Landocean Energy Services Co.Ltd(300157)
Audit report
Lixin Zhonglian Shen Zi [2022] d-0642
Lixin Zhonglian CPA (special general partner)
catalogue
1、 Audit report 1-7
2、 Financial statements
1. Consolidated balance sheet, parent company balance sheet 8-11 2, consolidated income statement, parent company income statement 12-13 3, consolidated cash flow statement, parent company cash flow statement 14-15 4, consolidated statement of changes in shareholders’ equity, parent company statement of changes in shareholders’ equity 16-19 5 Notes to financial statements 20-147
Lixin Zhonglian Certified Public Accountants (special general partnership)
LixinZhonglian CPAs (SPECIAL GENERAL PARTNERSHIP)
Audit report
Lixin Zhonglian Shen Zi [2022] d-0642
Landocean Energy Services Co.Ltd(300157) all shareholders:
1、 Audit opinion
We have audited the financial statements of Landocean Energy Services Co.Ltd(300157) (hereinafter referred to as Landocean Energy Services Co.Ltd(300157) company), including the consolidated and parent company’s balance sheet as of December 31, 2021, the consolidated and parent company’s income statement, consolidated and parent company’s cash flow statement, consolidated and parent company’s statement of changes in shareholders’ equity and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the financial position of Landocean Energy Services Co.Ltd(300157) the consolidated and parent company as of December 31, 2021 and the operating results and cash flow of the consolidated and parent company in 2021.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. The “responsibilities of certified public accountants for the audit of financial statements” in the audit report further expounds our responsibilities under these standards. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of Landocean Energy Services Co.Ltd(300157) , and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
3、 Key audit matters
The key audit matters are the most important matters that we consider to audit the current financial statements according to our professional judgment. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters. We confirm that the following matters are the key audit matters that need to be communicated in the audit report.
Key audit matters how to deal with them in the audit
(I) provision for bad debts of accounts receivable
As of December 31, 2021, we have audited the book value of key accounts receivable for bad debt provision of accounts receivable of 338.7 million yuan, of which the main audit procedures for bad items are as follows: the account provision is 617.64 million yuan; Other receivables 1. Understand the management’s daily management of receivables and the book value of receivables of 50.11 million yuan, including the key internal control related to bad recoverability evaluation; The account reserve is 84.08 million yuan. Accounts receivable 2. Review the recoverability of receivables of the management and disclose the bad debt reserves. See the relevant considerations and objective evidence of the evaluation of financial statements for details; Note V (III) and note V (VI). 3. For receivables with significant single amount, the impairment of receivables is selected. Based on the evaluation of the sample of receivables, the management reviews the expected credit loss of bad debts accrued for single amount, which is the basis for the evaluation due to Landocean Energy Services Co.Ltd(300157) public release; When determining the impairment of accounts receivable, the management of the company 4. For the accounts receivable that the management needs to use significant accounting estimates and judgments according to the combination of credit risk characteristics, and the amount of bad debt provision is significant in combination with the special impact of credit risk, therefore, we analyze the collection and aging of accounts receivable and review the impairment of bad debt provision of the management as a key audit matter. Accuracy of;
5. The management shall check the rationality of the bad debt provision after the withdrawal period.
6. Check whether the information related to the impairment of accounts receivable has been properly presented and disclosed in the financial statements.
