Inquiry letter on the annual report of Hengxin Shambala Culture Co.Ltd(300081) gem annual report inquiry letter [2022] No. 421 Hengxin Shambala Culture Co.Ltd(300081) board of directors:
Our department paid attention to the following situations in the post review of your company’s 2021 annual report: 1 The annual report shows that during the reporting period, your company achieved an operating income of 486799 million yuan, a year-on-year increase of 47.37%, and the comprehensive gross profit margin was 28.35%, a year-on-year increase of 16.03 percentage points. Among them, the application and service of digital creative products achieved an operating revenue of 1731944 million yuan, a year-on-year increase of 122.98%, and the gross profit margin was 28.19%, a year-on-year increase of 82.78 percentage points.
(1) Please supplement and disclose the business information of each sector, including but not limited to the development status of the industry, market capacity and competition, the position of the industrial chain, profit model, main products and their uses, etc.
(2) Please explain the reasons and rationality of the increase of operating revenue and the increase of gross profit margin during the reporting period in combination with the changes of business production and sales volume, orders on hand, product price change trend, the changes of five major customers and revenue proportion in the past three years, product cost and its composition, revenue recognition policy and its changes, sales policy and its changes, comparable companies in the same industry, etc.
Ask the accountant to check and give clear opinions, and focus on the specific audit procedures and coverage, procedure effectiveness and audit conclusions adopted for the authenticity of the company’s income.
2. At the end of the reporting period, the book balance of your company’s accounts receivable was 2493221 million yuan, the balance of bad debt provision was 1186158 million yuan, the withdrawal proportion was 47.58%, and the balance of bad debt provision accounted for 24.37% of the operating revenue in the reporting period. Among them, accounts receivable aged more than two years accounted for 91.75%. Your company’s book balance of accounts receivable and notes receivable of Zhongying Network Technology Co., Ltd. (hereinafter referred to as “Zhongying network”) is 6.1744 million yuan and 20 million yuan respectively, and the bad debt reserves have been fully withdrawn.
(1) Please supplement and disclose the sales to the top ten customers of China UK network and other closing balances, including but not limited to the customer name, corresponding sales content, recognized sales revenue, book balance of accounts and notes receivable, aging, accrued bad debt reserves and subsequent collection, and whether the customer has any relationship or other interest arrangements with your company, the company’s main shareholders, directors, supervisors and senior staff, And explain whether the relevant customers pay the money according to the contract one by one. If not, please explain the reasons and the countermeasures the company has taken and plans to take.
(2) Please explain whether the provision for bad debts of accounts receivable is reasonable and sufficient in combination with the aging distribution of accounts receivable, customer credit status and industry characteristics, the historical loss rate of accounts receivable in previous years calculated based on the migration model, the overdue situation of accounts receivable at the end of the reporting period in recent three years, the collection situation after the reporting period and other factors, Whether there is a situation that accounts receivable cannot be recovered due to the recognition of false sales revenue in previous years and the provision of bad debts is significant.
Ask the accountant to check the above matters, and explain the audit procedures, coverage, effectiveness and audit conclusions adopted for the authenticity of accounts receivable and corresponding sales revenue, the timeliness and sufficiency of bad debt provision.
3. At the end of the reporting period, the book balance of other receivables of your company was 949109 million yuan, and the balance of bad debt provision was 47.505 million yuan, with a withdrawal ratio of 50.05%. Among them, the ending balance of other receivables from the top five debtors is 734619 million yuan, accounting for 77.39%, and the aging is more than one year. During the reporting period, your company wrote off 211045 million yuan of other accounts receivable. Among them, due to the cancellation of Shandong Leji Trade Co., Ltd., the write off amount was 2.4451 million yuan; Due to the fact that the deposit advanced to 6 companies such as Zhihui Industrial Co., Ltd. could not be recovered, the write off amount was 183669 million yuan.
(1) Your company is requested to disclose the other receivables of the above write off objects and the top five debtors of the ending balance, including but not limited to the basic information, causes, transaction time, nature of payment, aging, agreed repayment time, payment arrangement and provision for bad debt reserves of the counterparty, and explain the necessity of relevant transactions or transactions, the relationship between the counterparty and your company, the company’s main shareholders Whether there is any relationship or other interest arrangement between the directors, supervisors and senior management personnel, whether there is any non operational occupation of the company’s funds or illegal provision of financial assistance, and whether appropriate deliberation procedures and information disclosure obligations are fulfilled.
(2) Please supplement and disclose the bad debt provision of other receivables of the above write off object in the last three fiscal years, the collection and recovery measures taken by the company and the implementation effect, the write off amount in the current period, the write off reasons and the write off procedures performed.
