Securities code: Zhongtian Financial Group Company Limited(000540) securities abbreviation: Zhongtian Financial Group Company Limited(000540) Announcement No.: 202249
Zhongtian Financial Group Company Limited(000540)
Announcement on the reply to the inquiry letter of the 2021 annual report of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Risk tips:
At present, the company has less discretionary funds, which is not enough to cover the interest bearing liabilities due within one year, and faces short-term liquidity risk. Please pay attention to investment risks.
Zhongtian Financial Group Company Limited(000540) (hereinafter referred to as ” Zhongtian Financial Group Company Limited(000540) ” and “the company”) received the inquiry letter on the annual report of Zhongtian Financial Group Company Limited(000540) 2021 of Shenzhen Stock Exchange (annual report inquiry letter [2022] No. 186 of the company department, hereinafter referred to as the “inquiry letter”) on May 5, 2022. In accordance with the questions and requirements listed in the inquiry letter, the company, together with the annual audit accounting organization ShineWing Certified Public Accountants (special general partnership) (hereinafter referred to as “ShineWing”), the company’s perennial legal adviser Beijing Guofeng law firm (hereinafter referred to as “Beijing Guofeng”) and the company’s independent directors, has conducted verification and Analysis on relevant matters, and the reply to relevant matters is as follows:
Question 1 According to the annual report, the financial statements of your company have not been fully disclosed due to the progress of equity acquisition transactions and the recoverability of deposit of Huaxia Life Insurance Co., Ltd. (hereinafter referred to as “Huaxia life”), the rationality of measurement and adequacy of disclosure of non-public market investment, and the improvement measures for the significant uncertainty of going concern assumption, ShineWing certified public accountants Co., Ltd. (hereinafter referred to as “ShineWing”) issued an audit report with qualified opinions with emphasized items, and an internal control audit report with unqualified opinions with emphasized items. Please verify and explain the following items by your company and relevant parties:
(1) In accordance with the relevant requirements of the rules for the preparation and reporting of information disclosure of companies offering securities to the public No. 14 – handling of non-standard audit opinions and matters involved (hereinafter referred to as the “rules for the preparation and reporting of No. 14”), explain the specific impact of matters involved in the qualified opinions of the 2021 financial report on your company’s financial situation, operating results and cash flow, and the proportion in the relevant items of your company’s corresponding financial statements. If you think it is not feasible to provide the possible impact amount of relevant matters, please explain in detail the reasons for the infeasibility in combination with the relevant accounting treatment basis of the company, the relevant provisions of accounting standards for business enterprises and auditing standards.
The reply is as follows:
The matters related to financial data in the qualified opinion of the company’s 2021 annual audit report are as follows:
The related matters involve the financial statement items affected by the retained matters in the total assets
Proportion of the amount of (100 million yuan)
Huaxia Life Insurance Co., Ltd. equity and other non current assets, credit minus 70.00 4.53% acquisition transaction progress and the recoverable value loss of deposit. The measurement rationality of non-public market investment is different from that of other non current financial assets and assets
Disclosure sufficiency: 144.04 9.29% of the allowable value change income of assets and financial business in the standing account
The items of these reserved matters affecting the financial statements include: other non current assets, other non current financial assets, independent account assets, credit impairment losses and income from changes in fair value of financial business.
(I) impact of the above matters on the financial situation
1. The company’s acquisition of the equity of Huaxia Life Insurance Co., Ltd. (hereinafter referred to as “Huaxia life”) is still in progress. As of December 31, 2021, the company included the deposit of RMB 7 billion in “other non current assets” for accounting and presentation, and no provision for impairment of the deposit of RMB 7 billion was made. Due to the uncertainty of whether the reorganization plan can obtain the administrative review and approval of the industry regulatory department, the company will account for the deposit of 7 billion yuan in accordance with the accounting standards for business enterprises, the company’s accounting policies and accounting estimates according to the reorganization progress and further information obtained. Due to the uncertainty of whether Huaxia life’s restructuring plan can be approved by the administrative review and approval of the industry regulatory authorities, ShineWing Certified Public Accountants (special general partnership) (hereinafter referred to as “ShineWing”) believes that if this transaction is not reached, the company may recover the deposit or face the risk that the deposit cannot be recovered in full, which has a significant impact on the financial statements. For the “other non current assets” of RMB 7 billion, the amount involved is significant, but it accounts for a low proportion of the company’s total assets at the end of 2021 and does not constitute a major part of the company’s financial statements.
