Securities code: Hangzhou Century Co.Ltd(300078) securities abbreviation: Hangzhou Century Co.Ltd(300078) Announcement No.: 2022044 bond Code: 123096 bond abbreviation: Sichuang convertible bond
Hangzhou Century Co.Ltd(300078)
Special instructions of the board of directors on matters involved in the audit report with qualified opinions in 2021
Tianjian Certified Public Accountants (special general partnership) hired by Hangzhou Century Co.Ltd(300078) (hereinafter referred to as "the company" or " Hangzhou Century Co.Ltd(300078) company") issued a qualified audit report on the 2021 annual financial report of the company.
In accordance with the Listing Rules of Shenzhen Stock Exchange and 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 matters involved, the board of directors of the company makes a special explanation on the matters involved in the reserved opinions as follows:
1、 Matters involved in the qualified opinion in the audit report
In 2020, Hangzhou Century Co.Ltd(300078) company and some of its subsidiaries' counterparties, such as Hangzhou Yijie Medical Devices Co., Ltd. and Hangzhou wenran Information Technology Co., Ltd., had direct or indirect capital exchanges with Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd., the former major shareholder of Hangzhou Century Co.Ltd(300078) company, and its related parties, and Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd. occupied the funds of listed companies. Due to the lack of relevant materials and the internal control defects of Hangzhou Century Co.Ltd(300078) company, we are unable to obtain sufficient and appropriate audit evidence on the authenticity and fairness of the transactions between Hangzhou Century Co.Ltd(300078) company and the above-mentioned companies and the integrity of the occupation of funds by Hangzhou Hangzhou Century Co.Ltd(300078) Group Co., Ltd. and its related parties. We express reservations on the 2020 financial statements of Hangzhou Century Co.Ltd(300078) company.
In 2021 Hangzhou Century Co.Ltd(300078) company found that some of the revenue recognition basis of the previous period was insufficient, corrected the error of relevant revenue, and reduced the operating revenue of RMB 16.090 million and operating cost of RMB 3.6254 million in 2020 by retrospective restatement method.
In 2021, Yihui Technology Co., Ltd., a subsidiary of Hangzhou Century Co.Ltd(300078) company, purchased 60.166 million yuan (excluding tax) of quilt cabinet and sleep instrument from Hangzhou Yijie Medical Instrument Co., Ltd., Zhejiang daoyixun Information Technology Co., Ltd. and Hangzhou feishiao Medical Technology Co., Ltd., and purchased 278143 million yuan (excluding tax) of other software and hardware and related services Hangzhou Century Co.Ltd(300078) company has invested in some of the above companies, and some of the above counterparties are related parties of Hangzhou Century Co.Ltd(300078) company.
By the end of 2021, the book balance of accounts receivable of Yihui Technology Co., Ltd. to Shanghai Xifan Technology Service Co., Ltd., Shenzhen Yulin Technology Service Co., Ltd., trickle Haicheng (Beijing) Technology Co., Ltd. and other companies was 92.044 million yuan, the bad debt provision was 642479 million yuan, and the book value of accounts receivable was 277961 million yuan.
We failed to implement the necessary audit procedures for the above matters to obtain sufficient and appropriate audit evidence, and were unable to judge the commercial essence, authenticity, fairness and rationality of the above transactions and related adjustments of Hangzhou Century Co.Ltd(300078) company, as well as the appropriateness of withdrawing bad debt reserves for the above accounts receivable. These events reflect the defects in the internal control of Hangzhou Century Co.Ltd(300078) company, which may have relevant potential impact on the financial statements.
2、 Detailed reasons and basis for issuing qualified audit report
（1） Overall importance level of consolidated financial statements
During the audit of the 2021 financial statements of Hangzhou Century Co.Ltd(300078) company, we determined that the overall importance level of the consolidated financial statements was 460743 million yuan Hangzhou Century Co.Ltd(300078) company is a profit-making entity. We take the total profit of this year (taking the absolute value) of 7679045 million yuan as the benchmark, multiply the benchmark by 6%, and the overall importance level of the consolidated financial statements is 460743 million yuan. The calculation method of importance level in this period is basically the same as that in the previous period.
