Shanghai Stock Exchange
Szgh [2022] No. 0321
About Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078)
Regulatory inquiry letter on information disclosure of 2021 annual report Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) :
In accordance with the requirements of the standards for the content and format of information disclosure by companies offering securities to the public No. 2 – the content and format of annual report (hereinafter referred to as the standard for the format No. 2), the guidelines for industrial information disclosure of Shanghai Stock Exchange and other rules, after the post audit of your 2021 annual report, and in accordance with the provisions of article 13.1.1 of the stock listing rules of the exchange, your company is requested to further supplement and disclose the following information.
1. The annual report disclosed that during the reporting period, the company reversed the bad debt provision for other receivables (including interest) of RMB 2.239 billion originally accrued for Chengxing group, resulting in the net assets from negative to positive, which is the main accounting treatment for the company to maintain its listing status. On April 19, 2020, the exchange sent the inquiry letter on matters related to the progress of Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) settlement (szgh [2022] No. 0245) to the company, asking the company and the annual auditor to reply whether the nested fund occupation scheme of the settlement agreement constitutes a package deal and the fairness of accounting treatment, but the company has not replied so far. The company and the annual audit accountant are requested to reply to relevant questions as soon as possible and clarify market expectations in accordance with the relevant provisions of the accounting standards for business enterprises.
In addition, the company still has a number of inquiries that have not been answered for several times, and the relevant information has not been truly, accurately and completely disclosed, which directly affects the judgment of investors on major matters such as whether the company’s control has changed and whether the company’s shares have been delisted due to financial data. The company and the directors, supervisors and senior management are requested to check relevant matters as soon as possible according to the regulatory requirements, reply to the inquiry letter as required and disclose to the public. The exchange has initiated relevant disciplinary procedures and seriously investigated the responsibilities of all parties.
2. Suya Jincheng Certified Public Accountants (special general partnership) (hereinafter referred to as Suya Jincheng) issued an audit report that could not express an opinion on the company’s 2020 financial statements, including the inability to obtain sufficient and appropriate audit evidence to judge whether the amount of bad debt provision withdrawn by the company’s receivables is appropriate and there are major uncertainties in continuous operation. At the same time, internal control was given a negative opinion. In 2021, Su yajincheng believed that the company’s 2020 audit report could not express an opinion, and the impact of the matters mentioned had been eliminated. He issued an unqualified opinion with emphasized matters, but the internal control was still a negative opinion. During the reporting period, the company involved in a large amount of litigation due to overdue financial claims. At the same time, the equity of relevant subsidiaries, the freezing of bank accounts and the sealing up of assets were not disclosed. The annual audit accountant is requested to explain: (1) what audit procedures have been specifically implemented, whether he has paid attention to the freezing and sealing up of the company’s relevant assets, bank accounts and equity of subsidiaries at the end of the period, and the specific basis and reasons for believing that the impact of the matters involved in the company’s inability to express opinions in 2020 has been eliminated; (2) Based on the above situation and in combination with the occupation of new funds found during the reporting period, verify whether the impact of relevant matters on the financial statements is significant and extensive, whether it is appropriate to issue only unqualified opinions with highlighted items on the financial statements, and whether there is any situation in which improper audit opinions are issued to help the company avoid delisting.
3. The annual report disclosed that the book balance of the company’s inventory at the end of the reporting period was 633 million yuan, a year-on-year decrease of 26%, the balance of inventory falling price reserves was 1516300 yuan, and the overall withdrawal proportion of inventory falling price reserves was only 0.24%. According to the annual audit accountant, the company’s inventory was not recorded in time after delivery, resulting in a large difference between the actual inventory number at the end of the period and the financial book number. The main thing is that the controlling shareholder Chengxing group coordinated and arranged the company to sell 1370914 tons of yellow phosphorus to Yunnan Dongping Phosphorus Industry Co., Ltd. (hereinafter referred to as Yunnan Dongping), forming 229 million yuan as accounts receivable, Yunnan Dongping did not pay the relevant amount and offset the relevant inventory against its debts with Chengxing group and related parties, which constituted Chengxing group’s occupation of non operating funds of the company. At present, the relevant funds have been returned by Zhejiang yaoning Technology Co., Ltd. The company is requested to: (1) explain the reason and rationality of the significant decrease in inventory balance in combination with business development and changes in inventory structure; (2) Supplement and disclose the specific standards and corresponding test process of inventory provision for falling price. At the same time, combined with inventory category, stock age, sales price and other factors, compare the situation of other comparable companies in the same industry, and explain whether the provision proportion of relevant subjects is in line with industry practice, whether the provision proportion is too low and insufficient; (3) Supplement how Chengxing group coordinates the company to sell a large amount of inventory to Dongping, Yunnan, the causes, process and relevant responsible persons of relevant matters; (4) Ask the accountant of the year to explain the counting procedures implemented at the end of the period, including but not limited to the counting scope, counting time and counting method, disclose the specific situation of the inventory counting difference at the end of the year, and whether there are similar situations in previous years; (5) Explain the specific background of Zhejiang yaoning Technology Co., Ltd., the reason and rationality of repaying the relevant occupation funds for Chengxing group this time, and whether there are other undisclosed arrangements. Please comment on the annual audit accountant.
