Special partnership accounting firm (Lixin)
About the notice on Sino Prima Gas Technology Co.Ltd(300483) Technology (Shanghai) Co., Ltd
Reply to the inquiry letter of 2021 Annual Report
Xin Hui Shi Han Zi [2022] No. 318 Shenzhen Stock Exchange:
Lixin Certified Public Accountants (special general partnership) (hereinafter referred to as “the company”) received the inquiry letter on the 2021 annual report of Sino Prima Gas Technology Co.Ltd(300483) Technology (Shanghai) Co., Ltd. (GEM annual report inquiry letter [2022] No. 274) (hereinafter referred to as “the inquiry letter”) issued by your firm on May 9, 2022. According to the requirements of the inquiry letter, we conducted special verification on the following questions in the inquiry letter, The specific reply is as follows: 1 The company achieved an operating revenue of 1.823 billion yuan in the current period, with a year-on-year increase of 19.54%, including 1.515 billion yuan in natural gas exploration and sales business, with a gross profit margin of 27.41%, a year-on-year decrease of 11.74 percentage points. The company’s overseas sales revenue was 293 million yuan, a year-on-year increase of 24.31%. The company purchased 2782797 million cubic meters of natural gas and gardening supplies from third parties, accounting for 27.61% of the total sales volume, with a year-on-year increase of 57.57%. 16438600 gardening supplies were purchased, accounting for 78.67% of the total sales volume. The net profit of the current period was 61.712 million yuan, a year-on-year decrease of 40.22%. The annual report explained that it was caused by the decrease of natural gas volume sharing income, the increase of operating costs, the decrease of tight gas subsidies and the increase of financial expenses. Please specify:
(1) The reasons for the sharp decline in the gross profit margin of natural gas exploitation and sales business quantitatively illustrate the impact of the sales price of natural gas and gardening supplies, the proportion of natural gas revenue, changes in operating costs, government subsidies and other factors on the gross profit margin and net profit of corresponding businesses.
Company reply:
The gross profit margin of the company’s natural gas exploitation and sales business in 2021 was 27.41%, down 11.74 percentage points from the same period last year; The gross profit margin of horticultural supplies business was 15.40%, down 6.34 percentage points from the same period last year. The quantitative analysis of the impact of the sales price of natural gas and gardening supplies, the proportion of natural gas revenue, changes in operating costs, government subsidies and other factors on the gross profit margin and net profit of corresponding businesses is as follows:
1、 Impact of changes in sales prices of natural gas and gardening supplies on gross profit margin and net profit
1. Impact of natural gas sales price change on gross profit margin and net profit
In 2021, the unit price of the company’s natural gas excluding tax was 1.74 yuan / m ³， Compared with 1.42 yuan / m in 2020 ³ Increased by 22.5%. Based on the average sales price in 2020, the gross profit margin of the company’s natural gas exploitation and sales business is 13.11%. The rise of natural gas price leads to the increase of gross profit margin by 14.30 percentage points and the contribution of net profit by 198 million yuan. The specific calculation is as follows:
Change proportion / amount of the project in 2021 (actual) and 2021 (estimated)
Operating income (10000 yuan) 1515685512662349, up 19.70%
Gross profit (10000 yuan) 41548551660349, up 150.24%
Gross profit margin increased by 14.30 percentage points from 27.41% to 13.11%
The net profit contributed was 33864871402458, an increase of 198402900 yuan
2. Influence of sales price change of gardening supplies on gross profit margin and net profit
In 2021, the gross profit margin of the company’s gardening supplies business was 15.40%, down 6.34 percentage points from the same period last year; The gross profit was 462541 million yuan, down 16.87% from 2020. The main raw materials of the company’s gardening supplies include steel, aluminum alloy, plastic, etc. affected by the rising price of relevant raw materials, the company’s production cost and outsourcing cost have increased; At the same time, the fluctuation and appreciation of RMB exchange rate in 2021 reduced the amount of income converted into RMB under the same foreign currency income, and also had a certain impact on the decline of gross profit margin. The company actively negotiated with customers and adjusted the prices of some products, but the increase has not yet reached the rising range of costs. The comprehensive impact of the above factors has led to a certain decline in the gross profit margin and gross profit of the company’s gardening supplies business.
