Inquiry letter on the annual report of China Dive Company Limited(300526)
Gem annual report inquiry letter [2022] No. 135 China Dive Company Limited(300526) board of directors:
Our department paid attention to the following situations in the post review of your 2021 annual report:
1. The company changed its accounting firm for four consecutive years. In February 2022, the company hired Asia Pacific (Group) accounting firm (special general partnership) (hereinafter referred to as Asia Pacific firm) as the auditor of the company's 2021 annual report. Asia Pacific firm will issue a qualified opinion audit report with significant uncertainty of going concern for your company's 2021 financial report. The audit report shows that the basis for forming qualified opinions is the implementation of audit procedures such as inspection, correspondence and visit for the elimination or change of reserved matters in the previous period in the current period. Due to the impact of limited audit scope, the corresponding audit procedures have not been implemented for the recognition basis of sales revenue of RMB 123978 million, so as to obtain sufficient and appropriate audit evidence to confirm the authenticity and accuracy of such revenue. This matter has or may have an impact on the comparability of current data and corresponding data. Your company has been issued with qualified audit reports for two consecutive years.
In combination with the relevant requirements of the guidelines for the application of regulatory rules - Audit category No. 1 and the answers to the audit standards for Chinese certified public accountants No. 16 - non unqualified opinions in the audit report, the annual audit accountant is requested to explain in detail the audit procedures implemented and the audit evidence obtained, and explain the formation process and reasons of the "restricted" matters, as well as the impact of the "restricted" matters on the company's financial situation The amount and proportion of possible impact on operating results and cash flow, the content of audit evidence not obtained for "restricted" matters, the content and results of communication with the management on the confirmed "restricted" situation, what audit evidence should be obtained to solve the "restricted" problem, and further explain whether the audit opinion is appropriate.
2. The annual report shows that the company lost 1428877 million yuan in 2021. As of December 31, 2021, the company's current liabilities were higher than current assets by 855501 million yuan. These events or circumstances indicate that there are major uncertainties that may lead to major doubts about the company's ability to continue as a going concern. Your company has evaluated the sustainable operation ability in the 12 months since the end of the reporting period, found no matters or situations that have major doubts about the sustainable operation ability, and put forward countermeasures to expand the existing main business, resolve liquidity risks, explore strategic transformation and improve governance level. At present, the company's main business has tended to shrink, its profitability has decreased significantly, and some production lines have not been restored, facing great operating pressure and difficulties.
(1) Please further explain whether the above-mentioned measures proposed by the company can be successfully implemented, what specific work the company has done for this purpose, and the impact of the measures taken on improving the company's financial situation and sustainable operation ability in combination with the current actual situation.
(2) Please explain the implementation progress and effect of the above measures after the period, whether the business situation has been effectively improved after the period, and whether there is significant uncertainty in the ability of sustainable operation. 3. At the 34th meeting of the 4th board of directors, Bao Qun, an independent director of the company, abstained from voting on four proposals, including the annual report and its summary in 2021, the final financial statement report in 2021, the self-evaluation report on internal control in 2021, and the proposal on the provision for asset impairment, and expressed his doubts about the authenticity, accuracy and accuracy of the annual report and its summary in 2021 and the self-evaluation report on internal control in 2021 Integrity cannot be guaranteed. The main reason is that the company's asset impairment is much higher than the average level of Companies in the same industry. The company's 2021 internal control self-evaluation report shows that there are still unresolved remaining problems and the impact has not been eliminated.
(1) Bao Qun, an independent director, is requested to explain the detailed reasons for abstaining from voting on the relevant proposals of the company, including that the company is far higher than the average level of Companies in the same industry in terms of asset impairment, the specific reasons and basis for the unresolved remaining problems shown in the 2021 internal control self-evaluation report, whether the company still has internal control defects up to now, and the specific work that has been carried out to improve the relevant internal control defects of the company.
(2) The annual report shows that in 2021, the company's inventory falling price loss and contract performance cost impairment loss were 729000 yuan, the impairment loss of construction in progress was 3.6 million yuan, the impairment loss of intangible assets was 488673 million yuan, the impairment loss of goodwill was 7.1807 million yuan, and the provision for asset impairment was Shanghai Moons' Electric Co.Ltd(603728) million yuan in total.
Please quantitatively explain the calculation process of the above asset impairment provision and the basis and rationality of the selection of relevant parameters, and whether it is quite different from the same industry. The annual audit accountant shall check and give clear opinions.
