Securities code: Guangzhou Great Power Energy&Technology Co.Ltd(300438) securities abbreviation: Guangzhou Great Power Energy&Technology Co.Ltd(300438) Announcement No.: 2022051 convertible bond Code: 123070 convertible bond abbreviation: Penghui convertible bond
Guangzhou Great Power Energy&Technology Co.Ltd(300438)
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.
1、 Overview of the provision for asset impairment this time
In accordance with the relevant provisions of Shenzhen Stock Exchange GEM Listing Rules and accounting standards for Business Enterprises No. 8 – asset impairment, the company conducted a comprehensive inventory of receivables, inventories, fixed assets, intangible assets, construction in progress, goodwill and other assets at the end of 2021, including the possibility of recovery of receivables, net realizable value of inventories, fixed assets The recoverable amount of intangible assets and construction in progress, including goodwill, has been fully evaluated and analyzed. Assets with signs of impairment have been tested for impairment. When the recoverable amount of each asset is expected to be lower than its book value, after recognition or measurement, the company needs to withdraw asset impairment reserves for relevant assets that may have asset impairment losses. The details are as follows:
Unit: Yuan
Current amount of the project
Provision for impairment of financial assets 5315873933
Inventory falling price reserves 3953373399
Provision for impairment of goodwill 1960656220
Provision for impairment of other non current assets 145659218
Expected credit loss of contract assets 523356326
Impairment loss of intangible assets 216545660
Total 12115464756
Including: provision for impairment of financial assets:
Current amount of the project
Bad debt provision for accounts receivable 3983816532
Bad debt provision for other receivables 1031310977
Bad debt provision for notes receivable 303079704
Bad debt provision for long-term receivables -2333280
Total 5315873933
2、 The recognition standard and withdrawal method of the provision for asset impairment this time
(I) in 2021, the company made provision for impairment of financial assets of 5315873933 yuan. The recognition method and withdrawal method of the provision for impairment of financial assets are as follows:
1. Recognition method of provision for impairment of financial assets
The company conducts impairment accounting treatment and recognizes loss reserves for financial assets (including receivables) measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income and lease receivables on the basis of expected credit losses. In addition, for loan commitments and financial guarantee contracts, provision for impairment and recognition shall also be made in accordance with the accounting policies described in this part.
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.
Except for the purchased or originated financial assets with credit impairment, the company assesses whether the credit risk of relevant financial assets has increased significantly since initial recognition on each balance sheet date. If the credit risk does not increase significantly after initial recognition and is in the first stage, the company measures the loss reserve according to the amount equivalent to the expected credit loss of the financial asset in the next 12 months; If the credit risk has increased significantly since the initial recognition, but there is no credit impairment, in the second stage, the company measures the loss reserve according to the amount equivalent to the expected credit loss within the whole duration of the financial asset; If a financial asset has been impaired since its initial recognition, it is in the third stage, and the company measures the loss reserve according to the amount equivalent to the expected credit loss of the financial asset in the whole duration. When evaluating the expected credit loss, the company takes into account the reasonable and reliable information about past events, current conditions and future economic conditions, including forward-looking information, which can be obtained without unnecessary additional costs or efforts on the balance sheet date.
The expected credit loss in the next 12 months refers to the expected credit loss caused by the possible default of financial assets within 12 months after the balance sheet date (if the expected duration of financial assets is less than 12 months, it is the expected duration), which is a part of the expected credit loss in the whole duration.
For financial instruments with low credit risk on the balance sheet date, assuming that their credit risk has not increased significantly since initial recognition, the company chooses to measure the loss provision according to the expected credit loss in the next 12 months.
For the financial assets in the first and second stages and with low credit risk, the company calculates the interest income according to the book balance and actual interest rate without deducting the impairment provision. For the financial assets 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.
2. Impaired financial assets
When one or more events of the company that have an adverse impact on the expected future cash flow of financial assets occur, the financial assets become financial assets with credit impairment. The evidence of credit impairment of financial assets includes the following observable information:
A. Significant financial difficulties of the issuer or debtor;
B. The debtor violates the contract, such as default or overdue payment of interest or principal;
C. 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;
D. The debtor is likely to go bankrupt or carry out other financial restructuring;
E. The financial difficulties of the issuer or debtor lead to the disappearance of the active market of the financial assets;
F. Purchase or source a financial asset at a substantial discount, which reflects the fact that a credit loss has occurred.
The credit impairment of financial assets may be caused by the joint action of multiple events, not necessarily by individually identifiable events.
3. Purchased or originated financial assets with credit impairment
For the financial assets purchased or generated by the company with credit impairment, on the balance sheet date, only the cumulative changes of expected credit loss in the whole duration after initial recognition are recognized as loss reserves. On each balance sheet date, the change amount of expected credit loss in the whole duration shall be included in the current profit and loss as impairment loss or gain. Even if the expected credit loss within the whole duration determined on the balance sheet date is less than the amount of expected credit loss reflected by the estimated cash flow at the time of initial recognition, the favorable change of expected credit loss is recognized as impairment gain.