2. Reserved opinions on matters related to the investment of RMB 14.404 billion by Zhongrong life. The accountant fails to obtain the business data of the invested entity related to the review and evaluation of the financial information of the invested entity; It also failed to obtain sufficient prediction basis for the cash flow related to the year-end fair value valuation report, failed to obtain sufficient and appropriate audit evidence on the measurement of changes in the fair value of the above-mentioned investment and the disclosure of financial report information based on the actual use of its funds, and issued a qualified opinion on this matter.
Except for the two equity investment projects of Shanghai Beisha Real Estate Co., Ltd. and Nantong Pengxin Investment Development Co., Ltd., which are located in Shanghai and have not issued audit reports due to the epidemic (the company has obtained the financial statements of 2021 confirmed by auditors. Up to now, the audit reports of the two companies have not been obtained) and the trust plan does not need to issue audit reports, Other investment projects have obtained the audited 2021 financial statements of the invested projects and the audit reports.
The company also obtained the valuation report of these invested projects, valued the equity of this part of non listed companies based on the valuation report issued by a third party, and subsequently measured these other non current financial assets in accordance with the accounting standards for business enterprises and relevant accounting policies of the company.
(II) impact of the above matters on operating results and cash flow
The subsequent measurement of the 7 billion yuan deposit paid by the company for the equity transaction of Huaxia life insurance is mainly affected by the progress of the transaction. If the transaction is not reached in the end, the company may recover the deposit or face the risk that the deposit cannot be recovered in full. The company will conduct accounting treatment on the deposit of RMB 7 billion in accordance with the accounting standards for business enterprises, the company’s accounting policies and accounting estimates, including estimating the recoverable amount and withdrawing the credit impairment loss according to the recoverable amount. Due to the uncertainty of whether Huaxia life’s restructuring plan can be approved by the administrative review and approval of the industry regulatory authorities, ShineWing believes that if this transaction is not reached, the company may recover the deposit or face the risk that the deposit cannot be recovered in full, which has a significant impact on the operating results, but this matter will not change the nature of the company’s profit and loss in 2021. The company has fully disclosed the uncertainty of relevant transactions, It is also not expected to lead to negative net assets attributable to shareholders of the parent company, risk early warning, delisting and other matters.
Zhongrong life invested in the equity of non listed companies through the non-public market in 2021. For the financial assets measured at fair value, Zhongrong life insurance has made subsequent measurement on the financial assets measured at fair value according to the fair value measurement model or with the help of the valuation report of external intermediaries, and the corresponding changes in fair value have been included in the income from changes in fair value of financial business in this year.
The above matters also do not affect the cash flow of the company this year.
(2) In combination with question (1), the annual audit accountant of your company is requested to analyze and explain whether the misstatement or undetected misstatement (if any) of relevant matters has or may have a wide impact on the financial statements, and whether there is a situation where qualified opinions replace unable to express opinions or negative opinions in accordance with the requirements of No. 14 reporting rules and guidelines for the application of regulatory rules – Audit No. 1.