(II) impairment of long-term equity investment and goodwill
Key audit matters how to deal with them in the audit
As of December 31, 2021, the book value of our long-term equity investment and key right investment in goodwill impairment is 310.25 million yuan. The main audit procedures for the audit items are as follows: the medium impairment provision is 67.428 million yuan; Goodwill 1. Understand and test the long-term equity investment and goodwill minus the book value of 82.55 million yuan, including the key internal control related to the impairment value. The long-term evaluation of the company’s reputation and the objectivity of the management’s ability to disclose the impairment information of RMB 1.49 million are detailed by the company’s long-term evaluation of the company’s reputation. See notes v. (XI) and Annex 3 to the financial statements. Based on the requirements of the accounting standards for business enterprises, the appraisal notes v. (XIX) have been reviewed. The valuation scope, valuation assumptions and impairment test of the valuation party in the value report are based on the book value method of long-term equity investment and valuation conclusion, and the careful evaluation of the long-term stock value of the management, the recoverable gold right investment of the asset group containing goodwill and the sum of the process and results of goodwill impairment test. The recoverable amount of long-term equity investment, asset group rationality and whether there is any trace preferred by the management is based on the expected image of the asset group. When reviewing the valuation report, we pay attention to the present value of future cash flow and the public capacity of assets in the following: (1) the higher one is determined by comparing the income growth rate in the forecast period with the net amount of the company’s historical value minus disposal expenses and the historical data of the industry.
Relatively; (2) Evaluate the rationality of the growth rate in the subsequent forecast period; (3) By comparing the forecast of the previous year with the performance used by the management of Landocean Energy Services Co.Ltd(300157) company in this year, the retrospective audit is conducted to evaluate the management’s pre significant accounting estimates and judgments, and consider the reliability and historical accuracy of the long-term measurement process. Equity investment and goodwill in the current period are important to the financial statements. 4. Check whether the relevant disclosure is appropriate. Therefore, we regard long-term equity investment and goodwill impairment as key audit matters. (III) impairment of oil and gas assets
Key audit matters how to deal with them in the audit
As of December 31, 2021, for the key audit items of oil and gas assets impairment, we have implemented the book value of assets of RMB 296.02 million, of which the audit procedures for reduction mainly include: the value reserve is RMB 137.51 million, the evaluation of oil and gas assets is different from the impairment evaluation process of oil and gas assets, and the disclosure of value reserve is detailed in the internal control related to the financial statements.
Note v. (XVI). 2. Compare the crude oil price adopted by Landocean Energy Services Co.Ltd(300157) in the cash flow model, which is not due to the significant book value of oil and gas assets, with the crude oil forecast published by well-known institutions to determine whether the assets are impaired and the amount of impairment. Size includes Landocean Energy Services Co.Ltd(300157) management’s estimation 3. Future crude oil production and judgment adopted in the cash flow model, such as future crude oil price, crude oil reserve evaluation issued by production and third-party reserve experts, renewal of oilfield contract, etc. Therefore, I compare the relevant future production in my report. We identified the impairment test of oil and gas assets as key 4. Audit the future production cost key adopted in the cash flow model. Compare with historical production cost or relevant budget. 5. Other key data in the cash flow model, price and production, are selected and compared with historical data and oilfield development plan.
6. This paper evaluates the appropriateness of the preparation method of cash flow model, and tests the accuracy of its data calculation.
4、 Other information
Landocean Energy Services Co.Ltd(300157) the management of the company (hereinafter referred to as the management) is responsible for other information. Other information includes the information covered in the 2021 annual report of Landocean Energy Services Co.Ltd(300157) company, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we have learned in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
The management is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.
When preparing the financial statements, the management is responsible for evaluating the sustainable operation ability of Landocean Energy Services Co.Ltd(300157) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless liquidation is planned, operation is terminated or there is no other realistic choice.
The management is responsible for supervising the financial reporting process of Landocean Energy Services Co.Ltd(300157) company.
6、 Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that the audit performed in accordance with the audit standards will always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant.
In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
(1) Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. The risk of fraud, collusion or failure to control may be higher than that caused by the discovery of material misstatement or fraud.
(2) Understand the internal control related to audit in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(4) Draw conclusions on the appropriateness of management’s use of going concern assumptions. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about the sustainable operation ability of Landocean Energy Services Co.Ltd(300157) company. If we conclude that there is significant uncertainty, the auditing standards require us to draw the attention of statement users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause Landocean Energy Services Co.Ltd(300157) company to be unable to continue its business.
(5) Evaluate the overall presentation (including disclosure), structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
(6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Landocean Energy Services Co.Ltd(300157) company to express audit opinions on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the current financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if we reasonably expect to communicate the negative consequences caused by a matter in the audit report
