About Shenzhen Esun Display Co.Ltd(002751)
Inquiry letter of 2021 Annual Report
Annual report inquiry letter [2022] No. 360 of the company Department Shenzhen Esun Display Co.Ltd(002751) board of directors:
In the process of reviewing your company’s 2021 annual report (hereinafter referred to as “annual report”), our department has paid attention to the following matters:
1. Your company’s 2021 financial report was audited by Asia Pacific (Group) Certified Public Accountants (special general partnership) (hereinafter referred to as “Asia Pacific Institute”), which was unable to express an opinion, forming (I) of the matters involved that could not express an opinion. Some accounts receivable were carried forward at the beginning of the period and were not collected this year, so it was difficult to implement satisfactory audit procedures and obtain sufficient and appropriate audit evidence for the recoverability of accounts receivable. In this regard:
(1) Please explain the specific situation of the accounts receivable carried forward at the beginning of the period and not collected this year, including the specific name of the customer involved, whether there is a related relationship with your company and your directors, supervisors and senior managers, the specific time, amount, content, pricing basis, transaction settlement method, delivery time of goods, revenue recognition time, recovery of accounts receivable over the years Adequacy of bad debt provision over the years and during the reporting period;
(2) In combination with the progress of communication with relevant customers in question (1), your company is requested to explain whether there is any situation that the relevant collection flows to related parties and whether it is occupied by the non operating funds of major shareholders and their related parties, and invite independent directors to express their opinions; (3) Please explain the specific inquiry contents, the time of sending the letter and the reply up to now of the accounts receivable customers carried forward at the beginning of the period and not collected this year; In case of reply and dispute, specify the content of the dispute. In case of no reply, explain the reason and rationality of the non reply in combination with the current business situation of the customer and the specific communication with the customer. At the same time, check whether there is any situation in which the relevant payment flows to the related parties during the reporting period;
(4) Please explain the specific audit procedures adopted by APAC for the accounts receivable carried forward at the beginning of the period and not collected this year, and explain whether there is untrue and inaccurate income in the previous period, and whether there is insufficient provision for bad debt reserves in the past year and the current period. 2. (2) the audit report of your company forms the matters that cannot express opinions. The abnormal loss of this year is 2871419368 yuan, of which 2255560006 yuan is the damage loss of goods caused by the termination of the contract with Guangxi Dongrong Eternal Asia Supply Chain Management Ltd(002183) supply chain Co., Ltd. (hereinafter referred to as “Dongrong Eternal Asia Supply Chain Management Ltd(002183) “), and the site has been demolished; The remaining 615859362 yuan is the damage and loss of goods caused by warehouse management of Yishang Hong Kong Co., Ltd. (hereinafter referred to as “Yishang Hong Kong”), which cannot be verified on site by the annual audit accountant due to the epidemic. In this regard:
(1) Please explain the specific circumstances of the transaction with Dongfeng Eternal Asia Supply Chain Management Ltd(002183) related to the transaction, including the specific time, amount, content, pricing basis, transaction settlement method, delivery time and revenue recognition time of the transaction, and explain the basis and rationality of your company’s accounting treatment related to the transaction with Dongfeng Eternal Asia Supply Chain Management Ltd(002183) above;
(2) Please explain the specific reasons for the termination of the contract related to Dongfeng Eternal Asia Supply Chain Management Ltd(002183) and whether the relevant goods are customized products. If so, in combination with the specific communication during product customization, explain the rationality of the termination of the contract, the cause and degree of loss of the goods, and the relationship between your company and your directors, supervisors and senior managers and Dongfeng Eternal Asia Supply Chain Management Ltd(002183) , Explain whether your company has the situation of transferring relevant interests; (3) Please comment on question (1) and explain the reason and rationality of the company’s provision for the loss of corresponding goods and the basis and rationality of corresponding accounting treatment in combination with the on-site inspection of the delivery site of the above goods;
(4) Please explain the specific situation of goods damage and loss caused by storage management in e-shang Hong Kong, including the time, place and mode of the loss, the proportion in all its inventory, and explain the reason and rationality of the above loss in combination with the content, nature and storage conditions of the corresponding goods, whether there is man-made damage, and in combination with the relevant systems of storage management in e-shang Hong Kong, Explain the specific accountability measures your company has taken for the damage of the above goods;
(5) Please explain the authenticity and accuracy of the provision for the damage loss of corresponding goods in the reporting period in combination with the inventory count of e-shang Hong Kong in the past years, and whether there is a lag in the provision in combination with the provision for the impairment of inventories in the past years;
(6) Please comment on (5) in combination with the communication with Dahua certified public accountants, the company’s accounting firm in 2020, and explain the authenticity and accuracy of the book balance of the opening inventory of Yishang Hong Kong.
