Securities code: Dongjiang Environmental Company Limited(002672) securities abbreviation: Dongjiang Environmental Company Limited(002672) Announcement No.: 202215 Dongjiang Environmental Company Limited(002672)
Announcement on the provision for asset impairment in 2021
The company and all members of its board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Dongjiang Environmental Company Limited(002672) (hereinafter referred to as “the company”) deliberated and adopted the proposal on the provision for asset impairment in 2021 at the 18th meeting of the 7th board of directors and the 9th meeting of the 7th board of supervisors held on March 25, 2022. According to relevant regulations, 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, in order to truly reflect the company’s financial status, asset value and operating results, the company combed and analyzed the relevant asset values in the consolidated statements as of December 31, 2021, tested by asset category, and accrued asset impairment reserves for assets with possible asset impairment losses.
2、 Asset scope, total amount and description of the provision for asset impairment this time
The provision for impairment of various assets within the scope of the company’s consolidated statements in 2021 totaled 1148238 million yuan. The details of the provision for impairment of various assets are as follows:
Unit: 10000 yuan
The proportion of assets withdrawn in 2021 in 2021 audited
Notes on the provision for impairment of assets attributable to the shareholders of the parent company
Proportion of net profit
The provision for asset impairment of accounts receivable is 132548 8.25% based on the expected credit loss model and the single expected credit loss rate
Other receivables account for 356.54% and 2.22%, and the provision for asset impairment is withdrawn according to the expected credit loss model and the single expected credit loss rate
44.16 0.27% of inventories shall be subject to the provision for asset impairment based on the difference between the cost and its net realizable value
84.06% 0.52% of fixed assets, if the recoverable amount is lower than its book value, the impairment provision shall be withdrawn according to the difference.
For 410149 25.52% of construction in progress, if the recoverable amount is lower than its book value, the impairment provision shall be withdrawn according to the difference.
Allocate the book value of goodwill to 557065 34.66% of the asset group goodwill or asset group combination expected to benefit from the synergy of business combination. If the test results show that the recoverable amount of the asset group or combination of asset groups containing the amortized goodwill is lower than its book value, the corresponding impairment loss shall be recognized.
Total 1148238 71.43%
Note: the audited net profit of the company belonging to the shareholders of the parent company in 2021 is 160745 million yuan.
3、 Description of the large amount of provision for impairment of assets
1. Notes to provision for bad debts of receivables
On the basis of expected credit loss, the company conducts impairment treatment on financial assets measured at amortized cost, debt instrument investment measured at fair value and whose changes are included in other comprehensive income, loan commitments and contract assets, and recognizes loss reserves.
Based on the expected credit loss, the company accrues the impairment provision for the above items according to the applicable expected credit loss measurement method (general method or simplified method) and recognizes the credit impairment loss. For financial instruments with low credit risk on the balance sheet date, the company measures the loss reserves based on the expected credit loss amount in the next 12 months or the whole duration according to whether the credit risk has increased significantly since the initial recognition. The company evaluates the credit risk of financial assets with significantly different credit risks. 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, and evaluates the credit risk on the basis of combination.
In addition to the accounts receivable and other accounts receivable that are individually assessed for credit risk, the company divides them into different combinations based on their credit risk characteristics:
Group 1 accounts receivable of government nature
Portfolio 2 receivables from related companies
Portfolio 3 accounts receivable from general customers or other accounts
Deposit, deposit and petty cash receivable under lease 4
In 2021, the company made bad debt provision for accounts receivable of RMB 13254800 and bad debt provision for other accounts receivable of RMB 3565400 according to the expected credit loss model and individual expected credit loss rate.
2. Description of provision for impairment of construction in progress
The recognition standard and withdrawal method of the company’s impairment provision for construction in progress are as follows: on the balance sheet date, the company checks whether there are signs of possible impairment for construction in progress. When there are signs of impairment, the company shall conduct impairment test to confirm its recoverable amount, and withdraw the impairment provision according to the part where the recoverable amount is lower than the book value. The recoverable amount of construction in progress is determined according to the higher of the net amount of the fair value of the asset minus the disposal expenses and the present value of the expected future cash flow of the asset. In 2021, the company made provision for impairment of construction in progress of 410149 million yuan.