4. Judgment criteria for significant increase of credit risk
If the probability of default of a financial asset within the expected duration determined on the balance sheet date is significantly higher than the probability of default within the expected duration determined at initial recognition, it indicates that the credit risk of the financial asset has increased significantly. Except for special circumstances, the company adopts the change of default risk in the next 12 months as a reasonable estimate of the change of default risk in the whole duration to determine whether the credit risk has increased significantly since initial recognition.
5. Methods for evaluating expected credit losses of financial assets
The evaluation of the company’s financial portfolio is based on the expected credit loss of the company. Evaluate the credit risk of financial assets with significantly different credit risks, such as receivables that have obvious signs that the debtor is likely to be unable to perform its repayment obligations.
In addition to the financial assets that individually assess the credit risk, the company divides the financial assets into different groups based on the common risk characteristics, and evaluates the credit risk on the basis of combination.
6. Accounting treatment of impairment of financial assets
The company calculates the estimated credit loss of various financial assets on the balance sheet date. If the estimated credit loss is greater than the book amount of its current impairment provision, the difference is recognized as impairment loss and debited to the “credit impairment loss” account. According to the type of financial assets, the company credits the “loan loss provision”, “creditor’s right investment impairment provision”, “bad debt provision” and “lease receivables impairment provision” and other accounts; If it is less than the carrying amount of the current impairment provision, the difference is recognized as impairment gain and the opposite accounting entry is made.
If the company has actually incurred credit losses and finds that the relevant financial assets cannot be recovered and are approved to be written off, it shall debit the “loan loss provision” and other subjects and credit the corresponding asset subjects, such as “loans” and “accounts receivable”, according to the approved write off amount. If the write off amount is greater than the accrued loss provision, it shall also debit the “credit impairment loss” according to the difference.
(II) in 2021, the company made provision for inventory falling price of 3953373399 yuan, the basis for determining the net realizable value of inventory and the method for making provision for inventory falling price:
The ending inventory is priced at the lower of cost and net realizable value. If the ending net realizable value of the inventory is lower than the book cost, the inventory falling price reserves are accrued according to the difference. Net realizable value refers to the amount of the estimated selling price of inventory minus the estimated cost to be incurred at the time of completion, estimated selling expenses and relevant taxes in daily activities.
1. Basis for determining the net realizable value of inventories: for materials held for production, if the net realizable value of finished products produced by them is higher than the cost, the materials are still measured according to the cost; If the decline in the price of materials indicates that the net realizable value of finished products is lower than the cost, the materials shall be measured according to the net realizable value.
The net realizable value of inventories held for the execution of sales contracts or labor contracts shall be calculated on the basis of the contract price. If the quantity of inventory held by the enterprise is more than the quantity ordered in the sales contract, the net realizable value of the excess inventory is calculated on the basis of the general sales price.
2. Withdrawal method of inventory falling price reserves: withdraw the inventory falling price reserves according to the lower of the cost and net realizable value of a single inventory item; However, for the inventory with large quantity and low unit price, the inventory falling price reserves shall be withdrawn according to the inventory category.
(III) in 2021, the company’s provision for impairment of goodwill was 1960656220 yuan, and the provision for impairment of other non current assets was 145659218 yuan. The methods of impairment test and provision for impairment of long-term assets are as follows:
For long-term equity investment, investment real estate measured by cost mode, fixed assets, construction in progress, intangible assets and other long-term assets, if there are signs of impairment on the balance sheet date, impairment test shall be conducted. If the impairment test results show that the recoverable amount of the asset is lower than its book value, the impairment provision shall be withdrawn according to the difference and included in the impairment loss. The recoverable amount is 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. The provision for asset impairment is calculated and recognized on the basis of individual assets. If it is difficult to estimate the recoverable amount of individual assets, the recoverable amount of the asset group is determined by the asset group to which the asset belongs. Asset group is the smallest asset portfolio that can generate cash inflow independently.
Goodwill shall be tested for impairment at least at the end of each year. The company conducts goodwill impairment test, and the book value of goodwill formed by business combination shall be apportioned to relevant asset groups according to reasonable methods from the purchase date; If it is difficult to allocate to the relevant asset group, it shall be allocated to the relevant asset group portfolio. When the book value of goodwill is apportioned to relevant asset groups or asset group combinations, it shall be apportioned according to the proportion of the fair value of each asset group or asset group combination to the total fair value of relevant asset groups or asset group combinations. If the fair value is difficult to be measured reliably, it shall be apportioned according to the proportion of the book value of each asset group or combination of asset groups to the total book value of relevant asset groups or combination of asset groups. If there are impairment signs in the asset portfolio, or if there are no impairment signs in the asset portfolio, the asset portfolio related to the impairment group shall be measured and compared with the asset portfolio, or the asset portfolio related to the impairment group shall be measured first. Then carry out impairment test on the asset group or combination of asset groups containing goodwill, and compare the book value of these relevant asset groups or combination of asset groups (including the book value of the apportioned goodwill) with their recoverable amount. If the recoverable amount of relevant asset groups or combination of asset groups is lower than their book value
