Securities code: Lawton Development Co.Ltd(600209) securities abbreviation: ST roton No.: Lin 2022028 Lawton Development Co.Ltd(600209)
Announcement on reply to inquiry letter of Shanghai Stock Exchange
The company and the directors 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. Important tips:
Since the accountant's audit of the financial statements of 2021 is still in progress, it is not possible to express appropriate verification opinions on the issues raised in the inquiry letter of the exchange according to the audit evidence obtained so far.
Lawton Development Co.Ltd(600209) (hereinafter referred to as "the company") received the inquiry letter on matters related to ST roton performance forecast (szgh [2022] No. 0095) (hereinafter referred to as "the first inquiry letter") from Shanghai Stock Exchange on January 28, 2022, and has replied to and announced questions 1, 2, 4 and 6 in the first inquiry letter, For details, please refer to the announcement of luodun development on reply to the inquiry letter of Shanghai Stock Exchange and delayed reply to some questions disclosed by the company (No.: Lin 2022019). On March 11, 2022, the company received the second inquiry letter on ST roton performance forecast (szgh [2022] No. 0181) (hereinafter referred to as the "second inquiry letter") from Shanghai Stock Exchange. After receiving the relevant letters, the company actively organized relevant parties to carefully analyze and implement the problems involved in the inquiry letter one by one, Now the company will reply to the remaining questions in the first inquiry letter and relevant questions in the second inquiry letter.
The reply is as follows:
1、 According to the reply announcement of the company, the company has focused on providing promotion services for Tencent E-sports products in the fourth quarter of 2021, and officially obtained the official strategic partner status of OCA for Tencent in December 2021. The company is requested to make supplementary disclosure: (1) the specific contents of the promotion services provided by the company; (2) Whether the cooperation service fee paid by Tencent and the specific amount have been received in the current period, and the specific amount of revenue recognized in the current period; (3) The specific payment arrangements between the company, OCA and Tencent, whether the company is the main responsible person or agent in the business, what method is adopted for revenue recognition, and whether it complies with the provisions of the accounting standards for business enterprises; (4) Whether the division and rationality of various performance obligations, as well as the specific time point and basis for the recognition of revenue from various performance obligations comply with the provisions of the accounting standards for business enterprises.
reply:
(I) specific contents of promotion services provided by the company.
The specific contents of the promotion services provided by the company are: to help confirm that Tencent Technology (Shenzhen) Co., Ltd. (hereinafter referred to as "Tencent") has obtained the identity of official strategic partner of OCA during the cooperation period and the brand equity of official strategic partner of OCA; Promote the promotion of Tencent E-sports products in Asia during the cooperation period. (II) whether the cooperation service fee paid by Tencent and the specific amount have been received in the current period, and the specific amount of revenue recognized in the current period.
During the reporting period, the company has received the cooperation service fee of RMB 125 million prepaid by Tencent, and the service income of RMB 1.5381 million is recognized in the current period (Unaudited). In view of the specific amount of revenue recognized in the current period in the above questions, on January 29, 2022, the company announced the annual performance forecast of roton development in 2021 (No.: Lin 2022003). The relevant data are the preliminary accounting data of the company and have not been formally audited by an accounting firm. In the process of annual review, the company consulted relevant experts on the way to recognize the income of important promotion services, and strictly compared with the relevant provisions of the accounting standards for business enterprises. The company found that the business did not meet the recognition requirements of the accounting standards for business enterprises on the main responsible person, so the relevant income was calculated according to the net method and recognized by stages within the agreed period. In this regard, there will be significant differences between the corrected financial data of the company's performance forecast and the originally disclosed financial data such as operating income. For details, please refer to announcement on correction of annual performance forecast of Lawton development in 2021 (No.: Lin 2022026) announced by the company on the same day.
According to the corrected performance forecast financial data, the company will touch the situations listed in article 9.3.11 of the stock listing rules of Shanghai Stock Exchange (revised in 2022), and the company's shares will be subject to the risk of termination of listing and trading by Shanghai Stock Exchange. If the final financial data after the audit is consistent with the financial data of the performance forecast after the correction in major aspects, the listing of the company's shares will be terminated in accordance with the relevant provisions of the stock listing rules of Shanghai Stock Exchange.
At present, the annual audit accountant of the company has not completed all audit work. The company will actively cooperate with the annual audit accountant to promote relevant audit work. After the annual audit accountant completes the audit work and issues the audit report, the company will timely perform the obligation of information disclosure according to the audit report or audit opinion.
