Securities code: 002586 securities abbreviation: Zhejiang Reclaim Construction Group Co.Ltd(002586) Announcement No.: 2022-011 Zhejiang Reclaim Construction Group Co.Ltd(002586)
Announcement on the rectification report of Ningbo Securities Regulatory Bureau on the administrative supervision measures taken by the company
The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete without false records, misleading statements or major omissions.
Risk tips:
1. Zhejiang Reclaim Construction Group Co.Ltd(002586) (hereinafter referred to as "the company"), the type of audit opinion issued by Asia Pacific (Group) accounting firm (special general partnership), the 2020 annual audit institution of the company, on the 2020 annual financial report of the company is qualified. According to the problems existing in the above decision, the audit opinion of the 2020 annual report of the company will be adjusted to negative opinion or unable to express opinion, Due to the adjustment of audit opinions, the company will touch the delisting risk warning in article 14.3.1 of the stock listing rules of Shenzhen Stock Exchange (revised in 2020). According to the relevant requirements of the notice on Issuing the stock listing rules of Shenzhen Stock Exchange (revised in 2020) (SZS [2020] No. 1294), the company will continue to implement the delisting risk warning. Please invest rationally and pay attention to risks.
2. The actual out of control time point of Millennium design is confirmed as May 15, 2020. The company will correct the relevant financial data announced and disclosed in 2020. The correction content is to consolidate the financial data of Millennium design from January to April 2020. Subsequently, the company will start relevant processes as soon as possible to correct the financial reports of the semi annual report, the third quarterly report and the annual report of 2020 and the first quarterly report, the semi annual report and the third quarterly report of 2021. The company's change of the out of control time point of the Millennium design will affect "other non current assets", "undistributed profits", "operating revenue" and "operating costs" in the above reports "Taxes and surcharges", "sales expenses", "management expenses", "financial expenses", "other income", "non operating income", "non operating expenses", "income tax expenses" and other financial indicators, the annual audit accounting firm appointed by the company will conduct a comprehensive audit and issue a new audit report or special assurance report, and the final opinion of the accountant shall prevail, Whether other financial data other than the above data need to be adjusted shall be subject to the opinions of accountants.
3. In the 2019 annual report disclosed by the company, the goodwill impairment loss of 70.805 million yuan of the company's subsidiary Shanghai Millennium urban planning and Engineering Design Co., Ltd. has been fully accrued. If the result of this impairment test is inconsistent with the result originally accrued by the company, it is necessary to correct the accounting error, which will affect the long-term equity investment Asset impairment loss and asset impairment loss and goodwill in the consolidated statements; The company needs to hire a professional evaluation institution to evaluate the fair value of the long-term equity investment of Shanghai Millennium urban planning and Engineering Design Co., Ltd. (the amount listed in other non current assets on the statement is 994556884.92 yuan) in 2020. If the evaluated fair value is lower than the amount listed in other non current assets on the statement, Then other non current assets, undistributed profits and asset impairment losses of the parent company and consolidated statements in 2020 shall be adjusted according to the difference between the assessed fair value and the value of non current assets listed in the statements; If it is determined that the control is restored, it may affect the long-term equity investment, asset impairment loss in the parent company's statements in 2021, asset impairment loss and goodwill in the consolidated statements. The final amount of impairment provision accrued in each year will be determined after evaluation and audit by the evaluation institution and audit institution hired by the company.
Due to inconsistencies in the consolidated scope of the company's financial statements in 2020, inconsistencies and incompleteness in the disclosure of the uncontrolled subsidiary Millennium Urban Planning Engineering Design Co., Ltd. (hereinafter referred to as "Millennium design") in the 2020 annual report, the financial data before Millennium design lost control was not included in the consolidated financial statements in 2020 Due to the failure to reasonably confirm the book value of "other non current assets" in the financial statements at the end of 2020 and other reasons, the company received the decision on administrative supervision measures ([2021] No. 25) (hereinafter referred to as the "decision") issued by Ningbo regulatory bureau of China Securities Regulatory Commission to the company and relevant personnel on November 19, 2021. The company attached great importance to the above problems and immediately established a rectification team after receiving the decision to organize relevant departments to do a good job in rectification. The company has comprehensively sorted out the matters involved in the decision, and carefully rectified them according to the provisions and requirements of relevant laws and regulations and the company's internal management system. The company held the 44th meeting of the 6th board of directors and the 20th meeting of the 6th board of supervisors on January 10, 2022, and deliberated and adopted the proposal on the rectification report on administrative supervision measures taken by Ningbo Securities Regulatory Bureau on the company. The rectification report is hereby announced as follows:
1、 Information disclosure
1. The consolidated scope of financial statements in 2020 is inconsistent and relevant explanations are not disclosed. Your company has consolidated the performance data of Shanghai Millennium urban planning and Engineering Design Co., Ltd. (hereinafter referred to as Millennium design) from January to March 2020 in the first quarterly report, semi annual report and third quarterly report of 2020, but has not consolidated the performance data of Millennium design in the 2020 annual consolidated financial statements, which is inconsistent, In addition, your company did not disclose the relevant explanation on the adjustment of the consolidation scope in the 2020 financial report, and the above matters do not comply with the relevant provisions of Article 30 of the rules for the preparation of information disclosure of companies offering securities to the public No. 15 - General Provisions on financial reports.
