Securities code: Dima Holdings Co.Ltd(600565) securities abbreviation: Dima Holdings Co.Ltd(600565) Announcement No.: Lin 2022034 Dima Holdings Co.Ltd(600565)
Reply to the regulatory inquiry letter on information disclosure of the 2021 Annual Report
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. Important notes: 1. Specific basis for adjustments after the balance sheet date: the cooling of the real estate market and the decline in the prices of most developers’ houses are the existing industry status quo on the balance sheet date. In view of the cooling of the real estate market in the second half of 2021, the company has adopted sales promotion policies for some projects in order to sell and return the funds as soon as possible. Affected by the epidemic situation, the scale of the company’s real estate market fell sharply, and the demand for real estate on the spot fell further due to the impact of the epidemic situation; The company’s sales amount in the first quarter of 2021 decreased by more than 50% year-on-year, and the sales downturn was serious; Competition around the project intensifies, and all real estate enterprises have reduced prices and volume. Under the pressure of competition, the company must adjust sales policies, speed up payment collection and ensure the safety of capital turnover. Based on the further conclusive evidence after the balance sheet date, the expected sales price and its impact on the inventory are carefully evaluated, the net realizable value of the inventory on the balance sheet date is recalculated and adjusted, and the originally recognized impairment amount of the inventory is adjusted. 2. The main reason for the decline of gross profit: in previous years, the real estate regulation policy began to be implemented gradually, but the company is still optimistic about the future prospect of the industry and market judgment. During the period of fierce competition in the land market at that time, in order to maintain the continuous growth of the company’s scale, some regions also pursued rapid expansion, and highly evaluated the investment income of some projects, resulting in high project cost; When these projects enter the sales stage one after another, the regulation requirements such as limited sales, price limit and self holding ratio further reduce the company’s profits; Since the beginning of 2020, with the covid-19 epidemic and repeated in the later stage, the on-site house sales visits have been reduced. In order to improve the purchase demand of consumers, the company has launched promotion policies. To sum up, the gross profit margin of real estate settlement has declined year by year from 2019 to 2021. 3. Cash short-term debt ratio: the company’s total financing at the end of the reporting period was 18.056 billion yuan, including 6.495 billion yuan of short-term loans and non current liabilities due within one year (hereinafter referred to as “short-term liabilities”), and 4.958 billion yuan of monetary capital, including 4.497 billion yuan of unrestricted monetary capital and only 0.76 yuan of cash short-term debt ratio. However, the company’s short-term liabilities are basically project development loans, the value of the project can fully cover their corresponding short-term liabilities, and the source of repayment is relatively sufficient. The company’s current operating condition is good, current assets can better cover current liabilities, and the company’s liquidity risk is controllable. If the real estate market continues to be depressed in the future, consumer demand cannot be continuously and effectively improved, and financial policies continue to be tightened, the company will face certain liquidity risks.
Dima Holdings Co.Ltd(600565) (hereinafter referred to as “the company”) received the inquiry letter on information disclosure supervision of Dima Holdings Co.Ltd(600565) 2021 annual report (shgh [2022] No. 0332, hereinafter referred to as “the inquiry letter”) issued by the management department of listed companies of Shanghai Stock Exchange on May 6, 2022. The company has carefully checked and implemented the relevant issues raised in the inquiry letter, and now replies to the relevant information and makes supplementary disclosure as follows:
1、 Correction of performance forecast
1. In the early stage, the company issued a performance forecast, saying that the net profit attributable to the parent company is expected to be 90.15 million yuan in 2021
Right, a year-on-year decrease of about 95%, and the decline in performance is mainly due to the decline in the scale of housing delivery projects and gross profit margin.
On April 28, 2022, the company simultaneously disclosed the correction announcement of performance forecast and the annual report of 2021. The net profit attributable to the parent company in 2021 was -2.054 billion yuan. The reason for correction is that affected by the new round of epidemic and the lower than expected sales of the company’s real estate projects in the first quarter, the company has accrued assets and credit impairment losses of 1.932 billion yuan and 180 million yuan respectively for inventories and receivables. Compared with the previous performance forecast, the actual performance of the company changes in the direction of profit and loss, and the amount varies greatly. The company is requested to make supplementary disclosure: (1) the decision-making of the correction of this performance forecast, and explain whether the company takes the epidemic situation and the sales in the first quarter as the specific basis for the adjustment after the balance sheet date and whether the relevant accounting treatment is in compliance with the relevant provisions of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date; (2) Explain the specific time point of impairment signs of major projects in combination with the location of major projects, completion time, early investment and sales deregulation, changes in the selling prices of surrounding comparable buildings, and self-examine the prudence and sufficiency of the current and early asset impairment provision; (3) The debtor of the credit impairment of receivables withdrawn this time, including but not limited to the name of the debtor, whether there is an association relationship with the company, the nature and aging of the payment, the debtor’s solvency, etc., indicating the changes and specific time points of the credit risk of the object of impairment withdrawn this time compared with the previous performance forecast, and whether the previous impairment withdrawal is sufficient. The annual audit accountant is requested to give a clear opinion.
