Securities abbreviation: Zjbc Information Technology Co.Ltd(000889) securities code: 000889 Announcement No.: 2022-03
Zjbc Information Technology Co.Ltd(000889)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Zjbc Information Technology Co.Ltd(000889) (hereinafter referred to as “the company”, “the company” or ” Zjbc Information Technology Co.Ltd(000889) “) received the attention letter on Zjbc Information Technology Co.Ltd(000889) issued by the company management department of Shenzhen Stock Exchange (company Department attention letter [2021] No. 465) on December 21, 2021. The board of directors of the company attached great importance to it and carefully checked and replied to the questions raised in the attention letter, The reply is hereby announced as follows:
On the evening of December 20, 2021, your company disclosed the announcement on the loss of control of a wholly-owned subsidiary. Up to now, your company has been unable to obtain the complete financial information of the wholly-owned subsidiary Beijing Zhongtian Jiahua Information Technology Co., Ltd. (hereinafter referred to as “Jiahua information”) and cannot conduct on-site audit, At the same time, your company is unable to grasp the actual operation, asset status and potential risks of Jiahua information, so that your company cannot control the major business decisions, personnel and assets of Jiahua information. In fact, your company loses control of Jiahua information. Your company decides not to include Jiahua information into the consolidation scope of the company’s consolidated financial statements as of October 1, 2021, and plans to withdraw an asset impairment provision of RMB 1.480 billion for the balance of long-term equity investment of Jiahua information, and recognize an investment loss of RMB 287 million.
Your company also disclosed the asset impairment test report on the performance commitment expiration of the underlying assets of major asset restructuring. According to the asset evaluation report, as of October 31, 2021, the recoverable amount of all shareholders’ equity of Jiahua information was RMB 593014600, which was lower than the transaction consideration for purchasing assets by RMB 1480 million, and the evaluated impairment was RMB 886985400. According to the performance compensation agreement signed between your company and the counterparty Liu Yingkui, the number of shares that the counterparty needs to compensate the company for asset impairment due to the expiration of performance commitment is 56430957, and the corresponding cash compensation amount is 618 million yuan. The arbitration dispute between your company and the counterparty is still in legal proceedings, and there are certain uncertainties in the amount of compensation and recovery under the asset impairment compensation scheme.
Our department is highly concerned about this. Please carefully check the following items and explain them:
Question 1: please explain your company’s management mode and actual management effect on its business, finance, personnel and major matters since the acquisition of Jiahua information. Your company is requested to supplement whether various situations described in the announcement on loss of control of wholly owned subsidiaries have occurred for the first time since your company acquired Jiahua information, and if so, explain the specific matters leading to such situations; If not, explain the historical situation of relevant situations, whether your company has determined that Jiahua information is out of control in a timely and reasonable manner, and provide sufficient and objective basis, and whether it is appropriate and sufficient for your company to include it in the consolidated financial statements in the early stage. The accountants and independent directors of your company are requested to check and express clear opinions.
Company reply:
1. Since the acquisition of Jiahua information, the management mode of its business, finance, personnel and major events has achieved actual management results
In 2018, the company purchased 100% equity of Jiahua information from Liu Yingkui, the original shareholder of Jiahua information, Jiayu Chunhua venture capital partnership (limited partnership) in Ningbo Free Trade Zone and Jiahui Qiushi venture capital partnership (limited partnership) in Ningbo Free Trade Zone (hereinafter collectively referred to as the “restructuring counterparty”), The transaction consideration was RMB 1480 million and signed restructuring related agreements with it. According to the agreement on issuing shares and paying cash to purchase assets and the performance compensation agreement, in order to maximize the stability and business strategy sustainability of the original management team of Jiahua information, the daily operation and management activities of Jiahua information are still the responsibility of the original team members. After the first delivery date, the organizational structure and personnel of Jiahua information will not be significantly adjusted. The senior management personnel of Jiahua information will be determined through consultation by all parties. In principle, the existing operation and management team of Jiahua information will continue to operate independently.
After completing the acquisition of Jiahua information, the company amended the articles of association of Jiahua information in accordance with relevant restructuring agreements. As the controlling shareholder of Jiahua information, the company exercised shareholder rights in accordance with the company law and the articles of association of Jiahua information, appointed directors to Jiahua information and maintained majority control over the board of directors of Jiahua information.
The company has formulated a series of detailed management systems and notification documents covering operation, personnel, finance, major events and other major issues for its subsidiaries, and issued information to Jiahua, which is required to be strictly followed, including monthly and quarterly business analysis meeting system, subsidiary personnel management system, fund management system, expense management system Approval and disclosure system of major events and official seal management system.
