Securities code: 601727 securities abbreviation: Shanghai Electric Group Company Limited(601727) No.: pro 2022-006 Shanghai Electric Group Company Limited(601727)
Announcement on withdrawing large amount impairment reserves of joint stock enterprises
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 content tips:
1. Chongqing Shenhua film Cecep Solar Energy Co.Ltd(000591) Technology Co., Ltd. (hereinafter referred to as “Chongqing Shenhua” or “target company”), a joint-stock enterprise with 20% equity held by Shanghai Electric Group Company Limited(601727) (hereinafter referred to as “the company”), held the 7th Meeting of the second board of directors on January 21, 2022, deliberated and adopted the proposal on the provision for asset impairment. Chongqing Shenhua has made provision for asset impairment of RMB 1418.1804 million. After the provision for impairment, Chongqing Shenhua’s shareholders’ equity is RMB -264.9382 million. The final amount of impairment is subject to the audit report issued by the accounting firm.
2. As of September 30, 2021, the company’s long-term equity investment in Chongqing Shenhua was RMB 232 million. According to the calculation of the company’s financial department, since Chongqing Shenhua will be insolvent after the provision for asset impairment, the company is expected to recognize the investment loss of RMB 232 million for the long-term equity investment of Chongqing Shenhua, which is expected to reduce the company’s net profit attributable to the parent company by RMB 232 million in 2021. 3. As of the date of this announcement, the company has provided Chongqing Shenhua with a maximum principal amount of no more than RMB 300 million within the same proportion of 20% of its shareholding in Chongqing Shenhua
Guarantee amount. As of the date of this announcement, the guarantee balance provided by the company for commercial bank loans of Chongqing Shenhua was about RMB 179 million. If Chongqing Shenhua fails to repay relevant debts on time, the company shall bear joint and several guarantee liabilities, and the corresponding maximum risk exposure shall not exceed RMB 300 million principal (excluding interest, liquidated damages, compensation, etc.).
On January 21, 2022, the company received the notification letter on the provision for asset impairment of Chongqing Shenhua film Cecep Solar Energy Co.Ltd(000591) Technology Co., Ltd. issued by Chongqing Shenhua, a joint-stock enterprise holding 20% equity, which was resolved at the 7th Meeting of the second board of directors of Chongqing Shenhua, According to the appraisal value in the appraisal and consultation report issued by Yinxin Assets Appraisal Co., Ltd., Chongqing Shenhua has accrued an asset impairment provision of RMB 1418.1804 million. The relevant information about the provision for asset impairment of Chongqing Shenhua is hereby announced as follows:
1、 Basic information of the target company
After deliberation at the 39th meeting of the 4th board of directors of the company, in January 2017, the company invested RMB 250 million to cooperate with China energy conservation and emission reduction Co., Ltd., Shenzhen Laibao High-Tech Co.Ltd(002106) , Beijing Institute of low carbon and clean energy Chongqing Shenhua was jointly established by Chongqing Liangjiang New Area strategic emerging industry equity investment fund (partnership). The business scope of Chongqing Shenhua is the R & D, production, sales, installation of Cecep Solar Energy Co.Ltd(000591) batteries and components and the sales of Cecep Solar Energy Co.Ltd(000591) application products; Engage in construction related business (practice only after obtaining relevant qualification). [for projects subject to approval according to law, business activities can be carried out only after approval by relevant departments]
As of the date of this announcement, the registered capital of Chongqing Shenhua is RMB 1.25 billion, and the equity structure is shown in the table below:
No. shareholder’s contribution and shareholding
(RMB 100 million) proportion
1 China energy conservation and emission reduction Co., Ltd. 6.75 54%
2 Shanghai Electric Group Company Limited(601727) 2.5 20%
3 Shenzhen Laibao High-Tech Co.Ltd(002106) 1.25 10%
4 Beijing Institute of low carbon and clean energy 1.25 10%
5 Chongqing Liangjiang New Area strategic emerging industry equity investment base 0.75 6%
Gold (partnership)
Among them, China energy conservation and emission reduction Co., Ltd. and Beijing low carbon clean energy research institute are subordinate enterprises of National Energy Investment Group Co., Ltd., Shenzhen Laibao High-Tech Co.Ltd(002106) which is 20.84% owned by China energy conservation and emission reduction Co., Ltd.
Chongqing Shenhua was established based on the industrialization project of copper indium gallium selenium Cecep Solar Energy Co.Ltd(000591) battery module. Later, due to changes in photovoltaic industry and other factors, the competitiveness of products using copper indium gallium selenium technology decreased. Therefore, Chongqing Shenhua decided to postpone the construction of the project and has not been put into operation so far.