3. Part (3) of the matters involved in the formation of your company’s audit report that cannot express opinions. It is difficult to implement satisfactory audit procedures for some sales and accounts receivable this year to obtain sufficient and appropriate audit evidence. In this regard:
(1) Please explain the specific situation of some sales behaviors and accounts receivable in this year that Asia Pacific Institute is difficult to implement satisfactory audit procedures, including the specific name of customers involved, whether there is any relationship with your company and your directors, supervisors and senior managers, the specific time, amount, content, pricing basis, transaction settlement method, delivery time of goods and revenue recognition time;
(2) Please analyze and explain the reasons and rationality of your company’s accounts receivable sales model with the above customers under the tight capital chain in combination with the main business and company scale of relevant customers in question (1), as well as your company’s sales policy and customer credit qualification selection criteria;
(3) Please explain whether there is insufficient provision for bad debt reserves in combination with the communication with relevant customers in question (1) and the collection so far. At the same time, further check whether there is any flow of relevant collection to related parties and whether it is occupied by non operating funds of major shareholders and their related parties, and ask independent directors to express their opinions;
(4) Please explain the specific inquiry on the accounts receivable customers in question (1) and the reply so far; In case of reply and dispute, specify the content of the dispute. In case of no reply, explain the reason and rationality of the non reply in combination with the current business situation of the customer and the specific communication with the customer. At the same time, check whether there is any situation in which the relevant payment flows to the related parties during the reporting period;
(5) Please explain the specific audit procedures adopted by APAC for the relevant sales behavior and accounts receivable in question (1), and explain whether there is untrue and inaccurate income and whether there is insufficient provision for bad debt reserves.
4. Part (4) of the matters involved in the formation of your company’s audit report that cannot express opinions. It is difficult to implement satisfactory audit procedures for some procurement activities and prepayments this year to obtain sufficient and appropriate audit evidence. In this regard:
(1) Please explain the details of some procurement activities and prepayments in this year that the accounting firm is difficult to implement satisfactory audit procedures, including the specific name of the supplier involved, whether there is any relationship with your company and your directors, supervisors and senior managers, the specific time, amount, content, pricing basis, transaction settlement method, delivery time of goods Whether the counterparty has the ability to perform the contract, and whether the prepayments over the years and during the reporting period should be converted into other receivables to withdraw bad debt reserves; (2) Please analyze and explain the reason and rationality of adopting the prepayment settlement mode with new suppliers under the tight capital chain of the company. At the same time, combined with the sales of purchased goods in the reporting period, explain the reason and rationality of the increase of the ending balance of the above prepayment compared with the opening balance when the operating income of your company decreases in the reporting period;
(3) Your company is requested to further check whether the relevant advance payment flows to related parties and is occupied by the non operating funds of major shareholders and their related parties. Independent directors are invited to express their opinions;
(4) Ask the Asia Pacific Affairs Office to explain the specific inquiry of the supplier in question (1) and the reply so far; For the reply and dispute, specify the content of the dispute. For the non reply, explain the reason and rationality of the non reply in combination with the current business situation of the supplier and the specific communication with the supplier;
(5) Please explain the specific audit procedures adopted by AsiaPacific for the relevant procurement activities and prepayments in question (1), and indicate whether the cost is untrue and inaccurate.
5. (5) the audit report of your company forms matters that cannot express opinions. The operating revenue of this period is 80366136414 yuan, the operating cost is 90780976930 yuan, and the comprehensive gross profit margin is – 12.96%, which is significantly lower than the comprehensive gross profit margin of the previous period of 31.32%. At the same time, your company’s display business achieved an operating income of 65191004799 yuan, a decrease of 13.86% over last year, and the operating cost of display business was 82570946383 yuan, an increase of 53.12% over last year; The gross profit margin of the exhibition business was – 26.66%, a decrease of 55.40% over the same period last year. In this regard:
(1) Please explain the specific reasons and rationality of the increase in operating costs in the case of a significant decrease in operating revenue this year in combination with the specific contents of the display business and the business development during the reporting period;
(2) Please analyze and explain the rationality of showing that the gross profit margin of the business is negative in combination with the business environment, business plan, gross profit margin level of the same industry, as well as the time point of revenue recognition, cost carry forward and the basis of corresponding accounting treatment of your company;
(3) Please show the business development of your company after the combination period, and explain whether there is a risk of continuous negative gross profit margin and whether it has a significant adverse impact on your company’s operation; (4) The Asia Pacific Institute is requested to verify and give special opinions.