Reply and supplementary disclosure:
(1) The decision-making situation of the correction of this performance forecast, and with reference to the relevant provisions of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date, explain whether the company takes the epidemic situation and the sales in the first quarter as the specific basis for adjusting events after the balance sheet date, and whether the relevant accounting treatment is in compliance;
1) Decision making for correction of this performance forecast:
According to the provisions of the stock listing rules, after preliminary calculation by the company’s financial department and written confirmation by the company’s chairman, President, financial director, chairman of the audit committee and Secretary of the board of directors, the company
On January 29, 2022, the announcement of annual performance reduction in 2021 (p.2022003) was issued.
According to the further development of the market situation and epidemic situation, based on the principle of prudence, the company began to conduct a comprehensive inventory of its assets at the end of March 2022, and conduct asset impairment test according to the latest situation, make prudent judgment on some accounting estimates according to further changes in the objective situation, and reassess the expected sales price and the impact of impairment. Before April 24, 2022, after repeated internal discussions, we had several rounds of communication with accountants on the provision of asset impairment. On April 24, 2022, the company held an audit committee to communicate and report on the performance correction items mentioned in the impairment plan, which was understood and agreed by the members of the audit committee. After determining the estimated amount of impairment, the chairman, President, financial director, chairman of the audit committee and Secretary of the board of directors confirmed in writing, timely fulfilled the obligation of information disclosure, and issued the announcement on correction of 2021 annual performance forecast (p.2022013).
2) Specific basis for adjustment after the balance sheet date and whether relevant accounting treatment is in compliance
Specific basis of the accounting standards for business enterprises: Article 2 of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date: events after the balance sheet date refer to favorable or unfavorable events that occur between the balance sheet date and the date of approval and issuance of the financial report. The date of approval of the financial report refers to the date when the board of directors or similar institutions approve the financial report. An adjustment event after the balance sheet date refers to an event that provides new or further evidence for the existing situation on the balance sheet date. Article 5 of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date: the post balance sheet adjustment events of an enterprise usually include the following items: (II) conclusive evidence obtained after the balance sheet date indicates that an asset has been impaired on the balance sheet date or that it is necessary to adjust the originally recognized impairment amount of the asset.
According to the relevant provisions of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date, the company regards the epidemic situation and the sales in the first quarter as the specific basis for adjusting events after the balance sheet date as follows:
The cooling of the real estate market and the decline in the prices of most developers’ houses are the current situation of the industry on the balance sheet date. In view of the rapid cooling of the real estate market in the second half of 2021, the general decline of house prices in the second and third tier cities, the overall liquidity risk of the industry began to be exposed, and some real estate enterprises had tight liquidity. In order to sell and withdraw funds as soon as possible, the company adopted promotion policies for some projects in the second half of 2021. At the end of 2021, the real estate regulation policy began to reverse adjustment, the regulation tone gradually warmed up, the housing loan interest rate of residents in some areas decreased slightly, and local governments also introduced measures to actively implement the stabilization of the real estate market. In view of the warming real estate policy and the stabilization of the epidemic situation, it is expected that the impact on the real estate may be improved in a certain stage, and the value of the company’s goods will rise to a certain extent. Therefore, the above factors are considered in the calculation of the provision for inventory falling price, according to the comparable market price of surrounding competitive products and the price of the company’s sold products, combined with the location of the project, product format, floor, orientation, house type and other factors, The provision for falling price of inventories was made and the performance forecast was made at the end of January 2022.