(III) the specific payment arrangements among the company, OCA and Tencent, whether the company is the main responsible person or agent in the business, what method is adopted for revenue recognition, and whether it complies with the provisions of the accounting standards for business enterprises.
1. The company and Tencent signed relevant cooperation agreements in November 2021. The specific payment arrangements are as follows:
After the cooperation agreement takes effect, 50% of the total cooperation service fee shall be paid; 30% of the cooperation service fee shall be paid after the cooperation agreement comes into force, Tencent receives the official confirmation letter from OCA about Tencent's status as OCA's strategic partner, and both parties confirm the time of officially announcing Tencent's status as OCA's strategic partner; 20% of the cooperation service fee shall be paid one natural year after the contract takes effect.
The company and OCA signed an agreement in September 2021. The specific payment arrangements are as follows:
The period of authorization given by OCA to the company is 5 years. From the year of authorization, the company shall pay 20% of the authorization fee to OCA before December 31 of each year.
2. During the annual review, the company consulted relevant experts on the way of revenue recognition of important promotion services and strictly compared with the relevant provisions of the accounting standards for business enterprises. The company found that the business did not meet the identification requirements of the accounting standards for business enterprises on the main responsible person. The company changed the relevant income to the net method and recognized it by stages within the agreed period, which was in line with the relevant provisions of the accounting standards for business enterprises.
(IV) whether the division and rationality of various performance obligations, as well as the specific time point and basis for the recognition of revenue from various performance obligations comply with the provisions of the accounting standards for business enterprises.
The division of the company's performance obligations is judged according to the essence of the relevant business. The performance obligations of the business belong to the performance obligations performed within a certain period of time. It is recognized by stages within the agreed period, which is in line with the provisions of the accounting standards for business enterprises.
2、 According to the company's reply announcement, the company's digital sports business has three main business models, and the company believes that the income of digital sports business does not belong to the "income generated by businesses that have not formed or are difficult to form a stable business model" stipulated in the operating income deduction.
The company is requested to make supplementary disclosure: (1) what kind of business model does the cooperation with Tencent belong to; (2) What are the input and output of the company under this mode, whether it has complete input, processing process and output capacity, and whether it can calculate the cost and income independently; (3) Under this mode, whether the company can provide processing or conversion activities for products or services, so as to enhance the value of products or services; (4) Under this mode, which customers and suppliers the company currently has, whether there is significant dependence on customers and suppliers, and whether it is sustainable; (5) Whether the model has commercial essence and commercial rationality; (6) In combination with the reply to the above questions, explain whether Tencent's relevant business income and other digital sports business income should be deducted according to the operating income deduction.
reply:
(I) what kind of business model does the cooperation with Tencent belong to.
The company's business models related to digital sports include: (1) participating in the construction of Asian Digital Sports (E-sports) event system (hereinafter referred to as "model (1)"); (2) Hosting or undertaking third-party digital sports (E-sports) events (hereinafter referred to as "mode (2)"); (3) Digital sports and other related technical services.
The services provided by the company in cooperation with Tencent mainly include assisting Tencent to confirm that it has obtained the identity of OCA's official strategic partner during the cooperation period and obtain the brand equity of OCA's official strategic partner; Promote the promotion of Tencent E-sports products in Asia during the cooperation period, mainly mode (1) and mode (2).
(II) what is the input and output of the company under this mode, whether it has complete input, processing process and output capacity, and whether it can calculate costs and income independently.
1. The main investment of the company's business development under this mode is as follows:
(1) Introduction and cultivation of core team. Since November 2020, Lawton development has introduced a management team and operation team with many years of E-sports experience in China.
(2) Innovative design of business model. The company seeks interested potential customers and establishes cooperative relations with the above-mentioned international organizations by obtaining the authorization of OCA or other individual sports associations. Through interaction with digital sports event systems in other Asian countries, the company seeks potential enterprise customers interested in overseas development and assists Chinese enterprises in promoting digital sports products.
2. Main outputs of relevant business models of the company:
(1) Obtain the authorization of relevant international sports organizations, assist them in finding qualified partners, and assist customers' products to enter the Asian digital sports event system or be promoted in other ways;
(2) Through holding activities, the company will bring output income such as copyright, commercial sponsorship, tickets, government subsidies and derivatives sales.
The company believes that the services under the above business model have complete input, processing process and output capacity, and can independently calculate costs and revenue.