(3) According to the self-assessment report on internal control in 2021, the following important defects were found in the internal control of the company's financial report during the reporting period: the company's domestic sales revenue of 5.1679 million yuan of diving equipment revenue and 145442 million yuan of material sales revenue in 2020 were missing business documents, resulting in incomplete information on the recognition of this part of revenue, so that the occurrence and accuracy of revenue in 2020 could not be determined. In order to eliminate the impact of the above matters on the financial report in 2021, the company accompanied the annual audit accountant to supplement relevant materials through visits, letters and other forms. The sales revenue of 7.3143 million yuan can be recognized, and the remaining unrecognized amount is 123978 million yuan. For the problems existing in the company's internal control over financial reporting in the early stage, the company believes that the design and operation of the company's internal control are effective after rectification, no such related events have occurred, and there are no major defects in the internal control over financial reporting.
Please explain the reasons and basis for the above internal control evaluation conclusion when the remaining problems in 2020 have not been solved, and explain whether the conclusion is reasonable and prudent.
4. The annual report shows that during the reporting period, several directors, supervisors and senior managers of your company resigned. Including Chairman Zhou Qian, Chen Chunguo and Zhang Shun, director Xuanyuan of the cultural revolution, supervisor Li Zhihui, deputy general managers Wang Sanming and Li Qifei, and chief financial officer Zhang Ruiyan.
(1) Please explain in detail the specific reasons for the resignation of the above directors, supervisors and senior managers, whether there are major adverse changes in the production and operation of your company, and whether your company, controlling shareholders, actual controllers and their related parties have committed violations.
(2) Please explain the specific reasons for the resignation, whether they can perform their duties independently and normally during their tenure, whether they are concerned about matters that have a significant adverse impact on the production and operation of the company, and whether they are concerned about the illegal acts of the company, controlling shareholders, actual controllers and their related parties.
(3) Please explain the impact of the resignation of the above personnel on the company's production and operation, decision-making on major matters and the effectiveness of internal control, and the measures your company has taken and plans to take to ensure the normal operation of corporate governance and operation.
(4) According to the announcement on the resignation of independent directors of the company disclosed on October 21, 2021 and the correction announcement on the resignation of independent directors disclosed on April 22, 2022, Bao Qun, an independent director of accounting, submitted his resignation to the company in October 2021.
Please explain Bao Qun's performance of duties since October 2021, the reason why the company has not elected independent directors majoring in accounting so far, whether it violates the relevant provisions of article 3.2.11 of the guidelines for self discipline supervision of listed companies No. 2 - standardized operation of companies listed on GEM, and explain the specific arrangements and current progress of subsequent supplementary appointment of relevant directors.
5. According to the annual report, in order to expand new business, your company plans to increase capital with Chen Xuedong, Anhui ruihezhi business consulting partnership (limited partnership) (hereinafter referred to as "ruihezhi") and other wholly-owned subsidiaries of Jiangsu Yunzhi Xinghe Network Technology Co., Ltd. (hereinafter referred to as "ruizhizhong") with self raised funds of RMB 51 million. After this capital increase is completed, your company will hold 51% shares of Ruizhi Zhonghe. According to the announcement on foreign investment and related party transactions disclosed by your company on March 9, ruizhizhong was established on August 4, 2021 and has not generated operating revenue since its establishment. After becoming a holding subsidiary of the company, it will carry out the development, design and application of photovoltaic tracking support system. This transaction constitutes a related party transaction.
(1) Please explain the transaction background of the related party transaction, whether it has commercial substance, whether the pricing is fair, and whether there is any situation of transferring benefits to related parties. The annual audit accountant shall check and give clear opinions.
(2) In combination with the company's monetary capital, cash flow, financing ability and solvency, explain whether the company is able to raise the above investment funds, whether the financing behavior will have an adverse impact on your company's cash flow and daily operation, and whether there is liquidity risk.
(3) Please explain the reasons why ruizhizhong has not realized its operating revenue, whether the company has the ability to operate photovoltaic related businesses across the border, the specific business arrangement and plan after the capital increase, and the specific impact ruizhizhong may have on the company's future business scope, business performance and sustainable operation ability in combination with the company's business personnel and technical reserves. Please make a written statement on the above issues, submit the relevant explanatory materials to our department for disclosure before May 9, and send a copy to the listed company supervision division of Guangdong securities regulatory bureau.
This is to inform you.
Gem company management department April 25, 2022
