On the evening of November 17, Xinjiang Sailim Modern Agriculture Co., Ltd. (600540.SH) issued an announcement that the Xinjiang Supervision Bureau decided to take measures to issue a warning letter to the 2020 annual report due to problems such as improper revenue recognition, inaccurate disclosure of operating costs, and untimely consolidation of projects under construction.
The Xinjiang Supervision Bureau believes that there are four violations in the information disclosure of the "2020 Annual Report" of Xinsai Shares.
Where some of the revenue recognition is inappropriate. In fiscal 2020, Xinsai Worsted Spinning, a subsidiary of Xinsai Co., Ltd., recognized all related sales revenue as the company's revenue by using the total amount method in the processing of lint cotton, cottonseed and infertility seeds with relevant parties. In fact, it only obtained a fixed processing fee income in this business, and did not bear the risk reward arising from the fluctuation of the price of the product sold, so it should recognize the income according to the amount of the processing fee. In 2020, the above-mentioned entrusted processing business of Xinsai Worsted textiles recognized revenue of 67.49 million yuan in accordance with the total amount method, and the above-mentioned business collected processing fees of 4.62 million yuan, and over-recognized revenue of 62.87 million yuan, accounting for 5.62% of the revenue in 2020.
In the case of inaccurate disclosure of operating costs. In 2020, Xinsai Co., Ltd. pulled the lint to the supervision warehouse and incurred transportation costs of 6.6793 million yuan, and the transportation costs incurred in the actual sales process were 7.1536 million yuan, and the company fully included the sales expenses in accordance with the previous practice, and did not record the transportation expenses incurred in the actual sales process of performance in the actual sales process as the contract performance costs in the operating costs in accordance with the previous practice.
In terms of the untimely transformation of the construction project. By the end of 2020, the balance of the construction project of Xinsai worsted affordable housing construction project was 11.86 million yuan. The construction in progress was completed in December 2015 and is in pre-existing condition. As of the date of inspection, the above-mentioned projects under construction have not been transferred to fixed asset accounting.
Other issues in financial accounting and disclosure. First, the relevant basis for the company's review and confirmation of the deferred tax assets of the relevant subsidiaries at the end of 2020 was insufficient; second, the investment income generated by holding trading financial assets disclosed in the 2020 annual report was less than 1.7998 million yuan; third, there was inaccuracy in the production, sale and inventory data of lint cotton and cotton yarn disclosed in the company's 2020 annual report. The difference between lint cotton was 865.43 tons and the difference between cotton yarn and 1228.22 tons; fourth, other receivables in the company's 2020 annual report were disclosed by 6.3024 million yuan less than the fifth division finance bureau project; fifth, the 2019 annual report did not reclassify "non-current liabilities due within one year" as required.
The Xinjiang Regulatory Bureau believes that the above-mentioned acts of Xinsai Shares violate Article 2 of the Administrative Measures for Information Disclosure of Listed Companies (Order No. 40 of the CSRC). In accordance with Article 59 of the Measures for the Administration of Information Disclosure of Listed Companies, the Xinjiang Regulatory Bureau decided to take administrative supervision measures of issuing a warning letter to Xinsai Shares, which was recorded in the integrity file of the securities and futures market.
According to the data, the main business of Xinsai Co., Ltd. is the production, processing, sales and research and development of agricultural high-tech products; the sales of cottonseed, sunflower seeds, rapeseed and other oil crops deep processing and refining vegetable oil; 100,000 tons of general yarn, fine yarn cotton spinning processing; 500T/D energy-saving coated glass production and processing; 200,000 tons of quartz sand deep processing.
(Editor-in-charge: Zhao Rong)