Securities code: Shenzhen Increase Technology Co.Ltd(300713) securities abbreviation: Shenzhen Increase Technology Co.Ltd(300713) Announcement No.: 2022029 Shenzhen Increase Technology Co.Ltd(300713)
Announcement on the provision for 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.
Shenzhen Increase Technology Co.Ltd(300713) (hereinafter referred to as “the company”) convened the fourth meeting of the third board of directors and the fourth meeting of the third board of supervisors on April 22, 2022, and deliberated and adopted the proposal on the provision for asset impairment in 2021. The relevant information is hereby announced as follows:
1、 Provision for impairment of assets and overview
In order to truly reflect the company’s financial situation and operating results, based on the principle of prudence and in accordance with the accounting standards for business enterprises and relevant regulations, Shenzhen Increase Technology Co.Ltd(300713) (hereinafter referred to as “the company”) conducted a comprehensive inventory of various receivables, contract assets, inventories, fixed assets, long-term equity investment and other assets in 2021, and fully evaluated and analyzed the possibility of impairment of various assets and the net realizable value of various inventories, After analysis, the company needs to withdraw the impairment provision for the above assets that may be impaired.
1. Provision for asset impairment
The details of the company’s provision for asset impairment in 2021 are as follows:
Unit: RMB
Amount incurred in current period and amount incurred in previous period
1、 Bad debt provision -230808084954561788
Including: bad debt provision for notes receivable -3686344840099986
Bad debt provision for accounts receivable 70978872620488276
Bad debt provision for other receivables -264923508293973526
2、 Inventory falling price reserves 398694422745727208
3、 Provision for impairment of contract assets 52760629 – 14232760
Total 2206469671686056236
2、 The recognition standard and withdrawal method of the provision for asset impairment this time
For financial assets measured at amortized cost, debt investments measured at fair value and whose changes are included in other comprehensive income, contract assets, lease receivables, loan commitments and financial guarantee contracts, the company recognizes loss reserves on the basis of expected credit losses.
① Measurement of expected credit loss
Expected credit loss refers to the weighted average value of credit loss of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contract cash flows receivable under the contract and all cash flows expected to be received by the company discounted at the original effective interest rate, that is, the present value of all cash shortages. Among them, the financial assets purchased or originated by the company with credit impairment shall be discounted according to the actual interest rate adjusted by the credit of the financial assets.
Expected credit loss in the whole duration refers to the expected credit loss caused by all possible events of default in the whole expected duration of financial instruments.
The expected credit loss in the next 12 months refers to the expected credit loss caused by the possible default of financial instruments within 12 months after the balance sheet date (if the expected duration of financial instruments is less than 12 months, it is the expected duration), which is a part of the expected credit loss in the whole duration.
On each balance sheet date, the company measures the expected credit losses of financial instruments in different stages. If the credit risk of the financial instrument has not increased significantly since the initial recognition, it is in the first stage, and the company measures the loss reserves according to the expected credit loss in the next 12 months; If the credit risk of a financial instrument has increased significantly since its initial recognition, but there is no credit impairment, it is in the second stage. The company measures the loss provision according to the expected credit loss of the whole duration of the instrument; If a financial instrument has been impaired since its initial recognition, it is in the third stage. The company measures the loss provision according to the expected credit loss of the whole duration of the instrument.
For financial instruments with low credit risk on the balance sheet date, the company assumes that its credit risk has not increased significantly since initial recognition, and measures the loss provision according to the expected credit loss in the next 12 months. For the financial instruments in the first and second stages and with low credit risk, the company calculates the interest income according to the book balance and effective interest rate without deducting the impairment provision. For the financial instruments in the third stage, the interest income shall be calculated according to the book balance minus the amortized cost after the provision for impairment and the effective interest rate.
For notes receivable, accounts receivable, accounts receivable financing and contract assets, whether there is a major financing component or not, the company measures the loss reserves according to the expected credit loss throughout the duration.
A. Receivables / contract assets
For the notes receivable, accounts receivable, other receivables, accounts receivable financing, contract assets and long-term receivables that have objective evidence of impairment and are suitable for single evaluation, the impairment test shall be conducted separately, the expected credit loss shall be recognized, and the single impairment provision shall be withdrawn. For notes receivable, accounts receivable, other receivables, accounts receivable financing, contract assets and long-term receivables without objective evidence of impairment, or when a single financial asset cannot evaluate the information of expected credit loss at a reasonable cost, the company divides notes receivable, accounts receivable, other receivables, accounts receivable financing, contract assets and long-term receivables into several combinations according to the characteristics of credit risk, The expected credit loss is calculated on the basis of the combination, and the basis for determining the combination is as follows:
The basis for determining the combination of notes receivable is as follows:
Bills receivable Portfolio 1 commercial acceptance bill
Bills receivable portfolio 2 bank acceptance bill
For bills receivable divided into portfolios, the company refers to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, and calculates the expected credit loss through default risk exposure and the expected credit loss rate for the whole duration.
The basis for determining the combination of accounts receivable is as follows:
Accounts receivable Portfolio 1 aging portfolio
Accounts receivable portfolio 2 digital accounts receivable debt portfolio
Accounts receivable portfolio 3 portfolio of related parties within the consolidation scope
For the accounts receivable divided into portfolio, the company refers to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, prepares the comparison table between the aging of accounts receivable and the expected credit loss rate throughout the duration, and calculates the expected credit loss.