4. The annual report shows that during the reporting period, the company achieved an operating revenue of 3.333 billion yuan, with a year-on-year increase of 6.28%, and the gross profit margin of main business was 20.12%, with a year-on-year increase of 11.84 percentage points, of which the gross profit margin of yellow phosphorus products increased by 55.21 percentage points; The gross profit margin of “other” products decreased by 51.73 percentage points year-on-year. In addition, the sales expense in 2021 was only 17 million yuan, a year-on-year decrease of 79.31%. The company said that the transportation expense was adjusted to the operating cost according to the new income standard. The company is requested to: (1) list the price fluctuations of relevant products in each quarter, and quantitatively analyze the impact of raw material price fluctuations on the company’s operating costs and gross profit margin in combination with the company’s procurement and sales model and quarterly financial data; (2) Close the business and financial data of comparable companies in the contract industry, and explain whether the change trend of the company’s revenue, cost and gross profit margin is consistent with that of comparable companies in the same industry. If not, please explain the reasons; (3) Explain the specific reasons for the significant increase of gross profit margin of yellow phosphorus and the significant decrease of gross profit margin of “other” products; (4) Explain the basis for the adjustment of transportation expenses to the presentation of operating costs according to the new income standard, the specific accounting treatment method and quantitative impact, and whether they match the changes in main business income; (5) Explain the name, location, corresponding operating income, whether there is a relationship between the top five customers in the past three years, and the changes of the main customers. The annual audit accountant is requested to give a clear opinion.
5. The annual report disclosed that during the reporting period, the company sold 207 million yuan of goods to Yunnan jiuxuan Mining Co., Ltd. (hereinafter referred to as jiuxuan mining), accounting for 6.2% of the current operating revenue, and purchased 75 million yuan from it, accounting for 2.82% of the total operating cost. According to public information, jiuxuan mining was established on November 3, 2020, and the industrial and commercial approval date is January 18, 2022. The scope of industrial and commercial business license was changed on June 17, 2021, and it can operate the sales of hazardous chemicals.
The company is requested to make supplementary disclosure: (1) the transaction background, specific content and specific time of the company’s sales and procurement of commodities to jiuxuan mining, and explain the necessity of carrying out the transaction in combination with the main business conditions of both parties; (2) The above transactions involve commodity category, transaction volume and transaction price, and compare the prices of similar commodities sold and purchased by the company to other parties to analyze and explain whether the pricing of related party transactions is fair. The annual audit accountant is requested to give a clear opinion.
6. The annual report disclosed that the ending balance of the company’s prepayment was 161 million yuan, an increase of 70.95% over the previous period. Among the top five prepayment objects, the company prepaid 175411 million yuan to Yunnan Dongping, and it used the company’s inventory to offset the debts with Chengxing group and related parties. The company is requested to make supplementary disclosure: (1) whether the top five prepayment objects have potential relationship or business dealings with the controlling shareholders and related parties of the company; (2) The type and delivery cycle of products purchased by prepayment, the necessity of prepayment, and whether there is overdue delivery; (3) Explain the specific reasons for the increase of prepayment in this period compared with the previous period in combination with the prepayment object, purchased products and account age; (4) Whether the relevant prepayments of Yunnan Dongping constitute the capital occupation of the controlling shareholder, please check whether there are other capital occupation by the company. Please comment on the annual audit accountant.
7. According to the annual report, Yunnan Maitreya phosphorus Power Chemical Co., Ltd. (hereinafter referred to as Maitreya phosphorus power) and Jiangsu xingxia Logistics Distribution Co., Ltd. (hereinafter referred to as xingxia logistics) achieved net profits of 244 million yuan and 255 million yuan respectively during the reporting period, a significant increase of 176 million yuan and 461 million yuan compared with last year. Yunnan Xuanwei phosphorus Power Co., Ltd. (hereinafter referred to as Xuanwei phosphorus power) achieved a net profit of – 135 million yuan, an increase of 105 million yuan over last year. Meanwhile, the balance of goodwill at the end of the reporting period was 127039 million yuan. The relevant information about the asset group or combination of asset groups where the goodwill belongs, as well as the goodwill impairment test process and key parameters in the company’s annual report were not fully disclosed as required. The company is requested to: (1) supplement and disclose the main financial data of the above three companies in recent three years, including total assets, net assets, income and net profit, and explain the rationality of large fluctuations in their performance in combination with their performance changes; (2) According to the disclosure requirements of the annual report, the relevant information of the asset group or combination of asset groups where the goodwill belongs, as well as the goodwill impairment test process, key parameters and the recognition method of goodwill impairment loss, and explain whether the provision for goodwill impairment is sufficient. Please comment on the annual audit accountant.
8. The annual report disclosed that the company’s short-term loan balance was 3.487 billion yuan, of which the overdue short-term loan amount was 3.159 billion yuan Bank Of Ningbo Co.Ltd(002142) Wuxi Branch and other banks transferred their financial creditor’s rights and subsidiary rights of the company to Jiangsu assets, and the company received the relevant notice of creditor’s rights transfer and failed to perform the information disclosure. (1) details of the creditor’s rights not disclosed by the Bank of Jiangsu and the reasons for the transfer of the above-mentioned assets to the responsible person in the early stage; (2) Combined with the specific progress of large sum cumulative litigation, explain the company’s accrual of estimated liabilities in the corresponding year, including the amount, basis and specific time point of accrual, and explain whether the relevant accounting treatment complies with the provisions of accounting standards. Please comment on the annual audit accountant.
In view of the above problems, if the company believes that it is not applicable or inconvenient to disclose due to special reasons in accordance with the requirements of standard format No. 2 and the guidelines for industry information disclosure of Shanghai Stock Exchange, the company shall explain the reasons why it cannot disclose. According to the stock listing rules of the exchange, if a listed company applies for canceling the delisting risk warning, the exchange may require the listed company to provide supplementary materials, and the period during which the company replies to the inquiry letter shall not be included in the time limit for making relevant decisions.
The company is requested to disclose the information immediately after receiving this letter, and reply to our department in writing on the above matters within 5 trading days, fulfill the obligation of information disclosure and make corresponding amendments to the periodic report.
Shanghai Stock Exchange listed company management Department II may 4, 2002
