the two sides failed to reach an agreement through repeated written communication. From June 17, 2019 to February 28, 2021, it has been in the state of no contract power consumption. On July 4, 2019, Honghe Prefecture Energy Bureau organized and held a coordination meeting on the collection of system standby fee and basic electricity fee of Yunnan Maitreya phosphorus Power Chemical Co., Ltd, The minutes of meeting mentioned that “before the signing of the new contract, in order to ensure the power supply and use and the normal production of the enterprise, both parties shall temporarily implement the original contract (Contract No.: 160303 Zhejiang Int’L Group Co.Ltd(000411) 0032). After the provincial development and Reform Commission defines the specific implementation standards or the signing of the new contract, both parties shall deal with the dispute expenses involved before according to the principle of refund for more and compensation for less.”
By January 2021, after the two sides failed to communicate whether to sign the contract according to the new standard, Honghe Power Supply Bureau began to send power outage notices one after another. Under pressure, Maitreya phosphorus power signed a transition power supply contract on February 28, 2021 according to the new standard, which is valid until June 30, 2021. During the transition period, Maitreya phosphorus power did not find the documents related to “the specific implementation standards specified by the provincial development and Reform Commission”. After internal audit, Honghe Power Supply Bureau calculated the supplementary payment amount of basic electricity fee and system standby fee from June 17, 2019 to February 28, 2021, After signing the supplementary payment agreement, the two sides signed a new power supply contract on July 25, 2021 according to the payment standard of Honghe Power Supply Bureau, which is valid for 3 years.
Although the company signed a new power supply contract on July 25, 2021 according to the payment standard of Honghe Power Supply Bureau, which is valid for 3 years. As the company and Honghe Power Supply Bureau have agreed that if there is a new policy basis, the payment standard of supplementary system standby fee can be adjusted. Therefore, after signing the contract on July 25, 2021, the company continues to actively communicate and coordinate with relevant departments and strive to find a new policy basis, and the contract amount may change. However, no more favorable conditions have been obtained as of the statement date. For the principle of prudence, the main business cost was fully recognized in December 2021. The confirmation in the third quarter and the confirmation in the fourth quarter have no impact on the annual performance.
According to the agreement, in the third quarter, the company confirmed the supplementary payment of basic electricity charges and system standby charges, with a total tax included amount of 10.29 million yuan, of which 3.43 million yuan was confirmed in August, 6.86 million yuan was confirmed in September, and the remaining 715749 million yuan was fully confirmed in the fourth quarter, resulting in a significant increase in the cost of main business, This led to a sharp decline in the company’s performance in the fourth quarter of 2021.
After verification, the company shall confirm the supplementary payment of 7157491168 yuan of basic electricity fee and system standby fee in the third quarter of 2021. The company’s third quarter report of 2021 (hereinafter referred to as the “third quarter report”) has errors in filling and leading to disclosure errors, so the third quarter report of 2021 shall be corrected. The specific corrections are as follows: the consolidated balance sheet on September 30, 2021: increased accounts payable by 6334062981 yuan, decreased taxes payable by 950109448 yuan, decreased undistributed profits by 2961174443 yuan and decreased minority shareholders’ equity by 2422779090 yuan. Profit statement from January to September 2021: increase the operating cost by 6334062981 yuan, reduce the income tax expense by 950109448 yuan, reduce the net profit by 5383953533 yuan, reduce the net profit attributable to the parent company by 2961174443 yuan, and reduce the profit and loss of minority shareholders by 2422779090 yuan.
Opinions of the board of directors on the above corrections: the correction of the third quarterly report complies with the provisions of relevant documents such as the rules for the preparation of information disclosure of companies offering securities to the public No. 19 – correction and related disclosure of financial information of China Securities Regulatory Commission, and can more objectively and fairly reflect the company’s financial position, operating results and cash flow. The decision-making procedure for the correction of the third quarterly report complies with the relevant provisions of laws, regulations and the articles of association, and there is no situation that damages the interests of the company and shareholders. Agree to correct the third quarterly report.
Opinions of independent directors on the above corrections: the correction of the third quarterly report complies with the provisions of relevant documents such as the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 19 – correction and related disclosure of financial information of China Securities Regulatory Commission, and can more objectively and fairly reflect the company’s financial position, operating results and cash flow. The deliberation and voting procedures of the board of directors on the correction of the third quarterly report comply with the relevant provisions of laws, regulations and the articles of association. There is no case that the interests of the company and shareholders are damaged in the correction of the third quarterly report. Agree to correct the third quarterly report.
According to item 8 of article 11.12.7 of the stock listing rules (2020 Edition), if the company enters into an important contract that may have a significant impact on the company’s assets, liabilities, rights and interests and operating results, it shall report and disclose it to the exchange in time. The specific amount shall refer to the provisions of article 9.2, That is, “the transaction amount of the transaction (including the debts and expenses undertaken) accounts for more than 10% of the latest audited net assets of the listed company, and the absolute amount exceeds 10 million yuan”. The signing of this electricity fee agreement meets the above information disclosure standards and has not been announced in the early stage. Verification opinions of the company’s accountants:
Verification procedure:
① Inquire about the reasons for the performance fluctuation of the company’s management;
② Independently inquire about the price trend of yellow phosphorus in 2021;
③ Inquire about the price trend of phosphorus ore; Understand the production cycle of yellow phosphorus products of the company; Analyze the income and cost of the company in combination with the production cycle of yellow phosphorus products;
④ Inquire and confirm the supplementary payment amount of basic electricity fee and system standby fee to Honghe Power Supply Bureau;
⑤ Obtain and check the agreement related to the system reserve fee, and check the relevant accounting treatment.
Verification opinion: the company’s reply to the above questions is true.
2、 The company is requested to carefully verify whether there is any material misstatement in the third quarter report, including but not limited to whether there is any false increase in revenue, underestimation of costs, expenses, etc; If yes, explain the reasons for the misstatement, correct the relevant data immediately, and investigate the relevant responsible person. Please comment on the company’s accountant
reply:
The company’s third quarter report has defects, mainly due to:
Due to the supplementary payment agreement: “After signing the supplementary payment agreement, if Maitreya phosphorus power obtains the relevant policies of basic electricity fee and system standby fee issued in the form of legal documents from the national or provincial price management authority department, Honghe Power Supply Bureau agrees to re approve the basic electricity fee and system standby fee payable by Maitreya phosphorus power from June 17, 2019 to February 28, 2021 according to the applicable period of the relevant policies Fee. At that time, both parties will deal with the principle of refunding more and making up less according to the re approved basic electricity fee and system standby fee. During the period when both parties re approve the basic electricity fee and system standby fee according to the relevant policies, Maitreya phosphorus power shall first
