Board of directors of Mengshi new energy technology (Henan) Co., Ltd
Special notes on matters involved in the audit report with non-standard opinions
The 2021 financial statements of Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as "the company" or "lion technology") have been audited by China Audit Asia Pacific Certified Public Accountants (special general partnership), and an audit report with no opinion was issued on April 29, 2022. The reason why the certified public accountant is unable to express an opinion is that due to the importance of the matters described in the section "forming the basis of unable to express an opinion", it is unable to obtain sufficient and appropriate audit evidence as the basis for issuing an audit opinion on the financial statements.
In accordance with the relevant provisions of 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 unqualified audit opinions and matters involved, the board of directors made the following special instructions on the matters involved in the audit report with non-standard opinions:
1、 Explanation of non-standard audit opinions and audit reports issued by Certified Public Accountants
(I) form a basis on which opinions cannot be expressed
1. Debt forgiveness
As stated in note 6.52 of the financial statements, the investment income from the debt restructuring of lion technology in 2021 was RMB 2140487000, of which the investment income from the debt exemption of creditors to lion technology in December 2021 was RMB 2082521700. Mengshi technology and its subsidiaries received the debt exemption notice and debt exemption letter issued by creditors in December 2021. The amount of creditor's rights involved in the debt exemption notice and debt exemption letter (base date: November 30, 2021) was 4030278100 yuan, with a total amount of 3404198500 yuan. Among them, the amount of creditor's rights exempted as a shareholder of the listed company was 1321676800 yuan, and the amount of creditor's rights exempted by other creditors was 2082521700 yuan.
Due to the failure to obtain sufficient and appropriate audit evidence for the creditor's debt exemption of lion technology, we are unable to judge the authenticity and commercial rationality of the debt exemption made by other creditors except the creditor who is a shareholder of the listed company.
2. It is impossible to judge whether the company's financial statements are properly prepared on the assumption of going concern
After deducting non recurring profits and losses, the net profit attributable to the shareholders of the listed company in this year was -1117578400 yuan. Of the 1243593600 yuan short-term loans at the end of the period, 1173493000 yuan was overdue, there were many litigation matters, and some assets were sealed up and frozen by the court. These circumstances indicate that there are major uncertainties that may lead to major doubts about the sustainable operation ability of lion technology. Lion technology has disclosed the management's analysis and improvement measures for going concern, but we still cannot judge whether it is appropriate for lion technology's management to use the assumption of going concern to prepare the financial statements of 2021.
3. The financial information of the overseas subsidiary durion energy AG is incomplete
As of December 31, 2021, durion energy AG, a holding subsidiary of fierce lion technology with a shareholding ratio of 55% (the registered address of the company is diddingen, Switzerland), the company's net assets were equivalent to -7.3421 million yuan, and the net profit of 2021 was equivalent to -2.1252 million yuan. As of the date of issuance of this audit report, the overseas intermediary employed by lion technology has failed to provide complete financial information and audit reports of durion energy Ag for 2020 and 2021. We are unable to obtain sufficient and appropriate audit evidence to judge whether the financial statements of durion energy AG are presented correctly, and then we are unable to judge the impact of the event on the financial statements.
(II) reasons and basis for issuing non-standard audit opinions
According to Article 10 of the auditing standards for Chinese certified public accountants No. 1502 - issuing unqualified opinions in audit reports, if sufficient and appropriate audit evidence cannot be obtained as the basis for forming audit opinions, but it is considered that the undetected misstatement (if any) may have a significant and extensive impact on the financial statements, the certified public accountant shall express an unqualified opinion.
The above matters for which opinions cannot be expressed have a significant and extensive impact on the financial statements.
In conclusion, we cannot express our opinion on the financial statements and notes of lion technology in 2021.
(III) impact of matters involved in non-standard audit opinions on financial position, operating results and cash flow during the reporting period
Due to the inability to obtain sufficient and appropriate audit evidence for the matters involved in the inability to express an opinion as the basis for issuing an audit opinion on the financial statements, we are unable to determine the possible impact amount of the relevant matters, nor can we judge whether the relevant matters may lead to changes in the nature of the company's profits and losses.
(IV) description of whether the matters involved obviously violate the accounting standards for business enterprises, systems and relevant information disclosure norms
Due to the inability to obtain sufficient and appropriate audit evidence as the basis for the formation of audit opinions, we cannot judge whether the matters involved in the inability to express opinions are in obvious violation of accounting standards and relevant information disclosure regulations.
2、 Description of relevant matters by the board of directors of the company and specific measures to eliminate the above matters and their impact
(I) description of debt forgiveness matters and measures to eliminate matters and their impact
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 he has failed to obtain sufficient and appropriate audit evidence for the above creditors' debt exemption of the company, and is unable 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. Beijing BOC law firm hired by the company has issued the first legal opinion on February 18, 2022. For the 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.
(II) description of the ability to continue as a going concern and measures to eliminate matters and their impact
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. Proposed business Countermeasures
2022 is a year for the company to recover its vitality and comprehensively improve its operation quality. The company will strive for the maximum support of partners and various resources, focus on the overall improvement of the operation quality of its main business, overcome various difficulties, especially the adverse situation of relative scarcity and instability of operating funds, grasp the focus of work in each stage under limited resource conditions in accordance with the established business policy, strive to solve the different problems faced by the core business sector and improve the overall value of the company.
Business policy: fully promote the work of completely resolving the debt problem and fundamentally improve the fundamentals of the company; Restore, rebuild and improve the core business reflecting the company's value, enhance the ability of sustainable operation and improve the quality of operation. Business strategy: clarify the business measures of core subsidiaries and implement them; Ensure the achievement of business objectives in the first quarter; Give priority to the recovery and improvement of lithium battery business.
Business objectives: ① the revenue of core subsidiaries increased year-on-year in the first quarter; ② Further defuse delisting risks; ③ Strive to completely solve the problem of debt default and fundamentally improve the operating conditions; ④ Strive to ensure the normalization of lithium battery business; ⑤ Challenge the main business to turn losses.
For subdivisional businesses, all subsidiaries and units are encouraged to introduce funds from external investors through joint ventures and shares to restore factory production and operation, project development and construction.
On the premise of legal compliance, the management team of the company will take all possible ways to actively solve various difficulties encountered by the company and fully release the production capacity of subsidiaries, so as to restore the company to normal operation as soon as possible.
To sum up, the company's cash flow is relatively stable in the past four years, and the company's main business is to maintain a positive focus on cash flow. The company's main business operation is relatively stable, the industry development continues to improve, and has entered a comprehensive business cycle. The company has strong technology and competitiveness in energy storage, lithium battery and other fields, has a large number of project reserves in new energy project development and engineering construction, and has good business expectations in the future. The company's strategic cooperation with central enterprises has ensured the normal development of the company's basic business. The company still has the ability of sustainable operation.
(III) incomplete information about energy Ag and measures to eliminate overseas subsidiaries
Since 2018, due to the tight liquidity of the company, various businesses under durion energy Ag have been suspended and personnel have left one after another. Now the company has no full-time employees, which brings obstacles to the audit work. Affected by the epidemic prevention and control policy, the company was also unable to send personnel to Europe to deal with the follow-up affairs of durion energy AG. To this end, the company hired SCHWEIZERISCHE Treuhandgesellschaft (Bern) AG, a Swiss intermediary, to conduct an investigation on durion energy AG