6. In the sixth part of the audit report of your company, the company signed a contract with Shenzhen huaxinglong Electromechanical Equipment Co., Ltd. (hereinafter referred to as “huaxinglong electromechanical”) to purchase the equipment of the mounter production line due to the need of preparing to build the mounter production line. The contract price is 8805000000 yuan, and 6662756972 yuan has been paid in advance according to the contract in April 2021, Later, due to the adjustment of the company’s investment projects, the execution of the equipment procurement contract was suspended, and the relevant aftermath matters are still under discussion. In this regard:
(1) Please explain the specific circumstances of the contract with huaxinglong Electromechanical, including the specific time of contract signing, pricing basis, transaction settlement method and goods delivery arrangement, and explain the basis and rationality of your company’s accounting treatment for the above transaction with huaxinglong electromechanical;
(2) Please explain the specific reasons and time for the adjustment of the above investment project and the termination of the contract related to huaxinglong Electromechanical, and explain the reasons and rationality of your company’s prepayment of 6662756972 yuan to huaxinglong electromechanical in the absence of determining the implementation of relevant projects and the tight capital chain of your company, in combination with the decision-making procedures of relevant investment projects and the delivery of relevant goods, and whether your company has any breach of contract, Combined with the measures taken by your company, explain whether your board of directors can protect the interests of listed companies and minority shareholders;
(3) In combination with the relationship and personnel exchanges between your company, your directors, supervisors and senior managers and huaxinglong Electromechanical, further check whether the relevant advance payment flows to the related parties and is occupied by the non operating funds of the major shareholders and their related parties, and invite the independent directors to express their opinions;
(4) Please check and comment on question (1).
7. (7) the audit report of your company forms the matters that cannot express opinions. Due to the epidemic situation, it is impossible to conduct on-site audit on the subsidiaries of the company, such as Shanghai Yishang Exhibition Service Co., Ltd., Kunshan Yishang intercontinental Exhibition Co., Ltd. ( Shenzhen Esun Display Co.Ltd(002751) headquarters with book inventory of 876385157 yuan stored in the company), oaktam system technology (Suzhou) Co., Ltd. and so on. Only remote audit procedures can be implemented.
Please explain the audit procedures that have been adopted so far for Shanghai Yishang Exhibition Service Co., Ltd., Kunshan Yishang intercontinental Exhibition Co., Ltd. and oktam system technology (Suzhou) Co., Ltd., whether the corresponding financial data disclosed in the annual report are untrue and inaccurate, and whether the inventory (if any) of the listed company in the above subsidiaries has accrued but not accrued impairment reserves.
8. For (8) of the matters involved in the formation of your company’s audit report that cannot express opinions, the company’s net profit and net cash flow from operating activities in 2021 are negative, and there are litigation matters such as due but unpaid debts and debt default, resulting in significant uncertainty in the company’s ability to continue operating. Meanwhile, during the reporting period, your company achieved a net profit attributable to shareholders of listed companies of -49931023933 yuan, a decrease of 104027% over last year, and a net profit attributable to shareholders of listed companies after deducting non recurring profits and losses of -42414756619 yuan, a decrease of 190520% over last year. According to the quarterly financial data of your company, the loss mainly occurred in the fourth quarter. In this regard:
(1) Your company is requested to list the matured but unpaid debts and default of debts, including the time and reason of occurrence of relevant debts, specific use of financing funds, debt term, interest, overdue time, calculation method of overdue liquidated damages and relevant accounting treatment;
(2) Please explain whether the relevant breach of contract may lead to the enforcement of your company’s assets and whether it will have an impact on the company’s production and operation in combination with the guarantee of the above defaulted debts. If so, please fully reveal the relevant risks;
(3) Please specify the measures your company has taken and plans to take to solve the matured debts during and after the reporting period;
(4) Please explain the reasons for the negative net cash flow generated by your company’s operating activities during the reporting period in combination with the company’s business development, collection and payment policies, customer credit, etc., and whether there is a continuous negative risk in combination with the cash flow after the reporting period;
(5) Please analyze and explain the reasons and rationality of the large gap between the fluctuation of your company’s net profit and the fluctuation of operating income in each quarter, explain the reasons for your company’s large loss in the fourth quarter, and explain whether your company’s net profit has a continuous negative risk in combination with your company’s profit up to now in 2022;
(6) Please your father