Rectification measures:
The company reorganized and confirmed the situation that Millennium design had lost control, combined with the opinions of relevant intermediaries, adjusted and confirmed that the actual time point when Millennium design lost control was May 15, 2020. In 2020, based on the fact that the Millennium design was out of control, the company could not fully obtain the financial data of the Millennium design before it was out of control. When preparing the financial report of the company's 2020 semi annual report and third quarterly report, only the performance data of the Millennium design from January to March 2020 were combined. Now, according to the final determined actual out of control time point, the company will analyze the semi annual report, third quarterly report and Make corrections to the annual report and the financial reports of the first quarterly report, semi annual report and third quarterly report announced and disclosed in 2021. According to the practice of monthly preparation of accounting statements, the correction content is to consolidate the financial data of Millennium design from January to April 2020.
2. The disclosure of Millennium design of runaway subsidiaries included in the scope of consolidated statements in the 2020 annual report is inconsistent and incomplete. First, your company disclosed in several paragraphs of the 2020 annual report, such as "important tips" and "major defects in internal control of important subsidiaries out of control", that "Waihai shares announced on August 21, 2020 that it lost control of the Millennium design, and since the semi annual report of the company was not included in the scope of consolidated statements, it will not be managed as the holding subsidiary of the company in the future", In the 2020 annual report, "changes in the scope of consolidation for other reasons" The "provision for impairment of goodwill" and other paragraphs in the notes to the financial statements disclose that "after careful judgment of the company, the company announced on August 21, 2020 that the Millennium design was out of control and not included in the scope of the consolidated statements, and will not be managed as the company's holding subsidiary in the future". There are inconsistencies in the time points disclosed above by your company about the Millennium design included in the scope of the consolidated statements.
Second, the out of control time point and judgment basis that your company believes that the Millennium design will no longer be included in the scope of consolidation from January 1, 2020 are not disclosed in the 2020 annual report. The above matters do not comply with the provisions of Article 2 of the measures for the administration of information disclosure of listed companies (Order No. 40 of the CSRC).
Rectification measures:
1. The company confirmed that the actual runaway time point of Millennium design is May 15, 2020. The main reasons are:
(1) On May 15, 2020, the board of directors of Millennium design rejected the company's request for convening an extraordinary general meeting. After this point, the company has been unable to implement effective management and control activities of Millennium design. (2) Since May 2020, the company has been unable to know the financial status and operating results of Millennium design according to the requirements of internal management system and previous processes.
2. The specific basis for judging out of control is as follows:
(1) The company is unable to appoint directors, supervisors and important management personnel to Millennium design
On May 6, 2020, the company issued the notice on requesting the board of directors of Shanghai Millennium urban planning and Engineering Design Co., Ltd. to convene the first extraordinary general meeting of shareholders in 2020 to the Millennium design board of directors, and submitted relevant proposals, mainly including amending the company's constitution, electing the board of directors and the board of supervisors, renewing a new seal and business license, etc.
On May 11, 2020, Millennium design held the seventh meeting of the third board of directors, and deliberated and adopted the proposal on disapproving the holding of the first extraordinary general meeting of shareholders in 2020 proposed by the controlling shareholder with 4 votes in favor and 1 abstention. Among the three Millennium design directors appointed by the company, two voted in favour of the proposal and one abstained, leading to the adoption of the proposal. The appointed directors cannot represent the company's position. Meanwhile, the Millennium design board of directors has made a clear resolution contrary to the major shareholders, indicating that the company has lost control of the Millennium design board of directors.
The board of directors of Millennium design rejected the company's request to convene the first extraordinary general meeting of shareholders in 2020 in a written reply on May 15, 2020.
