Securities code: Safbon Water Service (Holding) Inc.Shanghai(300262) securities abbreviation: Safbon Water Service (Holding) Inc.Shanghai(300262) Announcement No.: 2022040 Safbon Water Service (Holding) Inc.Shanghai(300262)
Announcement on the provision for asset impairment and write off of assets 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.
Safbon Water Service (Holding) Inc.Shanghai(300262) (hereinafter referred to as “the company”) convened the 36th meeting of the 4th board of directors and the 27th meeting of the 4th board of supervisors on April 27, 2022, deliberated and adopted the proposal on withdrawing provision for asset impairment and write off of assets in 2021, It is agreed that the company will withdraw a total of 38838207480 yuan of asset impairment reserves in 2021 (hereinafter referred to as “this withdrawal of asset impairment reserves”) and write off a total of 3225237827 yuan of assets (hereinafter referred to as “this write off assets”). According to the regulations of Shenzhen Stock Exchange GEM Listing Rules and other relevant laws and regulations, the specific conditions of the provision for asset impairment and write off of assets are hereby announced as follows:
1、 Overview of the provision for asset impairment this time
In accordance with the accounting standards for business enterprises and the company’s accounting policies and other relevant provisions, the company conducted an impairment test on the accounts receivable, other accounts receivable, inventory, contract assets, fixed assets, intangible assets, long-term receivables, long-term equity investment, goodwill and other assets at the end of 2021 within the scope of the consolidated financial statements based on the principle of prudence, and judged that there were signs of possible impairment, Determine the asset items that need to make provision for asset impairment. In 2021, the company made provision for asset impairment of 38838207480 yuan. The details of provision are as follows:
Amount of provision for asset impairment (yuan)
Impairment loss of contract assets 1724658499
Impairment loss of other non current assets 5383511700
Bad debt reserves – assets held for sale 59999900
Impairment loss of long-term equity investment 16566671148
Amount of provision for asset impairment (yuan)
Impairment loss of construction in progress 12688714001
Goodwill impairment loss 1874652232
Total 38838207480
2、 Description of the current provision for asset impairment
(I) accounts receivable
1. Accounts receivable with significant single amount and separate provision for bad debts: the judgment basis for significant single amount or significant single amount is more than 5 million yuan (including 5 million standard amount).
For receivables with significant single amount, when there is objective evidence indicating that the receivables with significant single amount are bad, the company will not be able to recover all account reserves according to the original terms of the receivables, the impairment test shall be conducted separately according to the difference between the present value of the estimated future cash flow of the receivables and its book value, and the bad debt reserves shall be withdrawn.
2. Accounts receivable with bad debt reserves withdrawn according to the combination of credit risk characteristics
Basis for determining combination
Accounts receivable without individual provision for bad debts are divided into two categories according to the nature of the account: (1) according to the dry combination of the nature of the account, based on the actual loss rate of the same or similar accounts receivable portfolio with similar credit risk portfolio characteristics in the previous year, combined with the current situation, determine the proportion of each portfolio to withdraw bad debt reserves, and calculate the bad debt reserves to be withdrawn accordingly.
Accounts receivable without individual provision for bad debts are divided into several combinations according to the aging, (2) according to the aging of accounts receivable, the proportion of provision for bad debts of each combination is determined based on the actual loss rate of the same or similar combination of accounts receivable with similar credit risk characteristics in previous years, combined with the current situation, and the provision for bad debts is calculated accordingly.
Method of withdrawing bad debt reserves according to the combination of credit risk characteristics
(1) Combination and individual identification method according to the nature of funds
(2) Combined aging analysis method by account aging
In the portfolio, the bad debt provision is withdrawn by aging analysis method
Accrual proportion of aging accounts receivable accrual proportion of other accounts receivable
1% within 1 year (including 1 year)
1-2 years 5%
2-3 years 20%
3-4 years 50%
4-5 years 50%
More than 5 years 100%
3. Receivables with insignificant single amount but separate provision for bad debts
If there is no objective evidence that the company can not withdraw a single amount of bad debts
Reasons for provision: when all amounts are recovered according to the original terms of accounts receivable, bad debt provision shall be recognized.
The provision for bad debts is calculated separately according to the difference between the present value of the estimated future cash flow of the amount and its book value
Method: impairment test and provision for bad debts.