After the balance sheet date, the impact of the epidemic has further exacerbated the downward trend of the real estate market. The actual sales situation in the first quarter of 2022 provides further evidence for the existing situation on the balance sheet date. According to the data of Kerui Research Center, the overall performance scale of the top 100 real estate enterprises in the first quarter of 2022 decreased significantly by 47% year-on-year, and the cumulative performance of more than 80% of the top 100 real estate enterprises decreased year-on-year, of which nearly 40% of the enterprises decreased by more than 50%. From January to April 2022, the overall performance scale of real estate enterprises decreased significantly by 50.2% year-on-year, which was further expanded compared with the first quarter. Since February 2022, not only did the Spring Festival return home sales in the peak season of the industry cycle fall short of expectations, but there were no obvious signs of warming in the overall market supply and demand and transactions, due to the interweaving of large-scale epidemic and sporadic epidemic, the situation of prevention and control in many regions became stricter, the on-site visits of the sales department decreased, and the purchase demand of consumers weakened, which had a great impact on the project development and sales of the company.
① The location of the company’s real estate for sale, such as Shanghai, Guangzhou, Wuhan, Hangzhou, Suzhou, Nanjing, Shijiazhuang, Chengdu, Xi’an, Changsha, Mianyang, Chongqing, Kunming and other regions, are affected to varying degrees by the sealing and control of the epidemic. The sales site situation in these regions has been affected. The epidemic prevention and control measures in various regions encourage the reduction of personnel mobility, and the consumption demand of the project continues to weaken.
② With the economic downturn and consumption degradation, consumers’ willingness to buy houses has been further reduced. The sales amount of the company in the first quarter of 2021 was 9.58 billion yuan, and the sales amount in the first quarter of 2022 was only 4.045 billion yuan, a significant decrease year-on-year, with a decrease ratio of more than 50%. The sales downturn is serious.
③ Competition around the project intensifies, and all real estate enterprises have reduced prices and increased volume. Customers are highly sensitive to prices. Under the pressure of competition, the company must adjust sales policies, speed up payment collection, ensure house delivery, ensure the safety of capital turnover, and strive to adapt to the current situation of the market.
Affected by the above factors, the actual sales price of the company’s projects in the first quarter of 2022 continued to decline, which changed with the market situation expected to pick up and stabilize in January 2022 and the actual sales situation of the company. The actual sales price of the company in the first quarter of 2022 and the sales price of surrounding competitive products and other conclusive evidence show that before the annual financial report of the company is considered and approved by the board of directors, The company’s inventory is impaired on the balance sheet date or the originally recognized impairment amount of inventory needs to be adjusted. Out of prudence, after full communication with the accounting firm, the company reassessed the expected sales price and its impact on inventory, made a supplementary provision for inventory falling price at the end of 2021 and corrected the performance.
The cooling of the real estate market and the decline of most house prices are existing conditions on the balance sheet date. The sales in the first quarter of 2022 provide further evidence for the existing conditions on the balance sheet date. The events that provide new or further evidence for the existing conditions on the balance sheet date are adjustment events after the balance sheet date, Article 7 of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date: significant changes in asset prices in non adjusting events after the balance sheet date. Moreover, Article 16 of the accounting standards for Business Enterprises No. 1 – inventories stipulates that an enterprise shall determine the net realizable value of inventories based on the conclusive evidence obtained, and consider the purpose of holding inventories, the impact of events after the balance sheet date and other factors. In accordance with the relevant provisions of the accounting standards for Business Enterprises No. 29 – events after the balance sheet date and the accounting standards for Business Enterprises No. 1 – inventory, based on further conclusive evidence after the balance sheet date, the company carefully evaluated the expected sales price and its impact on the inventory, recalculated and adjusted the net realizable value of the inventory on the balance sheet date, and adjusted the originally recognized impairment amount of the inventory, Accounting treatment meets the requirements of accounting standards.
(2) Explain the specific time point of impairment signs of major projects in combination with the location of major projects, completion time, early investment and sales deregulation, changes in the selling prices of surrounding comparable buildings, and self-examine the prudence and sufficiency of the current and early asset impairment provision;
1) In 2021, the company accrued asset impairment loss of 1.932 billion yuan, including 5 main projects with a loss of more than 100 million yuan, totaling 1.189 billion yuan, accounting for 61.54%. The relevant information of the main projects is as follows:
Revised edition of performance forecast stage in the first quarter of 22 years
The last year is the first quarter of the year ending 2021 when the budget is signed
S / N: changes of surrounding competitive products after the end of the batch, the cumulative investment and the budget in the region where the project is located
Working time (10000 yuan) (10000 yuan) (10000 yuan) rate business type expected sales impairment business type expected sales impairment provision