After being rejected by the Millennium design board of directors, the company proposed to the Millennium design board of supervisors to convene an extraordinary general meeting of shareholders. The Millennium design board of supervisors finally held its own general meeting on July 25, 2020. As the convener, the company also held the first extraordinary general meeting of shareholders of Millennium design in 2020 on August 3, 2020, deliberated and passed proposals on Amending the articles of association of Millennium design, electing directors and supervisors, renewing business license, seal and profit distribution in 2019. On the morning of August 4, 2020, new directors Supervisors arrived at Millennium design's headquarters building to prepare for work handover, but Millennium design related personnel refused to show up and took a series of bad measures such as door closure, power failure, employee vacation and alarm to prevent new directors and supervisors from entering Millennium design's business premises to perform their duties.
The company and Shanghai Millennium Engineering Investment Management Co., Ltd. (hereinafter referred to as "Millennium Investment") were sued by Zhong Chengrong, Millennium Investment and Tang Lei to Shanghai Minhang District People's court due to the above contradictions and disputes. According to the judgment of Shanghai Minhang District People's court, the resolution of the general meeting of shareholders of Millennium design held on July 25, 2020 is valid, The resolutions of the general meeting of shareholders held by Millennium design on August 3, 2020 are invalid, that is, the resolutions on Amending the articles of association, re electing the board of directors and the board of supervisors, renewing a new seal and business license, etc. considered and adopted by the company are invalid.
Convened by the company, on September 25, 2021, the Millennium design board of supervisors presided over the first extraordinary general meeting of shareholders in 2021, deliberated and approved the re-election of the board of directors and the board of supervisors. However, some shareholders of Millennium design, on behalf of Millennium Design Engineering Investment Management Co., Ltd. and Zhong Chengrong, made it clear in writing on October 11, 2021 that they would not cooperate with the amendment of the articles of association, the industrial and commercial filing of directors, supervisors and senior executives and the handover of relevant work. The new directors and supervisors re elected at the first extraordinary general meeting of shareholders in 2021 held by Millennium design on September 25, 2021 failed to enter Millennium design to perform their duties.
(2) The company cannot know the financial status and operating results of Millennium design
After May 2020, Millennium design has failed to provide the financial statements before the restoration of control, and the company is unable to know the financial status and operating results of Millennium design. The then chairman and vice chairman of the company have communicated with the then chairman and general manager of Millennium design for many times, and the other party has avoided providing financial statements. In this regard, the company has repeatedly sent reminders to Millennium design and its then general manager and financial director, requesting to provide Millennium design financial statements and other materials. However, the Millennium design rejection letter will not be replied and relevant materials will not be provided.
Based on the above events, since Millennium design's written reply on May 15, 2020 rejected the company's request to hold a general meeting of shareholders, the measures taken by the then board of directors and management of the company to restore control of Millennium design failed, and the company lost control of Millennium design's board of directors and could not operate and manage Millennium design through the board of directors, Therefore, it can be judged that the time point when the Millennium design actually gets out of control is May 15, 2020.
Therefore, on August 21, 2020, the company announced that "Millennium design is out of control and not included in the scope of consolidated statements, and will not be managed as the company's holding subsidiary" and the relevant statements on "Millennium design is out of control" in the 2020 annual report are not accurate enough and do not comply with the provisions of Article 2 of the measures for the administration of information disclosure of listed companies (Order No. 40 of the CSRC). The company will correct accounting errors in the subsequent financial reports of the semi annual report, the third quarterly report, the annual report of 2020 and the first quarterly report, the semi annual report and the third quarterly report of 2021. According to the practice of preparing accounting statements on a monthly basis, the correction is to consolidate the financial data of Millennium design from January to April 2020.
3. Contracts related to major asset restructuring were not disclosed in time. After verification, your company failed to disclose two contracts related to the major asset restructuring of the Millennium design in time, resulting in the incompleteness of the disclosed major asset restructuring plan. Among them, the share transfer agreement between Zhejiang Reclaim Construction Group Co.Ltd(002586) and Zhong Chengrong and Tang Lei on Shanghai Millennium Urban Planning Engineering Design Co., Ltd. (hereinafter referred to as the share transfer agreement) was signed from May 11, 2018 to June 11, 2018, The main contents include the agreement on the company's acquisition of the remaining 9.68% shares in the Millennium design restructuring plan, and the preconditions for the Millennium design to meet the performance indicators. This agreement is inconsistent with the disclosure that there is no follow-up plan or arrangement for this part of the remaining shares in the restructuring report of M & a millennium design disclosed by the company in April 2018, which belongs to the progress or change of major asset restructuring