For prepayments and long-term receivables, the company conducts impairment test separately. If there is objective evidence indicating that they have been impaired, the difference between the present value of future cash flow and its book value shall be recognized as impairment loss and bad debt provision shall be withdrawn.
(II) impairment of long-term assets
Goodwill and intangible assets with uncertain service life separately listed in the financial statements, regardless of whether there are signs of impairment, shall be tested for impairment at least annually. Fixed assets, intangible assets, investment real estate measured in cost mode and long-term equity investment, etc. if there are signs of impairment on the balance sheet date, the impairment test shall be carried out. 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. Once the aforesaid asset impairment loss is recognized, if the value can be recovered in the future, it will not be reversed.
3、 Assets written off this time
According to the accounting standards for business enterprises and the company’s accounting policies and other relevant provisions, the company cleaned up some uncollectible accounts receivable and wrote them off. The write off of other accounts receivable in Shanghai ba’an was 193581203 yuan, the bad debt provision had been fully accrued, and the inventory scrap loss of 3031656624 yuan was confirmed.
In 2021, the company wrote off 3225237827 yuan of assets, and the write off details are as follows:
Amount of asset items written off (yuan)
Other receivables 193581203
Inventory 3031656624
Total 2523227378
4、 Approval procedures for withdrawing asset impairment reserves and writing off assets this time
The provision for asset impairment and write off of assets have been deliberated and approved at the 36th meeting of the Fourth Board of directors and the 27th meeting of the Fourth Board of supervisors. According to the articles of association, Shenzhen Stock Exchange GEM Listing Rules, asset impairment provision write off management system and other relevant provisions, the provision for asset impairment and write off of assets are within the approval authority of the board of directors and do not need to be submitted to the general meeting of shareholders for deliberation. 5、 The impact of the provision for asset impairment and write off of assets on the company
This time, the company made provision for asset impairment of 38838207480 yuan and written off assets of 3225237827 yuan, which had an impact on the total profit in the reporting period of 41869864104 yuan, and correspondingly reduced the company’s net asset value at the end of the reporting period, which had no impact on the company’s operating cash flow in the reporting period. The write off of assets and the provision for impairment of assets truly reflect the financial situation of the enterprise, meet the requirements of accounting standards and relevant policies, comply with the actual situation of the company, do not harm the interests of the company and shareholders, and do not involve the company’s affiliated units and affiliated persons. Its voting procedures comply with the provisions of relevant laws and regulations and the articles of association.
6、 Opinions of the board of directors
After review, the board of directors of the company believes that the provision for asset impairment and write off of assets are based on the principle of prudence in accordance with the accounting standards for business enterprises and relevant provisions of the company’s accounting policies, which can more accurately reflect the company’s financial situation and operating results. It is agreed to withdraw the provision for asset impairment and write off assets this time.
7、 Independent opinions of independent directors
The independent directors carefully reviewed the provision for asset impairment and write off of assets. The independent directors believed that the provision for asset impairment and write off of assets of the company were based on the principle of accounting prudence and consistency, in line with the relevant provisions of the accounting standards for business enterprises and the actual situation of the company’s assets and the provisions of relevant policies, and fairly reflected the asset status of the company, It helps to provide investors with more authentic and reliable accounting information without damaging the interests of all shareholders, especially minority shareholders. The decision-making procedures for the provision for asset impairment and write off of assets this time comply with the relevant provisions of relevant laws, regulations and normative documents, and have performed the necessary approval procedures. The company agrees to withdraw the provision for asset impairment and write off assets this time.
8、 Opinions of the board of supervisors
After verification, the company’s provision for asset impairment and write off of assets this time comply with the relevant provisions of the accounting standards for business enterprises, the approval procedures are legal, the provision for asset impairment is reasonable and in line with the actual situation of the company; Bad debt reserves have been accrued for the assets written off according to procedures. The company agrees to withdraw the provision for asset impairment and write off assets this time.
9、 Documents for future reference 1. Resolutions of the 36th meeting of the Fourth Board of directors; 2. Resolutions of the 27th meeting of the 4th board of supervisors; 3. Special instructions and independent opinions of independent directors on relevant matters. It is hereby announced.
Safbon Water Service (Holding) Inc.Shanghai(300262) board of directors April 27, 2022