In March 2021, the company took the official seal, contract seal and business license of Jiahua information headquarters under the unified management of the company. On May 31, 2021, the company changed the legal representative and members of the board of directors of Jiahua information, and the president of the company concurrently served as the chairman of Jiahua information. In June 2021, the company uniformly changed the bank account, bank U shield and financial seal of Jiahua information headquarters and put them under the management of the company. On July 1, 2021, the company no longer set up the board of directors of Jiahua information, but changed to an executive director, who is concurrently held by the president of the company.
From the completion of the acquisition to before getting out of control, Jiahua information management and key core personnel can basically abide by the relevant management regulations issued by the company, complete various works according to the company’s requirements and cooperate with the annual audit.
2. The specific basis, timeliness and rationality of the company’s determination that Jiahua information is out of control
The company holds 100% equity of Jiahua information and is the controlling shareholder of Jiahua information. It controls Jiahua information according to the articles of association and decisions of the board of directors of Jiahua information. With the signs of loss of control and the gradual intensification of risks, the company is unable to claim its rights in accordance with the company law and the articles of association of Jiahua information company, which does not meet the requirements of accounting standards for Business Enterprises No. 33 – consolidated financial statements for preparation based on control. The details of gradually losing control are as follows:
(1) The restructuring counterparty initiated an arbitration application to the Beijing Arbitration Commission in June 2021, requiring the company to pay the remaining equity acquisition consideration, interest, etc. In August 2021, the restructuring counterparty resisted the company’s internal audit requirements by a lawyer’s letter on the grounds that the arbitration matter was still in progress. Prior to this, the Audit Department of the company issued an annual audit plan and required to carry out internal audit and special audit of Jiahua information, but the personnel of Jiahua information management team and finance department did not cooperate.
(2) On October 25, 2021, the opposite party of the restructuring transaction issued a statement to all employees of Jiahua information, claiming that the company is no longer the actual shareholder of Jiahua information and has no right to interfere in the internal management of Jiahua information, resulting in the resistance of Jiahua information management team and employees to the company’s operation management and financial management of Jiahua information.
(3) In November 2021, the opposite party of the restructuring transaction submitted the application for change of arbitration request to the Beijing Arbitration Commission, requiring the award to confirm that the agreements related to major asset restructuring have been terminated, and requiring the company to return 100% equity of Jiahua information to it and pay relevant funds. In view of the change arbitration request of the restructuring counterparty to confirm that the restructuring related agreement has been terminated, and the interference of the restructuring counterparty to the operation and management of Jiahua information, in order to more carefully evaluate the company’s control over Jiahua information:
① On November 15, 2021, the company issued the confirmation of employee performance due diligence to five senior executives of Jiahua information, all of whom refused to sign and provide the relevant materials required by the company list.
② On November 23, 2021, the company requested the general manager and chief financial officer of Jiahua information to provide Jiahua information and detailed financial information of each company within the consolidation scope, but there was no response.
(4) On December 1, 2021, according to the audit plan of the annual audit accountant, the company issued the annual audit work arrangement to the Jiahua information management team, requiring the general manager and chief financial officer of Jiahua information to cooperate with the entry pre-trial work of the annual audit accountant on December 8. The company and the annual audit accountant failed to communicate with them for many times and were unable to enter the site for audit.
So far, the company cannot obtain the complete financial data of Jiahua information and perform internal and external audit on it. At the same time, the company is unable to grasp the actual operation, asset status and potential risks of Jiahua information, so that the company cannot control the major business decisions, personnel and assets of Jiahua information, and the company loses control of Jiahua information in fact.
3. It is reasonable for the company to include Jiahua information in the consolidated financial statements in the early stage
After completing the acquisition of Jiahua information, the company holds 100% equity and 100% voting rights of Jiahua information. At the same time, the company appointed directors to Jiahua information and always maintained majority control over the board of directors of Jiahua information. Jiahua information can operate normally in accordance with the company’s management regulations. It is appropriate for the company to include Jiahua information into the scope of consolidated statements.