2、 Impact of the change of natural gas revenue share ratio on gross profit margin and net profit
According to the agreement of the cooperation contract and its supplementary contract and the resolution of the joint management board meeting, the R value of Yonghe 45 Yonghe 18 well block has been greater than 1 since February 2021, that is, the cumulative revenue sharing of the block has been greater than the cumulative input since February 2021. The revenue sharing ratio of CNOOC wobang in Yonghe 45 Yonghe 18 well block has been calculated according to the proportion of 24% of CNOOC coal and 76% of CNOOC wobang since March 2021.
If the revenue sharing ratio of Yonghe 45 Yonghe 18 well block is still calculated at 87% from March to December 2021, the gross profit margin of the company’s natural gas exploitation and sales business is 31.32%. The reduction of the sharing ratio leads to a decrease of 3.91 percentage points in the gross profit margin and a decrease in the contribution net profit of 685581 million yuan. The specific calculation is as follows:
Change proportion / amount of the project in 2021 (actual) and 2021 (estimated)
Operating income (10000 yuan) 1515685515878506, down 4.54%
Gross profit (10000 yuan) 41548554972742, down 16.45%
The gross profit margin was 27.41% and 31.32%, down 3.91 percentage points
The net profit contributed (10000 yuan) was 33864874072068 yuan, a decrease of 685581 million yuan
3、 Impact of increased operating costs on gross profit margin and net profit
The operating cost of the company’s natural gas exploration and sales business in 2021 was 110.2 million yuan, an increase of 43.24% over 2020, mainly due to the increase of depreciation and amortization by 19.41% and the increase of natural gas outsourcing cost by 109.25%.
1. Reasons for the rise of depreciation and amortization costs
First, the impact of the late start-up time of newly put into production natural gas wells. In 2021, the company’s natural gas wells were mainly put into operation in the second half of the year, especially in the fourth quarter, accounting for 57%. The production time of newly put into operation wells is short, and the annual gas contribution is small. According to the amortization formula of the oil and gas asset production method, “depreciation accrued in the current period = net book value of oil and gas assets” × Current natural gas production ÷ (remaining reserves of oil and gas assets + current natural gas production) “, when the newly put into production gas wells have not contributed a large amount of gas, they are involved in the depletion according to the overall depletion rate (i.e. current natural gas production ÷ (remaining reserves of oil and gas assets + current natural gas production)), so as to increase the amortization amount of oil and gas assets. Secondly, the phased impact of border expansion development. According to the law of oil and gas development, resource development generally builds production in enrichment areas and gradually expands to sub enrichment areas. At present, the section of Shan 23 developed in Shilou west block has gradually extended to the sub enrichment area. In the process of edge expansion, there will be fluctuations in the development effect of single wells, which will affect the amortization level of oil and gas assets. In addition to the reported reserves of He8, shan1 and Shan2 under development, the company also found that Benxi Formation, Taiyuan formation, he7-he1 member and Shiqianfeng have developed and encountered gas bearing horizons, and have been developed in adjacent blocks. The company will further strengthen research, optimize the overall development plan, and change from single development horizon to multi-layer three-dimensional development. With the gradual implementation of reserves of other strata, Under the reasonable three-dimensional development mode, strive for better resource development effect.
2. Reasons for the rising cost of natural gas outsourcing
With the expansion of the scale of purchased natural gas and the rise of natural gas price, the cost of purchased natural gas will increase accordingly.
