Mengshi new energy technology (Henan) Co., Ltd
Internal control evaluation report in 2021
All shareholders of Lion New Energy Technology (Henan) Co., Ltd.:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control supervision requirements (hereinafter referred to as the "enterprise internal control standard system"), combined with the internal control system and evaluation methods of Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as the "company"), on the basis of daily and special supervision of internal control, We evaluated the effectiveness of the company's internal control on December 31, 2021 (the benchmark date of the internal control evaluation report).
1、 Important statement
It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise's internal control standard system. The board of supervisors shall supervise the establishment and implementation of internal control by the board of directors. The management is responsible for organizing and leading the daily operation of the enterprise's internal control. The board of directors, the board of supervisors and the directors, supervisors and senior managers of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this report, and bear individual and joint legal liabilities for the authenticity, accuracy and completeness of the contents of the report.
The objective of the company's internal control is to reasonably ensure the legal compliance of operation and management, asset safety, authenticity and integrity of financial reports and relevant information, improve operation efficiency and effect, and promote the realization of development strategy. Due to the inherent limitations of internal control, it can only provide reasonable assurance for the realization of the above objectives. In addition, as changes in circumstances may lead to inappropriate internal control or reduced compliance with control policies and procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results.
2、 Evaluation conclusion
According to the identification of major defects in the company's internal control over financial reporting, there are no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report. The board of Directors believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise's internal control standard system and relevant regulations.
According to the identification of major defects in the company's internal control over non-financial reports, on the benchmark date of the internal control evaluation report,
There are no factors affecting the evaluation conclusion of the effectiveness of internal control from the base date of the internal control evaluation report to the date of issuance of the internal control evaluation report.
3、 Internal control evaluation
(I) evaluation scope of internal control
According to the risk oriented principle, the company determines the main units, businesses and matters included in the evaluation scope and high-risk areas.
1. The company determines the main units, businesses and matters included in the evaluation scope and high-risk areas according to the risk oriented principle. The units included in the evaluation scope include the company and its subsidiaries. The total assets of the units included in the evaluation scope account for 100% of the total assets in the company's consolidated financial statements, and the total operating revenue accounts for 100% of the total operating revenue in the company's consolidated financial statements.
2. The scope of business and project management, investment management, guarantee, and capital management of the subsidiary includes: business and project management, capital management.
3. The high-risk areas of focus mainly include: industrial policy risk, development strategy positioning risk, price fluctuation risk of main raw materials, market and industry risk, financial risk, investment risk of power lithium battery business, risk of vehicle operation business, operation management risk, talent demand risk, quality of financial report, external guarantee and external investment.
The above units, businesses and matters included in the evaluation scope and high-risk areas cover the main aspects of the company's operation and management, and there are no major omissions.
(II) basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation in accordance with the requirements of relevant laws, regulations and rules, such as the enterprise internal control standard system, the stock listing rules of Shenzhen Stock Exchange, the basic norms of enterprise internal control, the guidelines for the standardized operation of listed companies of Shenzhen Stock Exchange and so on.
The board of directors of the company distinguished the internal control of financial report from the internal control of non-financial report according to the identification requirements for major defects, important defects and general defects of the enterprise internal control standard system, combined with the factors such as the company's size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards of internal control defects applicable to the company, which are consistent with the previous years. The identification standards of internal control defects determined by the company are as follows:
1. Identification criteria for defects in internal control over financial reporting
(1) The quantitative standard takes the total profit and total assets as the measurement indicators.
If the loss that may be caused or caused by the defect of internal control is related to the income statement, it shall be measured by the total profit. If the amount of financial report misstatement that may be caused by the defect alone or together with other defects is less than 2% of the total profit, it shall be recognized as a general defect; If it exceeds 2% but less than 4% of the total profit, it is an important defect; If it exceeds 4% of the total profit, it is recognized as a major defect.
If the loss that may be caused or caused by the defect of internal control is related to the total assets, it shall be measured by the total assets. If the amount of financial report misstatement that may be caused by the defect alone or together with other defects is less than 0.5% of the total assets, it shall be recognized as a general defect; If it exceeds 0.5% but less than 2% of the total assets, it is an important defect; If it exceeds 2% of the total assets, it is recognized as a major defect.