2、 Provision for asset impairment of the target company this time
Chongqing Shenhua held the 7th Meeting of the second board of directors on January 21, 2022, deliberated and adopted the proposal on withdrawing provision for asset impairment. The main information is as follows:
At present, the PV module market is dominated by crystalline silicon products. After nearly 20 years of industrial development, crystalline silicon PV modules have achieved mature industrial chain and rapid cost reduction through efficiency improvement, technological innovation and market scale development. However, copper indium gallium selenium thin film PV products have weak R & D strength, slow improvement of product conversion efficiency and immature industrial chain, If the project is put into operation, Chongqing Shenhua will have upside down revenue and cost, resulting in large losses. At the same time, the advantages of copper indium gallium selenium battery are safety and beauty. Its products have unique advantages in the application of building curtain wall. However, this market segment is subject to the complexity of the construction industry and the constraints of current specifications, and it is impossible to have large-scale explosive growth in the short term.
Based on the above situation, according to the resolution of the shareholders’ meeting of Chongqing Shenhua, Chongqing Shenhua will not continue to build the industrialization project of copper indium gallium selenium Cecep Solar Energy Co.Ltd(000591) battery module. According to the relevant provisions of the accounting standards for business enterprises, in order to truly and accurately reflect the asset status, financial status and operation of Chongqing Shenhua as of December 31, 2021, Chongqing Shenhua has analyzed, tested and evaluated the industrialization project of copper indium gallium selenium Cecep Solar Energy Co.Ltd(000591) battery module, and made provision for impairment of assets that may have asset impairment losses.
According to the appraisal and consultation report issued by Yinxin Assets Appraisal Co., Ltd. on the base date of September 30, 2021, Chongqing Shenhua expects to withdraw various asset impairment reserves of RMB 1418.1804 million at the end of 2021, and the assets with asset impairment reserves are 306mw copper indium gallium selenium Cecep Solar Energy Co.Ltd(000591) battery module industrialization project, For the current assets and non current assets of Chongqing Shenhua (including prepayments, other receivables, fixed assets, projects under construction, engineering materials, etc. related to the industrialization project of copper indium gallium selenium Cecep Solar Energy Co.Ltd(000591) battery modules), the shareholders’ equity of Chongqing Shenhua will be RMB -264938200 after impairment, The final impairment amount shall be subject to the audit report issued by the accounting firm.
Summary of assets appraisal and consultation results of Chongqing Shenhua
Base date: September 30, 2021 unit: RMB 100 million
Increase / decrease rate of the book value of the project and the appraisal value (%)
Current assets 31684.44 24866.27 -6818.17 -21.52
Non current assets 191177.93 56178.06 -134999.87 -70.61
Including: net fixed assets 955.58 715.24 -240.34 -25.15
Net amount of construction in progress 187120.81 53050.41 -134070.40 -71.65
Net amount of engineering materials 1163.33 363.41 -799.92 -68.76
Net intangible assets 1938.21 2049.00 110.79 5.72
Total assets 222862.37 81044.33 -141818.04 -63.63
Current liabilities 7790.09 7790.90 0.81 0.01
Non current liabilities 98848.24 89740.44 -9107.80 -9.21
Total liabilities 106638.33 97531.34 -9106.99 -8.54
Owner’s equity 116224.03 -16487.00 -132711.03 -114.19 (or shareholder’s equity)
3、 Impact on the company’s financial position and risk tips
1. As of September 30, 2021, the company’s long-term equity investment in Chongqing Shenhua was RMB 232 million. According to the calculation of the company’s financial department, since Chongqing Shenhua will be insolvent after the provision for asset impairment, the company expects to recognize the investment loss of RMB 232 million for Chongqing Shenhua’s long-term equity investment, which is expected to reduce the company’s net profit attributable to the parent company by RMB 232 million in 2021. The above estimated data are only the preliminary accounting of the company’s financial department and have not been audited by an accounting firm. The relevant data shall be subject to the disclosure of the company’s 2021 annual report. 2. After deliberation at the 72nd meeting of the fourth session of the board of directors of the company, the company provides Chongqing Shenhua with a maximum principal guarantee amount of no more than RMB 300 million within the same proportion of 20% of its shareholding in Chongqing Shenhua, and the guarantee is valid from August 30, 2018 to August 8, 2027. As of the date of this announcement, the guarantee balance provided by the company for the commercial bank loan of Chongqing Shenhua is about 179 million yuan. If Chongqing Shenhua fails to repay relevant debts on time, the company needs to bear joint and several guarantee liabilities, and the corresponding maximum risk exposure is not more than RMB 300 million principal (excluding interest, liquidated damages, compensation, etc.).
The company will timely perform the obligation of information disclosure according to the progress of relevant matters. Please pay attention to the investment risks.
It is hereby announced.
Shanghai Electric Group Company Limited(601727) board of directors January 21, 2002
