Jilin Liyuan Precision Manufacturing Co.Ltd(002501) board of directors
Special description of the matters involved in the unqualified audit report with emphasis in 2021
Asia Pacific (Group) Certified Public Accountants (special general partnership) audited the 2021 annual financial report of Jilin Liyuan Precision Manufacturing Co.Ltd(002501) (hereinafter referred to as “the company”) and issued an unqualified audit report with highlighted items. In accordance with the requirements of the formulation of laws, regulations and rules such as the rules for the preparation and reporting of information disclosure of companies that offer securities to the public No. 14 – handling of non-standard unqualified audit opinions and matters involved, and the stock listing rules of Shenzhen Stock Exchange, the board of directors of the company makes a special explanation on the matters involved in the audit report as follows: I. The matters involved in the highlighted paragraph of the audit report
1. We remind the users of the financial statements to pay attention. As mentioned in note 14 to the financial statements, on May 26, 2021, Jilin Liyuan Precision Manufacturing Co.Ltd(002501) received the investigation notice (JZC investigation Zi No. 2021002) issued by the China Securities Regulatory Commission. Because the company was suspected of illegal information disclosure, the CSRC decided to file a case for investigation. As of the reporting date, the CSRC’s investigation on the company is still in progress. The contents of this paragraph shall not affect the issued audit opinion.
2. We remind the users of the financial statements to pay attention to the litigation disputes arising from false statements of the company as of April 25, 2022, as described in note XII (II) to the financial statements. According to the legal opinion issued by Jilin Shengxuan law firm on the analysis of the amount of compensation to be paid in the civil compensation case of Jilin Liyuan Precision Manufacturing Co.Ltd(002501) Securities Misrepresentation infringement, the total amount of compensation to be paid by Liyuan refining for the investor losses and case acceptance fees expected to be borne by Liyuan refining for the above litigation matters is about 943860619 yuan. It is not excluded that there is still the possibility that investors may file a lawsuit and claim to the court after the reporting date. For such cases, the amount cannot be reliably measured, so it is not recognized as estimated liabilities. The contents of this paragraph shall not affect the issued audit opinion.
2、 Special instructions of the board of directors of the company on the highlighted items
1. On May 26, 2021, the company received the investigation notice (jzjzz No. 2021002) issued by the China Securities Regulatory Commission. Because the company was suspected of violating laws and regulations in information disclosure, the CSRC decided to file a case for investigation. As of the date of this report, the above investigation is still in progress, and the company has not received the concluding opinions or decisions of the CSRC on the above investigation matters. During the investigation period, the company’s production and operation were normal, and actively and comprehensively cooperated with the investigation work of the regulatory department.
2. During the period from April 20, 2021 to April 25, 2022, the company successively received the notice of response to the lawsuit, the indictment and other materials from Liaoyuan intermediate people’s court. According to the indictment and other materials, the company received the administrative punishment decision issued by Jilin regulatory bureau of China Securities Regulatory Commission on July 28, 2020. The decision found that the company did not disclose the pledge and freezing of major shareholders’ shares and overdue breach of major debts in time, and made a punishment decision. The company was ordered to make corrections, given a warning and fined Shanghai Pudong Development Bank Co.Ltd(600000) yuan. 262 investors such as Mr. Huang and Mr. Li filed a lawsuit to Liaoyuan intermediate people’s court according to the above administrative punishment decision: asking the company to compensate for investment losses of about 19103011587. In order to safeguard the legitimate rights and interests of the company, the company employs a third-party professional legal service institution as the company’s agent to handle the above cases. As of April 25, 2022, Liaoyuan intermediate people’s court has made civil judgments against 182 investors, involving a total amount of 11759472009 yuan. The court ruled that the company should compensate the plaintiff for the loss of investment balance, commission, stamp duty and interest totaling 417413923 yuan. The case acceptance fee should be borne according to the compensation proportion determined in the judgment, and the loss verification fee should be borne by the company. Some first instance decisions have come into force, The company has paid the above amount of 251143297 yuan to the investors according to the judgment of the court. The plaintiffs in some cases of first instance have appealed. In order to accurately predict the litigation compensation losses, Jilin Shengxuan law firm issued the legal opinion on the analysis of the amount of compensation to be paid in the civil compensation case of Jilin Liyuan Precision Manufacturing Co.Ltd(002501) Securities Misrepresentation infringement. The company fully agrees with the opinions of the legal opinion and accrues the estimated liabilities accordingly. The board of directors of the company believes that the Asia Pacific (Group) accounting firm (special general partnership) strictly implements the audit standards and issues an unqualified audit report with emphasis for the company. The board of directors of the company understands and recognizes that the board of directors will continue to pay attention to the progress of the matters involved in the unqualified audit report with emphasis, and will perform the obligation of information disclosure in strict accordance with the regulatory requirements according to the relevant progress, Earnestly safeguard the legitimate rights and interests of the company and all shareholders.
According to the relevant provisions of the Listing Rules of Shenzhen Stock Exchange, if the company is subject to administrative punishment by the CSRC and the illegal act involves major illegal compulsory delisting, the company’s shares may be subject to the risk of delisting.
It is hereby explained.
Jilin Liyuan Precision Manufacturing Co.Ltd(002501) board of directors
April 28, 2022