(2) The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Signs of significant deficiencies in internal control over financial reporting include:
① Fraud of directors, supervisors and senior managers of the company;
② The company corrects the published financial report;
③ Material misstatement in the current financial report found by the certified public accountant but not identified by the company's internal control; ④ The supervision of the audit committee and the internal audit department on the company's external financial report and internal control over financial report is invalid.
Signs of significant deficiencies in internal control over financial reporting include:
① Failure to select and apply accounting policies in accordance with GAAP;
② Failure to establish anti fraud procedures and control measures;
③ No corresponding control mechanism has been established or implemented for the accounting treatment of unconventional or special transactions, and there is no corresponding compensatory control;
④ There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably ensure that the prepared financial statements achieve the true and complete goal.
Signs of general defects in internal control over financial reporting include: control defects other than the above major defects and important defects.
2. Identification standard of internal control defects in non-financial reporting
(1) The quantitative standard for the evaluation of internal control defects in non-financial reports shall be implemented with reference to the quantitative standard for the evaluation of internal control defects in financial reports.
(2) The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are determined by the impact of defects on the effectiveness of business processes and the possibility of occurrence. The recognition criteria are as follows:
① The major defects of internal control over non-financial reporting include: the possibility of defects is high, which will seriously reduce the work efficiency or effect, or seriously increase the uncertainty of the effect, or make it seriously deviate from the expected goal.
② Important defects of internal control of non-financial reporting include: the possibility of defects is high, which will significantly reduce the work efficiency or effect, or significantly increase the uncertainty of the effect, or make it significantly deviate from the expected goal.
③ The general defects of non-financial reporting internal control include: the possibility of defects is small, which will reduce work efficiency or effect, or increase the uncertainty of effect, or make it deviate from the expected goal.
(III) identification and rectification of internal control defects
1. Identification and rectification of internal control defects in financial reporting
According to the above identification standards of internal control defects in financial reporting, the company has no major defects and important defects in internal control of financial reporting during the reporting period.
2. Identification and rectification of internal control defects in non-financial reports
According to the above identification standards of internal control defects in non-financial reports, there were no major defects and important defects in the company's internal control over non-financial reports during the reporting period.
4、 Description of other important matters related to internal control
(I) rectification of internal control defects in the previous year
□ applicable √ not applicable
(II) main contents involved in non-standard audit opinions this year
1. Notes on debt forgiveness
The company and its subsidiaries have received the notice of debt exemption and the letter of claim exemption issued by 12 creditors including Huarong (Fujian pilot Free Trade Zone) Investment Co., Ltd. before December 31, 2021. The above creditors irrevocably, irrevocably and irrevocably exempt some / all of their claims against the company and its subsidiaries. The amount of creditor's rights involved above (base date November 30, 2021) is 4030278100 yuan, and the total amount of exempted creditor's rights is 3404198500 yuan. Among them, the amount of exempted creditor's rights as a shareholder of the listed company is 13216768 million yuan, and the amount of exempted creditor's rights of other creditors is 20825217 million yuan.
The annual audit accountant believes that the above-mentioned creditors have failed to obtain sufficient and appropriate evidence for the debt exemption of the company, and the above exemption basis recorded in the "investment income" account is insufficient, so it is impossible to judge the authenticity and commercial rationality of the debt exemption made by other creditors except the creditors who are shareholders of the listed company.
According to the requirements of the regulatory authorities, the company has hired a law firm to conduct special verification and give legal opinions on the above-mentioned creditor's exemption from the company's debt. The first legal opinion issued by Beijing BOC law firm hired by the company has not yet solved the concerns of the regulatory authorities. For the draft of legal opinion after supplementary verification, the regulatory authorities require further supplementary verification and explanation of some contents, and the verification work needs to be continued. On April 26, 2022, BOC Beijing law firm proposed to the company to cancel the special legal service contract signed with the company on the legal services for the exemption of the company's debts by relevant creditors. The company will further communicate and negotiate with BOC Beijing to solve the relevant matters of the special legal service contract. At the same time, in order to actively promote the work, the company has arranged relevant law firms to carry out verification work and entrusted them to issue legal opinions on the debt exemption of the company by relevant creditors of the company. At that time, the company will coordinate the annual audit accounting firm to conduct supplementary audit according to the actual facts and legal findings, and timely supplement and announce the annual report.