3. Measurement
If the operating cost in 2021 is calculated based on the operating cost in 2020, the overall gross profit margin of the company’s natural gas in 2021 is 44.33%, and the increase of unit cost leads to the decrease of gross profit margin by 16.92 percentage points and the contribution of net profit by 2103102 million yuan. The specific calculation is as follows:
Change proportion / amount of the project in 2021 (actual) and 2021 (estimated)
Operating cost (10000 yuan) 110020008437468, up 30.39%
Gross profit (10000 yuan) 41548556719387, down 38.17%
The gross profit margin was 27.41% and 44.33%, down 16.92 percentage points
The net profit contributed (10000 yuan) was 33864875489589 million yuan, a decrease of 2103102 million yuan
Based on the above factors affecting the gross profit margin of natural gas exploitation and sales business, the gross profit margin of natural gas exploitation and sales business of the company decreased by 11.74% in 2021, which is mainly due to the comprehensive influence of factors such as the increase of natural gas sales price, the increase of gross profit margin by 14.30%, the decrease of natural gas sharing proportion, the decrease of gross profit margin by 3.91%, and the increase of operating cost, the decrease of gross profit margin by 16.92%.
4、 Impact of tight gas subsidy decline
The company’s tight gas subsidy is included in the “other income” item, which has no impact on the gross profit margin of the company’s natural gas exploitation and sales business. The company received a tight gas subsidy of 29.071 million yuan in 2021, a decrease of 494561 million yuan compared with 785271 million yuan in 2020. The decrease of tight gas subsidy led to a decrease of 420377 million yuan in net profit.
Change amount of the project in 2021 and 2020
The tight gas subsidy received (10000 yuan) was 290710785271, a decrease of 494561 million yuan
Contributed net profit (10000 yuan) 247104667481, decreased by 42037700 yuan
5、 Impact of increased financial expenses
In 2021, the company incurred financial expenses of 1170902 million yuan, an increase of 551042 million yuan compared with 61.986 million yuan in 2020, mainly due to the increase of Kunlun trust loan interest, resulting in a decrease of 282697 million yuan in contributed net profit; The increase in interest on unpaid equity funds resulted in a decrease in net profit of 353509 million yuan.
Verification by annual auditor
The annual audit accountant verification procedures include but are not limited to:
1. Obtain the company’s 2021 annual operating income and operating cost structure table, natural gas sales income cost schedule, natural gas sales settlement sheet, gardening supplies export sales schedule and relevant export documents.
2. Obtain the cooperation contract and supplementary agreement signed between CNOOC Warburg and CNPC coal, the resolution of the joint management committee meeting on adjusting the share proportion, relevant documents issued by tight gas subsidies and bank receipts, and check the original vouchers.
3. Review and analyze the changes of the company’s gross profit rate of natural gas sales in 2021; 4. The amount of financial expenses has been analytically reviewed and tested for rationality.
Verification opinions of annual audit accountant:
Due to the increase of the company’s gross profit margin and the decrease of the company’s gross profit margin due to the increase of the above factors, such as the increase of the company’s gross gas production cost and the decrease of the company’s comprehensive profit margin due to the increase of the company’s gross gas production cost and net gas amortization.
(2) The specific regions of the company’s overseas sales in the current period, the reasons for the significant growth in the current period, as well as the collection of overseas sales, and report the list of the top five customers of overseas sales.
Company reply:
1、 Overseas sales
In 2021, the company achieved an overseas sales revenue of 294 million yuan, all of which were gardening supplies business revenue, with a year-on-year increase of 24.31%, mainly due to the tight shipping capacity in 2020 due to the covid-19 epidemic in 2020, and some orders were postponed to 2021, resulting in an increase in overseas sales revenue in 2021; At the same time, affected by the rising prices of raw materials and outsourcing and other factors, the prices of some horticultural products of the company have been raised after negotiation with customers. The specific regions of overseas sales in 2021 are as follows:
No. regional income amount (10000 yuan)
1 North America
