Securities code: Anxin Trust Co.Ltd(600816) securities abbreviation: St Anxin No.: pro 2022031
Announcement on the reply to the inquiry letter on the 2021 annual report of Shanghai Stock Exchange
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
On May 11, 2022, Anxin Trust Co.Ltd(600816) (hereinafter referred to as “the company” or “Anxin trust”) received the inquiry letter on information disclosure supervision of Anxin Trust Co.Ltd(600816) 2021 annual report of Shanghai Stock Exchange (shgh [2022] No. 0347, hereinafter referred to as “the inquiry letter”), and the reply is as follows:
Question 1:
About the main business. During the reporting period, the company achieved a total operating income of 225 million yuan, a year-on-year decrease of 24.66%. In terms of inherent business, the loss scale has continued to expand since 2019. The company’s net interest income in 2021 was -1.228 billion yuan, an increase of 250.86% compared with the loss scale in 2019. In terms of trust business, the company’s fee and commission income continued to decline, with a year-on-year decrease of 8.3%. The company is requested to make supplementary disclosure: (1) explain the reasons and rationality of the continuous expansion of the company’s net interest income loss in recent three years in combination with the specific types and development of inherent business; (2) The reasons for the continuous decline in the handling fees and commission income of the company’s trust business. The annual audit accountant is requested to give a clear opinion.
reply:
1、 Description of the reasonableness of the company’s expansion of business scale and net income in recent three years
Inherent business refers to the business carried out by the company with its own funds, including but not limited to loans, leasing, investment, interbank deposits, interbank lending, etc. The net interest income of the company in recent three years is as follows:
Unit: 100 million yuan
Project 20212020 2019
Interest income 0.04 0.57 1.10
Less: interest expense 12.32 11.38 4.60
Net interest income -12.28 -10.81 -3.50
On the one hand, due to the decline of the quality of stock loans year by year, the possibility of charging relevant loan interest is small. According to the relevant provisions of the accounting standards for business enterprises, it cannot be recognized as the current interest income, and the interest income decreases year by year; On the other hand, the company borrowed from Bank Of China Limited(601988) Shanghai Branch (hereinafter referred to as “BOC”) and obtained liquidity support from China Trust Industry guarantee fund Co., Ltd. (hereinafter referred to as “SINOSURE”) and China Trust Industry Guarantee Fund (hereinafter referred to as “SINOSURE fund”), paid or accrued interest and overdue default interest, and the interest expenditure increased greatly, so the net interest income of the company in 2021 was -1228 million yuan, The loss scale increased by 250.86% compared with 2019. The specific analysis is as follows:
(I) interest income: mainly formed by loans and deposits with other banks. The specific composition is as follows:
Unit: 100 million yuan
Project 20212020 2019
Loans and advances 0.03 0.55 1.05
Interbank deposit 0.01 0.01 0.03
Trust industry guarantee fund 0.01 0.01 0.03
Total (note) 0.04 0.57 1.10
Note: the total tail difference is generated by rounding, the same below.
Due to the borrower’s default in succession, the loan and advance payment failed to repay the principal and interest as agreed in the contract, and the corresponding interest income decreased significantly year by year;
Interest income from deposits with banks;
The trust industry guarantee fund is the interest income generated by the company’s subscription of the trust industry guarantee fund.
(II) interest expense: it is mainly formed by the liquidity support of trust industry guarantee fund and interbank borrowing. The specific composition is as follows:
Unit: 100 million yuan
Project 20212020 2019
Trust industry guarantee fund 10.25 9.79 4.33
Interbank loan 2.06 1.92 0.97
Structured subject 0.00 -0.34 -0.69
Project 20212020 2019
Interest expense of lease liabilities
Use 0.01
Total 12.32 11.38 4.60
Interest expense of trust industry Guarantee Fund: in 2019, the company received liquidity support of RMB 1.2 billion and RMB 4.45 billion from China SINOSURE Corporation and China SINOSURE fund respectively. According to the agreement, the interest generated and default interest.
Inter bank loan interest expense: the company borrowed 978 million yuan and 2.3 billion yuan from BOC in 2019 and 2020 respectively, and generated interest and penalty interest according to the agreement.
The interest expense of the structured entity is the net value of the current change enjoyed by other share holders when the company merges the structured entity.
To sum up, the scale of the company’s net interest income loss has continued to expand in recent three years, mainly due to the continuous growth of interest and penalty interest generated by borrowing from BOC and obtaining the liquidity support of SINOSURE company and SINOSURE fund.
During the reporting period, the debts to be settled between the company and BOC and SINOSURE have been settled, and the total overdue liabilities of the company have decreased significantly. The debt between the company and the SINOSURE fund is 4.45 billion yuan. According to the debt settlement agreement signed by both parties, the 1.455 billion shares of Anxin trust held by the controlling shareholder that have been pledged to the SINOSURE fund will transfer all rights to the SINOSURE fund through judicial auction, judicial debt repayment or other appropriate procedures. The debt repayment is progressing in an orderly manner. After the completion of the above-mentioned debt settlement, the relevant interest bearing debts of the company will be fully settled, and the amount of interest expenditure will be significantly reduced.
Verification by annual auditor:
1. Obtain and analyze the specific composition and change reasons of the net interest income of Anxin trust;
2. For the interest income from loans and advances, obtained and checked the loan contract, wrote to the borrower, recalculated the interest income, understood the basic situation of the borrower, etc;
3. For the interest expenditure of trust guarantee industry funds and interbank loans, the contract or agreement was obtained and verified, the letter to the creditor was confirmed, and the interest expenditure was recalculated.