Ask the accountant to check and give clear opinions.
4. At the end of the reporting period, the total book balance of your company’s inventory was 576071400 yuan, the balance of inventory falling price reserves was 193197500 yuan, and the withdrawal proportion of inventory falling price reserves was 33.54%, an increase of 19.49 percentage points year-on-year. During the reporting period, the provision for inventory falling price loss was 147875000 yuan, an increase of 100.84% over the same period of last year, accounting for 30.38% of the operating revenue in the reporting period.
Your company is requested to make supplementary disclosure of the composition of the ending inventory by business segments, including but not limited to the inventory type, product composition, purpose, quantity, amount and stock age, and explain the reason and rationality of the sharp increase in the loss of falling price of goods in the reporting period in combination with the product price change trend, sales situation and the situation of comparable companies in the same industry in recent three years, and whether there is any accrued but not accrued situation in previous years, Whether there is profit adjustment by using inventory falling price reserves. Ask the accountant to check the above matters, and explain the audit procedures and coverage, program effectiveness and audit conclusion for the authenticity and accuracy of the inventory.
5. At the end of the reporting period, the book balance of goodwill of your company was 4629299 million yuan, involving six subsidiaries such as Anhui Saida Technology Co., Ltd., and the balance of goodwill impairment provision was 1736441 million yuan. During the reporting period, a total of 391103 million yuan of goodwill impairment loss was withdrawn.
Please add whether the determination method, relevant important assumptions and key parameters of the recoverable amount in this year’s goodwill impairment test are consistent with those in the formation of goodwill and the previous year’s goodwill impairment test. If not, please further explain the differences and their reasons, and whether there is a situation of adjusting profits by making provision for goodwill impairment, Whether it complies with the relevant provisions of accounting standards for Business Enterprises No. 8 – asset impairment and accounting supervision risk tips No. 8 – goodwill impairment. Ask the accountant to check the above matters, explain the audit procedures and audit evidence obtained for the goodwill impairment test, and express clear opinions on whether the time point and amount of the provision for goodwill impairment are appropriate.
6. In April 2016, your company invested US $22.7 million to participate in the virtual reality company (hereinafter referred to as “VRC”).
The annual report shows that your company directly holds 17.57% of the equity of VRC; The net assets of VRC at the end of 2020 and 2021 were -5.301 million yuan and -7.2342 million yuan respectively. VRC achieved operating income of 929900 yuan and 242500 yuan respectively in 2020 and 2021, and net profit of -49.419 million yuan and -2.0776 million yuan respectively. During the reporting period, your company’s long-term equity investment in VRC recognized an investment income of -365000 yuan according to the equity method. As of the end of the reporting period, no provision for impairment has been made.
Your company is requested to disclose the business model of VRC and the business dealings with your company during the reporting period, and explain the reason and rationality of not withdrawing the provision for impairment in combination with its business results, financial status, judgment criteria for impairment signs and specific process of impairment test in recent three years, as well as the process and basis for your company to confirm the investment income. Ask the accountant to check and give clear opinions. 7. During the reporting period, the sales expense of your company was 943069 million yuan, an increase of 25.07% over the same period of last year. Among them, the expense amount of depreciation and amortization was 312312 million yuan, an increase of 104003% over the same period of last year.
Please explain the reason and rationality of the significant increase of relevant depreciation and amortization expenses in the reporting period in combination with the changes of fixed assets and intangible assets, the use of relevant assets, depreciation and amortization policies and their changes in the reporting period, and whether there was a situation of less provision of depreciation and amortization expenses in previous years. Ask the accountant to check and give clear opinions.
8. The annual report shows that the management expenses of your company during the reporting period were 996468 million yuan, an increase of 29.50% over the same period of last year. In this regard, your company explained that it was mainly due to the early termination of the contract of the leased office space (Shengtang Guyi Pioneer Park), and the balance of the deferred expenses of the corresponding cooperative operation was included in the current expenses at one time.
Please supplement and disclose the specific conditions of relevant lease contracts, including but not limited to the signing time, lease reasons, main terms of the contract, reasons for early termination, etc., and explain the impact of this matter on your company’s production and operation and financial statements in 2021. Ask the accountant to check and give clear opinions.
Please make a written statement on the above issues, submit the relevant explanatory materials to our department and disclose them to the public before June 6, 2022, and send a copy to the listed company supervision department of Beijing Securities Regulatory Bureau.
This is to inform you.
Gem company management department may 22, 2022