2. Going concern ability
Although the owner's equity attributable to the shareholders of the listed company is relatively low in 2021, and the company's liquidity is expected to be tight and overdue debts still exist in 2022, the company's main business is stable and still maintains a certain scale and competitive advantage.
① The company's industry has entered an explosive period and has great market potential
The company takes the energy storage business as the core, and its main businesses include new energy power engineering and battery manufacturing, new energy vehicle leasing and operation, etc. The above-mentioned new energy business has always been an industry actively advocated and encouraged by the state. Especially after the central economic conference put forward the objectives and timetable of "carbon peak" and "carbon neutralization", China's whole new energy industry ushers in new development opportunities, and the production structure and consumption structure of energy are bound to change greatly. Under the requirements of achieving "carbon peak" in 2030 and "carbon neutralization" in 2060, the country should build a clean, low-carbon, safe and efficient energy system, control the total amount of fossil energy, strive to improve utilization efficiency, implement renewable energy substitution actions, deepen power system reform, and build a new power system with new energy as the main force and new energy storage as the auxiliary. It is estimated that during the "14th five year plan" period, the annual installed capacity of photovoltaic and wind power will reach 120gw, and the proportion of clean energy power generation in the power consumption of the whole society is expected to increase from about 15% at present to 23% in the long term; New energy storage has achieved comprehensive market-oriented development and become one of the key supports for carbon peaking and carbon neutralization in the energy field; The pulling effect of the electric vehicle industry on lithium batteries is expected to reach 2600gwh in 2030, with an industrial output value of about 2.6 trillion yuan.
In conclusion, the lithium battery and energy storage industries engaged by the company meet the requirements of the national new energy policy and have huge market prospects. With the progress of technology and the improvement of environmental protection awareness, the industry has fully entered the business cycle and has great commercial value.
② The company's existing business layout is reasonable and has market competitiveness
After focusing on the company's development strategy, the limited resources are concentrated in the core subsidiaries that meet the company's strategic development plan and have strong market competitiveness, and strive to ensure the development of core business. At this stage, the company's main operating revenue mainly comes from its core subsidiaries Fujian power treasure, Fujian lion new energy, Zhengzhou Dakar, Shenzhen clean power, etc. Apart from the above-mentioned unique market position, the company does not have certain operational risks.
③ Gradually dispose of non core assets, strengthen the recovery of accounts receivable and improve the company's cash flow
In 2021, the company sold the equity of Yicheng Mengshi Clean Energy Technology Co., Ltd., Jingmen Mengshi clean energy Co., Ltd., jimusar Mengshi photoelectric new energy Co., Ltd. and other project companies and their power stations, and sold the equity participation of Xiamen Gaorong nano New Material Technology Co., Ltd., which effectively realized the return of funds and reduced the company's liabilities.
The company strengthened the collection of accounts receivable through various ways, and the balance of accounts receivable at the end of 2021 decreased by more than a quarter compared with the beginning of the period. The company has accelerated the cash inflow of the company through the above means to ensure the development of business.
④ The core management team is stable, and the main creditors are optimistic about the company's industry
Facing the difficult situation, the actual controller and core management team of the company actively responded. Through strategic cooperation with central enterprises, the introduction of local government support, the implementation of debt restructuring, the termination of non core business and the streamlining of governance structure, we have maintained a relatively stable revenue scale and positive operating cash flow under extremely difficult circumstances, and gradually reserved a large amount of scenery storage projects.
In 2021, the production and operation team of the company and its subsidiaries remained stable, there was no resignation of core personnel, and the salary arrears of the company improved significantly. The company and most subsidiaries did not have salary arrears in the current period in 2021.
⑤ Business coping strategies
2022 is the year when the company recovers and comprehensively improves its economic performance