The basis for determining the combination of other receivables is as follows:
Interest receivable of other receivables Portfolio 1
Other receivables portfolio 2 dividends receivable
Other receivables portfolio 3 aging portfolio
Combination of other receivables 4 combination of related parties within the consolidation scope
For other receivables divided into portfolios, the company refers to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate in the next 12 months or the whole duration.
The basis for determining the combination of receivables financing is as follows:
Receivables financing Portfolio 1 commercial acceptance bill
Receivables financing portfolio 2 bank acceptance bill
For the receivables financing divided into portfolios, the company refers to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate for the whole duration.
The basis for determining the combination of contract assets is as follows:
Unexpired warranty deposit of contract asset portfolio
For the contract assets divided into portfolios, the company refers to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate for the whole duration.
B. Debt investment and other debt investment
For debt investment and other debt investment, the company calculates the expected credit loss through default risk exposure and expected credit loss rate in the next 12 months or the whole duration according to the nature of the investment and various types of counterparty and risk exposure.
② Low credit risk
If the default risk of a financial instrument is low, the borrower has a strong ability to perform its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and business environment over a long period of time, it may not necessarily reduce the borrower’s ability to perform its contractual cash flow obligations. The financial instrument is considered to have low credit risk.
③ Credit risk increased significantly
The company compares the default probability of the financial instrument within the expected duration determined on the balance sheet date with the default probability within the expected duration determined at the initial recognition to determine the relative change of the default probability within the expected duration of the financial instrument, so as to evaluate whether the credit risk of the financial instrument has increased significantly since the initial recognition.
When determining whether the credit risk has increased significantly since initial recognition, the company considers reasonable and reliable information, including forward-looking information, that can be obtained without unnecessary additional costs or efforts. The information considered by the company includes:
A. Whether the internal price index has changed significantly due to the change of credit risk;
B. Adverse changes in business, financial or economic conditions that are expected to lead to significant changes in the debtor’s ability to perform its debt service obligations;
C. Whether the actual or expected operating results of the debtor have changed significantly; Whether the regulatory, economic or technological environment in which the debtor is located has changed significantly;
D. Whether there is a significant change in the value of collateral as debt collateral or the quality of guarantee or credit enhancement provided by a third party. These changes are expected to reduce the debtor’s economic motivation to repay within the period specified in the contract or affect the probability of default;
E. Whether the economic motivation that is expected to reduce the debtor’s repayment according to the time limit agreed in the contract has changed significantly; F. Expected changes in the loan contract, including whether the expected breach of contract may lead to the exemption or amendment of contractual obligations, the granting of interest free period, the jump of interest rate, the request for additional collateral or guarantee, or other changes to the contractual framework of financial instruments;
G. Whether the debtor’s expected performance and repayment behavior have changed significantly;
H. Whether the contract payment is overdue for more than (including) 30 days.
According to the nature of financial instruments, the company assesses whether the credit risk has increased significantly on the basis of single financial instrument or combination of financial instruments. When evaluating based on the combination of financial instruments, the company can classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk rating.
Under normal circumstances, if it is overdue for more than 30 days, the company determines that the credit risk of financial instruments has increased significantly. Unless the company can obtain reasonable and reliable information without paying too much cost or effort to prove that the credit risk has not increased significantly since initial recognition, although the payment period agreed in the contract has exceeded 30 days. ④ Financial assets with credit impairment
On the balance sheet date, the company evaluates whether the financial assets measured at amortized cost and the creditor’s rights investment measured at fair value and whose changes are included in other comprehensive income have been impaired. When one or more events that have an adverse impact on the expected future cash flow of a financial asset occur, the financial asset becomes a financial asset with credit impairment. The evidence of credit impairment of financial assets includes the following observable information:
Significant financial difficulties of the issuer or debtor; The debtor violates the contract, such as default or overdue payment of interest or principal; The creditor gives concessions that the debtor will not make under any other circumstances due to economic or contractual considerations related to the debtor’s financial difficulties; The debtor is likely to go bankrupt or carry out other financial restructuring; The financial difficulties of the issuer or debtor lead to the disappearance of the active market of the financial assets; Purchase or source a financial asset at a substantial discount, which reflects the fact that a credit loss has occurred.
⑤ Presentation of provision for expected credit losses
In order to reflect the changes of credit risk of financial instruments since initial recognition, the company remeasures the expected credit loss on each balance sheet date, and the increased or reversed amount of loss reserves shall be included in the current profit and loss as impairment loss or gain. For financial assets measured at amortized cost, the loss reserves shall offset the book value of the financial assets listed in the balance sheet; For the creditor’s rights investment measured at fair value and whose changes are included in other comprehensive income, the company recognizes its loss reserves in other comprehensive income and does not deduct the book value of the financial asset.
3、 Impact on the company
The credit impairment loss is 230808084 yuan, and the asset impairment loss is 451455051 yuan. It will reduce the total profit of the company in 2021 by 220646967 yuan. The above asset impairment provision has been withdrawn in the annual report of 2021.
The provision for asset impairment this time truly reflects the financial situation of the enterprise, meets the requirements of accounting standards and relevant policies, conforms to the actual situation of the company, does not harm the interests of the company and shareholders, does not involve the company’s affiliated units and affiliated persons, and its voting procedures comply with the provisions of relevant laws and regulations and the articles of association. 4、 Approval procedures performed
The provision for asset impairment has been audited and confirmed by Rongcheng Certified Public Accountants (special general partnership). This matter has been approved by the third board of directors of the company