Verification opinions of annual audit accountant:
Based on the above audit procedures, the explanation of the continuous expansion of the loss scale of net interest income of Anxin trust in the past three years is not significantly inconsistent with the information obtained when we audit the financial statements of 2021. The recognition of interest income and interest expense complies with the relevant provisions of the accounting standards for business enterprises in all material aspects.
2、 Reasons for the continuous decline of handling fees and commission income of the company’s trust business
Trust business is the business behavior of a trust company to promise trust and handle trust affairs as a trustee for the purpose of business and receiving remuneration. The company’s handling fees and commission income in recent three years are as follows:
Unit: 100 million yuan
Project 20212020 2019
Trust remuneration 2.18 2.40 3.58
Intermediate business income 0.02 0.02 0.10
Total 2.20 2.41 3.68
In 2021, the company confirmed that the income from handling fees and commissions was 220 million yuan, of which the trust remuneration was 218 million yuan, accounting for 99.08%.
The company’s trust business counterparties are mainly small and medium-sized enterprises. As small and medium-sized enterprises are greatly affected by the macroeconomic downturn, some counterparties fail to pay the trust remuneration as agreed in the contract. The management of the company comprehensively evaluated the status of the counterparties of the trust plan, the distributable trust interests and other factors, and believed that because some counterparties of the trust plan failed to pay the trust remuneration normally in accordance with the contract, although the company has the right to withdraw the trust remuneration according to the trust contract, there is no sufficient evidence that the relevant trust remuneration can be received. In order to make the financial statements accurately reflect the real operating results of the company, The company has not confirmed or fully confirmed the trust remuneration for these projects.
Verification by annual auditor:
Our audit procedures for handling fees and commission income of Anxin trust include:
1. We have evaluated and tested the effectiveness of the design and operation of internal control related to the extraction and confirmation of trust remuneration.
2. Review the method, process and results of trust benefit distribution: check the large trust remuneration and income in combination with the contract terms and project status one by one, including recalculation.
3. For important revenue items, whether there is a reasonable commercial substance is judged by means of interview and letter confirmation, so as to confirm the rationality of revenue recognition.
4. For major and abnormal projects, check the bank statement of the project and check whether the capital flow is abnormal. 5. Check the trust remuneration confirmed on the balance sheet with the trustee remuneration distributed off the balance sheet in the current period.
6. Cut off test: for major projects that have the right to withdraw trust remuneration according to the trust contract but have not allocated trust remuneration due to the default of underlying assets:
1) Obtain off balance sheet accounts and analyze their asset liability structure;
2) Obtain and analyze the income and taxes payable to the beneficiaries of the trust project at the end of the trust project by December 31, 2021 after deducting the off balance sheet monetary funds, and there is still a balance after other payables;
3) For the projects that can withdraw the trust remuneration but have not been allocated in this period, implement the sample calculation of large trust remuneration income, understand the reasons why the company has not been allocated in combination with the interest arrears in previous years, and judge whether it is reasonable;
4) Check the changes in bank deposits of relevant projects after the period.
Annual audit opinion of accountant:
Based on the above audit procedures, there is no material inconsistency between the explanation of Anxin trust on the reasons for the decline of trust handling fees and commissions and the information obtained when we audit the financial statements of 2021. The recognition of handling fee and commission income complies with the relevant provisions of the accounting standards for business enterprises in all major aspects.
Question 2:
About going concern ability. The company’s financial statements that have been audited for three consecutive years and have significant liabilities due to the existence of “significant liabilities” at the end of 2020, and the company’s financial statements that have been audited for three consecutive years have significant liabilities. During the reporting period, the company’s total operating income continued to decline, with a net profit attributable to the parent of -1.129 billion yuan and a net profit attributable to the parent of -874 million yuan after deducting non profits. The performance has suffered large losses for four consecutive years. In addition, according to the company’s previous announcement, the Shanghai Banking and insurance regulatory bureau took prudential regulatory measures such as suspending the self-management fund trust business. In the 2021 financial statement audit report, the accountant judged that there was no significant uncertainty in the company’s sustainable operation ability based on the company’s completion of debt settlement, signing of share subscription agreement and most of the minimum guarantee commitments. The company is requested to: (1) describe in detail the progress of the issue of shares to specific objects up to now and the follow-up promotion plan, as well as whether there are substantive obstacles or uncertainties in the issue; If the subsequent issuance of shares to specific objects fails, will it have a serious adverse impact on the company’s operation and affect the company’s sustainable operation ability. If yes, please explain whether it is prudent and reasonable to eliminate the uncertainty of the company’s continuing operation under the uncertainty of the matter; (2) Combined with the current business and risk resolution, explain whether there are still major uncertainties affecting the ability of sustainable operation. The annual audit accountant shall explain whether it is prudent and reasonable to determine whether the uncertainty of the company’s going concern ability has been eliminated when the profitability of the company’s main business has not been substantially improved and the risks have not been completely resolved, whether the nature of the uncertainty of going concern and its impact on the financial statements have been carefully evaluated in the audit process, and please specify the audit procedures performed when evaluating the going concern ability of the listed company Identify the specific evidence and basis for the elimination of relevant situations, and express clear opinions on question (1) and question (2).
reply:
1、 Specify the issue of shares to specific objects so far