(III) whether the company can provide processing or conversion activities for products or services under this mode, so as to enhance the value of products or services.
The company team has the ability to tap the identity value of official strategic partners of international sports organizations such as OCA. After obtaining the authorization of OCA and other international sports organizations, the company team independently or according to the recommendation of relevant parties, selects cooperation objects and assists them in reaching strategic cooperation with the above international sports organizations. At the same time, the company team can analyze the opportunities and paths for Chinese E-sports products to go to sea, and provide customers with digital sports promotion services through authorization, including partner selection, customer communication, etc.
(IV) under this mode, which customers and suppliers the company currently has, whether there is significant dependence on customers and suppliers, and whether it is sustainable.
Main customers: Xi'an Wangying Sports Culture Communication Co., Ltd., Tencent Technology (Shenzhen) Co., Ltd. Main suppliers: digital sports (Hangzhou) Co., Ltd., Huzhou media cultural creation Co., Ltd. After the correction of the company's 2021 annual performance forecast, the revenue recognized by Tencent related businesses under this mode accounts for a relatively small proportion of the total revenue of the company in the current period. Therefore, the company believes that the company does not have significant dependence on Tencent in the current period. The company also has no significant dependence on other customers and suppliers, and its business is sustainable.
(V) whether the model has commercial essence and commercial rationality.
The company believes that the business model has commercial essence and commercial rationality.
(VI) in combination with the reply to the above questions, explain whether Tencent's relevant business income and other digital sports business income should be deducted according to the operating income deduction.
According to the relevant provisions of operating income deduction, the company believes that Tencent's relevant business income and other digital sports business income meet the recognition requirements of relevant rules and do not need to be deducted.
3、 According to the reply announcement of the company, the company obtained the engineering project of the related party Beijing luodun Shahe construction and Development Co., Ltd. (hereinafter referred to as Beijing luodun) through bidding in the fourth quarter, with a contract amount of about 83 million yuan. In the fourth quarter, part of the revenue was recognized according to the construction progress. This transaction constituted a related party transaction and significantly increased the engineering business revenue of the company. According to the 2020 annual report, the amount of engineering business between the company and Beijing luodun was 1.872 million yuan in 2020 and 135531 million yuan in 2019. If the project is disclosed in accordance with the provisions of the accounting standards of the company, please confirm whether the actual income of the project in the current period is in line with the provisions of the accounting standards of the company; (2) The specific reasons and rationality of the substantial increase in the amount of engineering business between the company and Beijing luodun in this year, whether the transaction price is fair, whether there is commercial substance and whether there is sustainability; (3) In combination with the reply to the above questions, explain whether the recognition of the related party transaction related income is in compliance and whether it should be deducted according to the operating income deduction.
reply:
(I) the specific amount of revenue recognized in the current period under the contract, the actual construction progress of the project, and whether the revenue recognition complies with the provisions of the accounting standards for business enterprises.
As of December 31, 2021, a total of 187972 million yuan (Unaudited) has been recognized in the fine decoration project (hereinafter referred to as "Shahe project") of block B (7 items such as b-2 residence) of phase III residence and supporting facilities in Beijing Shahe higher education park. The decoration engineering business provided by the company belongs to the performance obligation to be performed within a certain period of time. The performance progress of the services provided shall be determined according to the proportion of the cost incurred in the total cost, and the revenue shall be recognized according to the performance progress. If the performance schedule cannot be reasonably determined and the costs incurred by the company are expected to be compensated, the revenue shall be recognized according to the amount of costs incurred until the performance schedule can be reasonably recognized. The company believes that the revenue recognition of the Shahe project complies with the relevant provisions of the accounting standards for business enterprises.
(II) the specific reasons and rationality of the substantial increase in the amount of engineering business between the company and Beijing luodun this year, whether the transaction price is fair, whether there is commercial substance and whether there is sustainability.
The Shahe project of Shanghai luodun Decoration Engineering Co., Ltd. (hereinafter referred to as "Shanghai Engineering Company") and Beijing luodun Shahe construction and Development Co., Ltd. (hereinafter referred to as "Beijing luodun Shahe company") was obtained by the company through public bidding, with fair price and commercial essence. In addition to 2016, the company, its holding subsidiaries and Beijing luodunshahe company have generated relevant engineering business income in recent ten years, which has been stable and sustainable for a long time. Combined with the relevant engineering business of both parties over the years, the company's relevant engineering revenue did not increase significantly in 2021. The business and transaction amount of both parties in recent ten years are as follows:
