Securities code: Gansu Engineering Consulting Group Co.Ltd(000779) securities abbreviation: Gansu Engineering Consulting Group Co.Ltd(000779) Announcement No.: 2022024 Gansu Engineering Consulting Group Co.Ltd(000779)
Announcement on withdrawing asset impairment in 2021
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.
Gansu Engineering Consulting Group Co.Ltd(000779) (hereinafter referred to as “the company” or “the company”) held the 30th meeting of the seventh board of directors on April 19, 2022, which deliberated and adopted the proposal on the company’s provision for asset impairment in 2021. This proposal does not need to be submitted to the general meeting of shareholders for deliberation. In accordance with the relevant provisions of the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – business handling, the specific conditions of the company’s provision for asset impairment are hereby announced as follows:
1、 Overview of provision for asset impairment
In order to objectively reflect the financial situation and operating results of the company in 2021, according to the relevant provisions of the accounting standards for business enterprises and based on the principle of prudence, the company has checked and counted its assets, and conducted impairment test on the assets with signs of impairment. After testing, the company’s provision for impairment in 2021 totaled RMB 999047 million, accounting for 32.51% of the company’s latest audited net profit attributable to shareholders of listed companies, as follows:
Project amount in 2021 amount in 2020
1、 Impairment loss of notes receivable -28660615
2、 Impairment loss of accounts receivable -8602103893 -4733964069 III. impairment loss of contract assets -497086426
4、 Impairment loss of other receivables -862624009 -316 Shanghai Waigaoqiao Free Trade Zone Group Co.Ltd(600648) total -9990474943 -5050564717
2、 Conditions and reasons for withdrawing asset impairment
Based on the expected loss, the company accrues the impairment provision for the following items according to the applicable expected credit loss measurement method, and recognizes the impairment loss.
In 2021, the company made credit impairment provision of 86.021 million yuan for accounts receivable, 8.6262 million yuan for other receivables, 286600 yuan for notes receivable and 4.9708 million yuan for contract assets. The main reasons for the provision for impairment are: first, the aging of accounts receivable; Second, the balance of receivables and contract assets increased. 3、 Recognition standard and withdrawal method of asset impairment withdrawn this time
When there are the following signs, it indicates that the asset may be impaired:
(1) The market price of assets has fallen sharply in the current period, and the decline is significantly higher than the expected decline due to the passage of time or normal use.
(2) The economic, technical or legal environment in which the company operates and the market in which the assets are located will undergo significant changes in the current period or in the near future, which will have an adverse impact on the company.
(3) The market interest rate or other market return on investment has increased in the current period, which affects the discount rate used by the enterprise to calculate the present value of the expected future cash flow of the asset, resulting in a significant reduction in the recoverable amount of the asset.
(4) There is evidence that the asset is obsolete or its entity has been damaged.
(5) Assets have been or will be idle, terminated or planned to be disposed in advance.
(6) The evidence in the internal report of the company indicates that the economic performance of the assets has been or will be lower than the expectation, such as the net cash flow created by the assets or the operating profit (or loss) realized is far lower than the expected amount.
(7) Other signs indicating that the assets may have been impaired.
On the balance sheet date, the company judges the long-term equity investment, fixed assets, engineering materials, construction in progress, right of use assets, intangible assets (except those with uncertain service life) and other assets applicable to the accounting standards for Business Enterprises No. 8 – asset impairment. When there are signs of impairment, the company will conduct impairment test – estimate its recoverable amount. The recoverable amount is determined by the higher one between 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. If the recoverable amount of an asset is lower than its book value, the book value of the asset shall be written down to the recoverable amount. The written down amount shall be recognized as asset impairment loss and included in the current profits and losses, and the corresponding asset impairment reserves shall be accrued at the same time.
If there is any indication that an asset may be impaired, the company usually estimates its recoverable amount on the basis of individual assets. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of the asset group shall be determined based on the asset group to which the asset belongs.
Asset group is the smallest asset portfolio that can be recognized by the company, and its cash inflow is basically independent of other assets or asset groups. The asset group consists of assets related to the creation of cash inflows. The recognition of an asset group is based on whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset groups.
The company conducts annual impairment test on the goodwill and intangible assets with uncertain service life and not yet in serviceable condition formed by business combination, regardless of whether there are signs of impairment. The impairment test of goodwill shall be conducted in combination with its related asset group or combination of asset groups.
Once the asset impairment loss is recognized, it shall not be reversed in the subsequent accounting periods.
4、 The impact of this provision for asset impairment on the company’s performance
This provision for asset impairment complies with the accounting standards for business enterprises and relevant policies and regulations, conforms to the actual situation of the company’s assets, can more fairly reflect the company’s asset status, and can make the company’s accounting information on asset value more authentic, reliable and reasonable.
The company’s provision for impairment of RMB 999047 million in 2021 will reduce the total profit of RMB 999047 million and the net profit attributable to shareholders of Listed Companies in 2021 by RMB 84.919 million.
5、 Statement of the audit committee of the board of directors on the rationality of withdrawing asset impairment
The company’s provision for asset impairment this time complies with the provisions of the accounting standards for business enterprises and relevant accounting policies of the company. It is made based on the principle of prudence after asset impairment test, and the basis is sufficient.
After the provision for asset impairment is made, the financial statements can more fairly reflect the company’s financial status and operating results, making the company’s accounting information more reasonable. Therefore, the company agrees to withdraw the provision for asset impairment this time.
6、 Explanation of the board of directors on the rationality of withdrawing asset impairment
The provision for impairment of the company’s assets this time is made according to the actual situation of the company’s relevant assets and based on the principle of prudence, which is in line with the accounting standards for business enterprises and other relevant provisions. The basis for the provision is reasonable and sufficient. After the provision for asset impairment is made, the company’s 2021 annual financial statements can more objectively reflect the company’s current financial situation, asset value and operating results, and the company’s financial information is more reasonable. 7、 Opinions of the board of supervisors on the provision for asset impairment
The company’s provision for asset impairment follows the principle of prudence and conforms to the accounting standards for business enterprises, the provisions of the company’s accounting policies and the actual situation of the company’s assets. The decision-making procedure of the board of directors on this matter is legal and based on sufficient basis. The provision for asset impairment this time can more fairly reflect the asset status of the company.
8、 Independent opinions of independent directors on the accrual of asset impairment
The company’s provision for asset impairment this time complies with the provisions of the accounting standards for business enterprises and relevant accounting policies of the company. The review procedures are legal and based on sufficient basis. After the provision for asset impairment is made, the financial statements can more fairly reflect the company’s financial status and operating results, which is in line with the overall interests of the company and does not damage the interests of the company and minority shareholders. We agree that the provision for asset impairment is made this time. It is hereby announced
Gansu Engineering Consulting Group Co.Ltd(000779) board of directors April 20, 2022