（2） Reasons and basis for issuing qualified audit report
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: (1) after obtaining sufficient and appropriate audit evidence, certified public accountants believe that the misstatement alone or combined has a significant impact on the financial statements, but it is not extensive; (2) 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 mentioned in "I. matters covered by qualified opinions in the audit report", we failed to implement necessary audit procedures for the above matters to obtain sufficient and appropriate audit evidence, and could not judge the commercial essence, authenticity, fairness and rationality of the above transactions and related adjustments of Hangzhou Century Co.Ltd(300078) company, as well as the appropriateness of withdrawing bad debt reserves for the above accounts receivable. These events reflect the defects in the internal control of Hangzhou Century Co.Ltd(300078) company, which may have relevant potential impact on the financial statements. We believe that the above misstatement, if any, will have a significant impact on the financial statements of 2021, but it is only limited to accounts receivable, inventories, fixed assets, intangible assets, operating revenue, operating costs, credit impairment losses and other items. Such misstatement will not lead to changes in the nature of profits and losses of Hangzhou Century Co.Ltd(300078) company, so it is not extensive. In accordance with the audit standards, we have expressed reservations on these matters.
3、 The qualified opinion refers to the possible impact of matters on the financial position, operating results and cash flow during the reporting period
The possible impact of the matters involved in the qualified opinion on the financial position, operating results and cash flow during the reporting period is detailed in note II.
4、 Opinions of the board of directors on the audit report with qualified opinions
The board of directors of the company believes that Tianjian Certified Public Accountants (special general partnership) has issued a qualified audit report based on relevant conditions and in the principle of strictness and prudence. The statement of matters involved in the qualified opinion in the audit report truly and objectively reflects the actual financial situation of the company. The board of directors will try its best to take corresponding and effective measures to eliminate the matters involved in the reserved opinions as soon as possible and actively safeguard the interests of the majority of investors.
5、 Opinions of independent directors on the audit report with qualified opinions
We carefully checked the qualified opinion audit report issued by the accounting firm and the special instructions of the board of directors on matters involved in the qualified opinion audit report in 2021 issued by the board of directors, and agreed with the relevant instructions of the board of directors of the company on this matter.
It is hoped that the board of directors and the management can continuously improve the level of corporate governance, improve the internal control system, standardize the implementation of the internal control system, strengthen the supervision and inspection of internal control, actively take effective measures, strive to reduce and eliminate the adverse impact of the matters involved on the company, strive to improve the business environment, reduce business risks and continuously improve the company's sustainable operation ability, Earnestly safeguard the rights and interests of the company and all shareholders, especially the legitimate rights and interests of minority shareholders.
6、 The possibility and specific measures of the board of directors to eliminate the above matters and their impact
The board of directors of the company attaches great importance to the matters involved in the qualified opinions put forward by the accountants in this annual audit. For the matters involved in the above qualified opinions, the board of directors and management have formulated relevant measures to actively eliminate the above matters and their adverse effects and safeguard the legitimate rights and interests of the company and shareholders. Specific measures are as follows:
1. The fifth session of the board of directors on the adjustment and correction of accounting errors of the company retroactively reviewed and adopted the proposal on the adjustment and correction of accounting errors of the company in the third session of the board of directors on April 27, 2024. Up to now, the company has completed the correction of the above accounting errors.
2. In 2022 and beyond, the company will continue to improve its internal control, actively try to introduce new suppliers, establish and improve a reasonable and orderly inquiry system, purchase the company's quilt cabinet, sleep instrument and other equipment in a market-oriented manner as far as possible, and gradually reduce business transactions with Hangzhou Yijie Medical Devices Co., Ltd. At the same time, strengthen the promotion, expand the sales channels of quilt cabinet and sleep instrument, improve the turnover efficiency of quilt cabinet, sleep instrument and other equipment, and reduce the inventory risk.
3. The company established a special working group led by the chairman and in the charge of the general manager to conduct a comprehensive inventory of the company's accounts receivable, and formulated corresponding collection policies and measures to improve the recovery efficiency of the company's accounts receivable.
The board of directors of the company respectfully invites investors to invest carefully and pay attention to investment risks.
It is hereby explained.
Hangzhou Century Co.Ltd(300078) board of directors
April 29, 2022
