Modern Avenue Group Co.Ltd(002656)
Special instructions of the board of directors on matters involved in the audit report with qualified opinions in 2021
Whereas Zhongshen Zhonghuan Certified Public Accountants (special general partnership) (hereinafter referred to as "Zhongshen Zhonghuan") has issued a qualified audit report on Modern Avenue Group Co.Ltd(002656) (hereinafter referred to as "the company"), In accordance with the requirements of laws, regulations and rules such as the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 14 - handling of non-standard audit opinions and audit matters and the stock listing rules of Shenzhen Stock Exchange issued by the China Securities Regulatory Commission, the board of directors of the company makes a special explanation on the matters involved in the audit report with qualified opinions as follows:
1、 Details of matters covered by the qualified opinion
Investment in Nanjing Jiayuan New Energy Vehicle Co., Ltd
On June 28, 2021, the company held the 7th Meeting of the 5th board of directors, deliberated and adopted the proposal on foreign investment of subsidiary Foshan Taiyuan No. 1 equity investment partnership (limited partnership), It is agreed that Foshan Taiyuan No. 1 equity investment partnership (limited partnership) (hereinafter referred to as the "fund") fund will increase the capital of Nanjing yiqihang Information Technology Co., Ltd. (later renamed Nanjing Jiayuan New Energy Vehicle Co., Ltd., hereinafter referred to as "Jiayuan new energy" and "target company") by RMB 24 million, of which RMB 8.35 million will be used as the capital increase of the registered capital of the target company, RMB 231.65 million is included in the capital reserve of the target company. After the capital increase, the fund accounts for 16.70% of the equity of the target company. The management of the company designates it as a financial asset measured at fair value and whose changes are included in other comprehensive income according to the holding purpose. It is necessary to evaluate the fair value of the investment equity at the end of each reporting period, and the fair value and changes are reported in the accounts of "other equity instrument investment" and "other comprehensive income".
Due to the delay of Jiayuan new energy in providing its materials, including but not limited to the resolutions of the board of directors, the board of supervisors, the company's business plan and decision-making, balance sheet, income statement, audit report and other materials, on October 27, 2021, In the name of the fund, the company entrusted Beijing Jindu (Shenzhen) law firm to file a lawsuit on the shareholders' right to know of Jiayuan new energy with the people's Court of Jiangbei new area, Nanjing, Jiangsu Province [case No.: (2021) Su 0192 minchu No. 8171]. As of the date of issuing the financial statements in 2021, the case is under trial in the first instance.
On January 21, 2022, in the name of the fund, the company entrusted Beijing Jindu (Shenzhen) law firm to bring a lawsuit against Jiayuan New Energy Technology Co., Ltd., Guangzhou Hongyue Technology Industry Investment Co., Ltd., Luo Yan, Li Qicai, Xie Yixing and Li Hui to Nanjing Intermediate People's Court on contract disputes. Request an order to terminate the investment agreement and the capital increase agreement and return the capital increase. As of the date of issuing the financial statements of 2021, the case has been accepted and has not yet been heard.
As of the issuance date of the financial statements of 2021, due to Jiayuan new energy's refusal to cooperate in providing the capital use, financial data, operation and other information about the investment of 240 million yuan, it is difficult to evaluate the fair value of the investment equity. Zhongzhongzhonghuan believes that it is unable to obtain sufficient and appropriate audit evidence as the basis for forming audit opinions.
2、 Reasons and basis for expressing reservations
According to Article 8 of the auditing standards for Chinese certified public accountants No. 1502 - issuing non unqualified opinions in audit reports, certified public accountants shall express qualified opinions in case of any of the following circumstances: (I) after obtaining sufficient and appropriate audit evidence, the certified public accountants believe that the misstatement alone or combined has a significant impact on the financial statements, but it is not extensive; (II) certified public accountants are unable to obtain sufficient and appropriate audit evidence as the basis for forming audit opinions, but believe that the undetected misstatement (if any) may have a significant impact on the financial statements, but it is not extensive.
As stated in the main contents of the above qualified opinions, zhongzhongzhonghuan is unable to obtain sufficient and appropriate audit evidence for the matters described in the "basis for forming qualified opinions" part of the audit report. Zhongshen Zhonghuan believes that the above matters may have a significant impact on the financial statements, but they are not extensive, so it issues a qualified opinion.
3、 Impact of relevant matters on the company's financial statements
After communication between the company and the annual audit accountant, the company believes that due to the failure to obtain sufficient and appropriate evidence for the matters leading to the qualified opinion, it is temporarily unable to determine the specific impact of these matters on the company's financial position as of December 31, 2021 and the operating results and cash flow of 2021.
4、 Opinions of the board of directors of the company
The board of directors of the company believes that Zhongshen Zhonghuan certified public accountants has issued a qualified audit report based on the actual situation and the principle of strictness and prudence, which objectively and truly reflects the financial situation of the company. The board of directors attaches great importance to the impact of the matters involved in the qualified opinion on the company, will earnestly promote the specific measures to eliminate the matters involved in the qualified opinion, timely fulfill the obligation of information disclosure, and safeguard the legitimate rights and interests of the company and all shareholders.
5、 Opinions of independent directors of the company
After careful review of the qualified audit report issued by Zhongshen Zhonghuan certified public accountants, as well as discussion and communication with the annual audit accountant, we unanimously agree with the special instructions of the board of directors on matters involved in the company's 2021 qualified audit report prepared by the board of directors of the company. The statement is in line with the actual situation of the company, and the specific measures taken to eliminate relevant matters and their impact are feasible. At the same time, we will continue to pay attention to and supervise the implementation of corresponding measures by the board of directors and management of the company, eliminate the impact of the above matters on the company as soon as possible, better promote the development of the company and safeguard the interests of investors.
6、 Opinions of the board of supervisors of the company
We acknowledge the special statement of the board of directors on matters involved in the company's 2021 qualified opinion audit report prepared by the board of directors of the company. The special statement complies with the provisions of relevant normative documents and regulations issued by China Securities Regulatory Commission and Shenzhen Stock Exchange. We will fully support the board of directors and management of the company to take effective measures to solve the matters involved in the qualified opinion and assist them in carrying out relevant work, Earnestly safeguard the legitimate rights and interests of the company and all shareholders.
7、 Specific measures to eliminate relevant matters and their impacts, the possibility and time of expected elimination of impacts. At present, the company's production and operation are normal. For the matters involved in the audit report with qualified opinions, the company has hired a lawyer team to actively eliminate the matter and its impact through litigation. For details of the litigation, please refer to the announcement on litigation involving the foreign investment of the holding Sun company (Announcement No.: 2021138) and the announcement on major litigation involving the foreign investment of the holding Sun company (Announcement No.: 2022007) disclosed by the company on November 9, 2021 and January 8, 2022.
The board of directors and management of the company will solve relevant problems through legal means and other means from the perspective of effectively safeguarding the rights and interests of the company and shareholders, and fulfill the obligation of information disclosure in time. The information disclosure media designated by the company are securities times, China Securities News, securities daily and cninfo（ http://www.cn.info.com.cn. ）, all information of the company shall be subject to the announcement published on the above designated information disclosure media. Please pay attention to the subsequent relevant announcements of the company and pay attention to investment risks.
Modern Avenue Group Co.Ltd(002656) board of directors April 26, 2022