3. Description of provision for impairment of goodwill
According to the accounting standards for Business Enterprises No. 8 – asset impairment, the goodwill formed by business combination shall be tested for impairment at least at the end of each year. Goodwill shall be tested for impairment in combination with its related asset group or combination of asset groups. If the recoverable amount of the asset group or combination of asset groups is lower than its book value, the corresponding impairment loss shall be recognized. The amount of impairment loss shall first offset the book value of goodwill in the asset group or asset group combination, which shall be treated as the impairment loss of goodwill and included in the current profit and loss.
At the end of 2021, the company conducted impairment test on the goodwill formed by business merger, and the provision for goodwill impairment was 557065 million yuan, accounting for 34.66% of the absolute value of the net profit attributable to the shareholders of the listed company in 2021. The details are as follows: Zhuhai Qingxin industrial environmental protection Co., Ltd. (hereinafter referred to as “Zhuhai Qingxin”), Weifang Dongjiang Environmental Company Limited(002672) blue ocean environmental protection Co., Ltd. (hereinafter referred to as “Weifang Dongjiang”) Yancheng coastal solid waste disposal Co., Ltd. (hereinafter referred to as “coastal solid waste”) and Hefei covid-19 Energy Development Co., Ltd. (hereinafter referred to as “Hefei covid-19”) according to their current operation and future development, the company believes that there are signs of impairment of goodwill formed by the acquisition of the above four companies, and employs an asset appraisal institution to adopt the asset-based method The recoverable amount of the assets included in the goodwill method shall be evaluated on the benchmark date. According to the appraisal report, during the reporting period, the provision for goodwill impairment was made for Zhuhai Qingxin, Weifang Dongjiang, coastal solid waste and Hefei covid-19 respectively.
4、 The impact of the current provision for asset impairment on the company
The company’s provision for asset impairment in 2021 totaled 11482380000 Yuan, reducing the company’s net profit attributable to shareholders of listed companies by 9772.5% in 2021520000 yuan, a corresponding decrease of 9772.5% of the owner’s equity attributable to shareholders of Listed Companies in 2021520000 yuan; After the provision for asset impairment is made, the total profit of the company in 2021 is 191506500 yuan, and the net profit attributable to the shareholders of the listed company is 160745 million yuan. The above data have been audited by Zhongshen Zhonghuan Certified Public Accountants (special general partnership).
5、 Explanation on the rationality of the provision for asset impairment in 2021
The provision for asset impairment this time complies with the requirements of the accounting standards for business enterprises and other relevant regulations, is fully based, reflects the principle of accounting prudence, and is in line with the actual situation of the company. After the provision for asset impairment is withdrawn, the company’s financial position and asset value as of December 31, 2021 can be more fairly reflected, making the company’s accounting information more reasonable.
6、 Opinions of the board of supervisors
The company’s resolution procedure for withdrawing the provision for asset impairment this time complies with the provisions of relevant laws and regulations and the articles of association, and the content of the resolution complies with the accounting standards for business enterprises and other relevant provisions, reflecting the company’s operating results in 2021 and the asset status as of December 31, 2021. It is agreed that the provision for asset impairment is withdrawn this time.
7、 Opinions of independent directors
The company’s provision for asset impairment this time meets the requirements of the accounting standards for business enterprises and other relevant regulations. After the company’s provision for asset impairment, it can more objectively and fairly reflect the company’s asset status and operating results, and make the company’s accounting information about asset value more true, reliable and reasonable. The decision-making procedure of the board of directors to consider the matter is legal and compliant, and there is no situation damaging the interests of the company and shareholders. We agree to withdraw the provision for asset impairment this time.
8、 Documents for future reference
1. Resolution of the 18th meeting of the 7th board of directors of the company.
2. Resolution of the 9th meeting of the 7th board of supervisors of the company.
3. Independent opinions of independent directors on relevant matters.
It is hereby announced.
Dongjiang Environmental Company Limited(002672) board of directors March 26, 2022
