Editor's note: The CSRC's "Opinions on Accelerating the High-quality Development of the Public Fund Industry" pointed out that it is necessary to continue to strengthen compliance and risk control capabilities, urge fund managers to continue to strengthen the construction of internal control over investment research, standardize the management of securities in and out of the warehouse, and effectively play the role of supervision, checks and balances in research, trading, risk control, compliance, supervision and other links.
Recently, Century Huatong received the "Prior Notice of Administrative Punishment" by the China Securities Regulatory Commission. According to the announcement, there were false records in the goodwill of Century Huatong's 2018-2022 annual report, and the company's fictitious software copyright transfer business or early recognition of revenue led to false records in the 2020-2021 annual report and the interim report on the completion of performance commitments.
According to the data, a number of products under Bank of China Fund will hold shares in Century Huatong at the end of the fourth quarter of 2023, including funds such as Bank of China Theme Strategy and Bank of China Outstanding Growth. As of April 3, 2024, the net value of Bank of China Thematic Strategy A fund has fallen by 3.5% this year, underperforming the performance benchmark by more than 7 percentage points, ranking 2411/4180 in the same category.
Century Huatong: Suspected of false records in financial reports for many years
Recently, Century Huatong announced that the company received the "Advance Notice of Administrative Punishment" (Penalty Zi [2024] No. 48) from the China Securities Regulatory Commission.
Previously, in July 2023, the China Securities Regulatory Commission decided to file a case against Century Huatong in accordance with relevant laws and regulations due to suspected violations of information disclosure laws and regulations.
It was found that there were false records in the goodwill of Century Huatong's 2018-2022 annual report, and the company fabricated software copyright transfer business or recognized revenue in advance, resulting in false records in the 2020-2021 annual report and the interim report on the completion of performance commitments.
Specifically, Century Huatong failed to perform the goodwill impairment test in 2018, the original value of goodwill was disclosed incorrectly from 2019 to 2022, the segment disclosure of the annual report from 2019 to 2022 did not comply with the accounting standards, and the goodwill impairment test was not implemented in accordance with the requirements from 2020 to 2022.
According to the calculation of the China Securities Regulatory Commission, due to the failure to implement the goodwill impairment test in accordance with the regulations, Century Huatong understated the goodwill impairment provision of 7cool network by 62.363 million yuan and inflated profit by 62.363 million yuan in 2018, accounting for 5.94% of the total profit of the year, and understated the goodwill impairment provision of 762 million yuan and inflated profit of 762 million yuan in 2020, accounting for 22.24% of the total profit of the year. In 2022, the provision for goodwill impairment was overstated by 345 million yuan, and the inflated profit was 345 million yuan, accounting for 4.95% of the total profit of the year.
In addition, Century Huatong fictitiously increased the operating income and profit in 2020 by fictitious "Millennium 3" software copyright transfer transaction, confirmed the income from the "Rainbow Lianmeng" software copyright transfer transaction in advance, inflated the operating income and profit in 2020 and reduced the operating income and profit in 2021, and there were false records in the "Statement of Zhejiang Century Huatong Group Co., Ltd. on the Completion of the 2020 Annual Performance Commitment of Shanghai Shengqu (Group) Co., Ltd."
The SFC intends to decide to issue a warning and impose a fine on the company and the relevant responsible persons.
Century Huatong: A large amount of goodwill impairment has been provided
Century Huatong was listed on the Shenzhen Stock Exchange in July 2011, and its main business is Internet games and auto parts, and its industries include Tianyou, Qiku, Diandian Interactive, Shanda Games, Century Huatong Automobile Industry, etc.
According to the 2022 annual report, Century Huatong suffered a loss of more than 7 billion yuan. Among them, the company made a goodwill impairment provision of 5.428 billion yuan for the game business asset group excluding ActozSoft.
In May 2023, the Shenzhen Stock Exchange issued an inquiry letter to the company for its annual report, requiring the company to explain whether it has taken advantage of the current market environment to make large impairment provisions for performance "big bath".
Previously, Century Huatong has repeatedly attracted the attention of regulatory authorities.
In February 2023, Century Huatong received a regulatory letter from the Shenzhen Stock Exchange for the repurchase, and in July 2023, the company was investigated by the China Securities Regulatory Commission.
Bank of China Fund: 4 of its products hold positions in Century Huatong
Bread Finance combed through public information and found that according to the 2023 annual report, a number of products under Bank of China Fund hold shares in Century Huatong, including Bank of China Theme Strategy, Bank of China Outstanding Growth and other funds.
Among them, Bank of China Theme Strategy holds a large number of shares, holding more than 4 million shares of Century Huatong.
As of April 3, 2024, the net value of Bank of China Thematic Strategy A fund has fallen by 3.5% this year, underperforming the performance benchmark by more than 7 percentage points, ranking 2411/4180 in the same category.
According to publicly disclosed information, Bank of China Fund Management Co., Ltd., formerly known as Bank of China International Fund Management Co., Ltd., officially opened on July 29, 2004, and was a joint venture between Bank of China International and Merrill Lynch Investment Management (Merrill Lynch Investment Management Co., Ltd. merged with BlackRock Investment Management Co., Ltd. on September 29, 2006, and the new company name after the merger was "BlackRock Investment Management Co., Ltd."). The chairman of the company is Zhang Yan, and the chief inspector is Ouyang Xiangjun.
Should the chairman, general manager and chief inspector of the company be given more attention to the company with false financial records of heavy holdings and the company being placed under investigation?
(Article Serial Number: 1776850083162230784)
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