The reply is as follows:
(I) auditing standards for Chinese certified public accountants and relevant regulatory rules
1. Auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in audit reports
According to Article 5 of the auditing standards for Chinese certified public accountants No. 1502 – issuing unqualified opinions in audit reports, “Universality” refers to the term used to describe the impact of misstatement on the financial statements, or the possible impact of the undetected misstatement (if any) on the financial statements due to the inability to obtain sufficient and appropriate audit evidence. According to the judgment of certified public accountants, the situations with extensive impact on the financial statements include the following aspects: (I) Not limited to the impact on specific elements, accounts or items of the financial statements; (II) although it only affects specific elements, accounts or items of the financial statements, these elements, accounts or items are or may be the main components of the financial statements; (III) when related to disclosure, the impact is very important for users of financial statements to understand the financial statements. “
According to Article 8 of the auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in audit reports, “Under any of the following circumstances, the certified public accountant shall express a qualified opinion: (I) after obtaining sufficient and appropriate audit evidence, the certified public accountant believes that the misstatement alone or combined has a significant impact on the financial statements, but does not have universality; (II) the certified public accountant is unable to obtain sufficient and appropriate audit evidence as the basis for forming the audit opinion, but believes that the undetected misstatement (if any) It may have a significant impact on the financial statements, but it is not extensive. “
Article 9 of the auditing standards for Chinese certified public accountants No. 1502 – expressing unqualified opinions in the audit report stipulates that “after obtaining sufficient and appropriate audit evidence, if it is considered that the misstatement alone or combined has a significant and extensive impact on the financial statements, the certified public accountant shall express a negative opinion.” Article 10 of the auditing standards for Chinese certified public accountants No. 1502 – Express unqualified opinions in the audit report stipulates that “if sufficient and appropriate audit evidence cannot be obtained as the basis for forming the audit opinion, 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.”
2. Rules for the preparation of information disclosure of companies offering securities to the public No. 14 – handling of non-standard audit opinions and matters involved (2020)
According to Article 6 of the rules for the preparation of information disclosure of companies offering securities to the public No. 14 – non-standard audit opinions and the handling of matters involved (2020), “The certified public accountant issuing the qualified opinion shall issue a special explanation for the relevant matters involved in the qualified opinion, including (but not limited to): (I) detailed reasons and basis for issuing the qualified opinion, including the reasons why the certified public accountant believes that the matters involved in the qualified opinion do not have a broad impact on the financial statements as described in the audit standards; (II) The amount of possible impact of relevant matters on the company’s financial position, operating results and cash flow during the reporting period, and explain whether the nature of the company’s profit and loss has changed after considering the impact amount; If it is not feasible to provide the possible impact amount of relevant matters, the reasons for the infeasibility shall be explained in detail. “
3. Guidelines for the application of regulatory rules – Audit No. 1
“III. (III) regulatory requirements” in the guidance on the application of regulatory rules – Audit No. 1 of the CSRC, “Certified public accountants shall carefully evaluate whether the impact of relevant matters on the financial statements is extensive. If there is no obvious evidence to the contrary, the following circumstances indicate that the impact of relevant matters on the financial statements is extensive: including multiple major events that cannot obtain sufficient and appropriate audit evidence; a single event has a great impact on the main components of the financial statements; it may affect delisting indicators, risk warning indicators and profit and loss nature Change, going concern, etc. If a certified public accountant, after obtaining sufficient and appropriate audit evidence, believes that the misstatement has a significant and extensive impact on the financial statements, he shall give a negative opinion. If it is unable to obtain sufficient and appropriate audit evidence, but believes that the undetected misstatement may have a significant and extensive impact on the financial statements, it shall express an opinion. “
(II) analyze and explain whether the misstatement or undetected misstatement (if any) of relevant matters has or may have a wide impact on the financial statements, and whether there is a situation where qualified opinions are used instead of unable to express opinions or negative opinions
1. Financial status and operating results of the company
Project end of 2021 / year 2021 (RMB 100 million)
Total assets 154548
Total liabilities 143404
Total shareholders’ equity 111.43
Total shareholders’ equity attributable to the parent company 118.91
Total profit -117.30
Net profit -106.19
Based on the financial situation and operating results of the Institute, before issuing the audit opinion, ShineWing analyzed and evaluated the possible impact of the matters that led to the limited audit of the company and failed to obtain sufficient and appropriate audit evidence on the financial statements submitted by the company with the approval of the board of directors.