In 2021, the company uniformly changed the official seal, contract seal, business license, bank account, bank U shield and financial seal of Jiahua information headquarters and put them under the management of the company, and maintained continuous management. However, due to the arbitration initiated by the restructuring counterparty, the operation and management of Jiahua information has been disturbed to a certain extent, and the operation and management team has individual repeated and wavering or even conflict and resistance to cooperate with the implementation of the company’s management requirements. In order to prevent Jiahua information management team from not cooperating with the company’s internal control management requirements due to arbitration disputes, the company has repeatedly communicated with Jiahua information management team and all employees orally and in writing to explain the shareholder relationship, rights and obligations between relevant legal subjects. The company will promote the proper handling of relevant matters and protect the legitimate rights and interests of the company and all employees. The company explicitly requires the general manager and chief financial officer of Jiahua information to confirm that the data in the financial statements of Jiahua information from January to September 2021 provided by Jiahua information finance department is true, accurate and complete, and specially reminds that if there are any false records, misleading statements or major omissions in the financial data information provided, they may be investigated for relevant legal responsibilities. As of October 30, 2021, the company has released the third quarterly report, and Jiahua information has provided the statements in accordance with the requirements of the company for preparing consolidated statements. In conclusion, it is appropriate for the company to include Jiahua information in the consolidated financial statements from the beginning of 2021 to the end of control.
Accountant’s opinion:
1. Specific basis and rationality of Jiahua information out of control
According to articles 6 and 7 of accounting standards for Business Enterprises No. 33 – consolidated financial statements, the consolidation scope of consolidated financial statements shall be determined on the basis of control. Control means that the investor has the power over the investee, enjoys variable returns by participating in relevant activities of the investee, and is able to use the power over the investee to affect its return amount.
The information we have collected so far shows that:
The restructuring counterparty initiated an arbitration application to the Beijing Arbitration Commission in June 2021, requiring Zjbc Information Technology Co.Ltd(000889) to perform the acquisition agreement and pay the remaining equity acquisition consideration and interest. During the period, the restructuring counterparty continued to negotiate a settlement plan with Zjbc Information Technology Co.Ltd(000889) . In August 2021, the restructuring counterparty resisted the company’s internal audit requirements by a lawyer’s letter on the grounds that the arbitration matter was still in progress. On October 25, 2021, the opposite party of the restructuring transaction issued a statement to all employees of Jiahua information, claiming that Zjbc Information Technology Co.Ltd(000889) is no longer the actual shareholder of Jiahua information and has no right to interfere in the internal management of Jiahua information, and called on Jiahua management team and employees not to accept the management of Zjbc Information Technology Co.Ltd(000889) ; In November 2021, the opposite party of the restructuring transaction submitted the application for change of arbitration request to the Beijing Arbitration Commission, requiring the award to confirm that the agreement related to major asset restructuring has been terminated, and requiring the company to return 100% equity of Jiahua information to it.
In view of the above events, Zjbc Information Technology Co.Ltd(000889) reassessed its control over Jiahua information: (1) 2021
On November 15, five core management team members of Jiahua information were issued with the confirmation of employees’ due diligence, and all of them refused to sign and provide relevant materials required by the company’s list; (2) On November 23, 2021, the company requested the general manager and chief financial officer of Jiahua information to provide Jiahua information and detailed financial information of each company within the consolidation scope, but there was no response; (3) On December 1, 2021, according to the audit plan of the annual audit accountant, the company issued the annual audit work arrangement to the Jiahua information management team, requiring the general manager and chief financial officer of Jiahua information to cooperate with the mobilization pre-trial work of the annual audit accountant on December 8. The company and the annual audit accountant have failed to communicate with them for many times, so far they have been unable to enter the site for audit. In order to further carefully evaluate whether the core management team of Jiahua information can cooperate with the annual audit, on the morning of January 10, 2022, Zjbc Information Technology Co.Ltd(000889) asked the head of Jiahua information finance department to provide necessary audit materials to the annual audit accountant at the specified time, but the other party did not cooperate.
To sum up, the company has a number of matters affecting its daily management. It is necessary to judge whether the decision-making power over relevant activities can be exercised. The accountant needs to make a judgment according to the investigation after further investigation in the later audit.
2. Is it reasonable for the company to include Jiahua information in the consolidated financial statements in the early stage
In 2018, Zjbc Information Technology Co.Ltd(000889) purchased 100% equity of Jiahua information from the original shareholders of Jiahua information by issuing shares and paying cash. After completing the acquisition of Jiahua information, the company amended the articles of association of Jiahua information in accordance with the acquisition agreement. As the controlling shareholder of Jiahua information, he exercised shareholder rights in accordance with the company law and the articles of association of Jiahua information, appointed directors to Jiahua information and maintained majority control over the board of directors of Jiahua information. The core management team of Jiahua information accepted the business and financial management of Zjbc Information Technology Co.Ltd(000889) . During the audit of annual reports from 2018 to 2020, The core management team of Jiahua information can also cooperate with the audit work of the firm. During the annual audit, we found no sign of losing control.
In conclusion, we believe that Zjbc Information Technology Co.Ltd(000889) company can actually control Jiahua information before 2020, and it is reasonable to include Jiahua information in the scope of consolidated financial statements.
Opinions of independent directors:
In view of the above problems, we consulted the company
