On the evening of April 18, the Shenzhen Stock Exchange issued an inquiry letter on the annual report of Xinjin Power Group Co., Ltd. (hereinafter referred to as "Xinjin Power" or "the Company"). The letter of inquiry requires Xinjin Power to explain the reasons why the company's net profit after deducting non-profits has been negative for five consecutive years, whether there is any material uncertainty in the ability to continue operations, and the basis and reasonableness of the company's preparation of the annual report based on the assumption of going concern.
Screenshot of the inquiry letter of the annual report of the Shenzhen Stock Exchange
According to the inquiry letter, in the process of post-mortem review of Xinjin Power's 2023 annual report (hereinafter referred to as the annual report), the Shenzhen Stock Exchange paid attention to the following situations:
1. The annual report shows that the company's operating income in the reporting period was 656.5801 million yuan, an increase of 41.56% year-on-year, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses (hereinafter referred to as the net profit after deducting non-recurring profits) was -167.2815 million yuan, a year-on-year decrease of 22.71%, and was negative for five consecutive years. Please Xinjin Power:
(1) Combined with factors such as the industry environment, the company's competitiveness, and the operating conditions of comparable companies in the same industry, explain the reasons why the company's net profit after deducting non-profits has been negative for five consecutive years, whether there is significant uncertainty in the ability to continue operations, and the basis and reasonableness of the company's preparation of the annual report based on the continuing operation assumption;
(2) Explain whether there is a significant impairment risk of fixed assets, projects under construction and intangible assets related to various products in the case of continuous losses in the company's main business, and the reasonableness and adequacy of the provision for impairment of relevant assets.
2. According to the annual report, the net assets attributable to shareholders of listed companies at the end of the reporting period were 146.36 million yuan, of which the balance formed by the investment of perpetual bonds by the controlling shareholder Beijing Shuosheng Technology Information Consulting Co., Ltd. (hereinafter referred to as Shuosheng Technology) in the company was 273 million yuan. The annual report also shows that in November 2023, Shuosheng Technology signed the "Perpetual Bond Investment Confirmation Letter", converting 90 million yuan of Shuosheng Technology's claims to the company into perpetual bond investment, which belongs to the second phase of the perpetual debt investment agreement signed in 2022, and the company did not disclose the aforementioned confirmation letter temporarily. Please Xinjin Power:
(1) Combined with the relevant provisions of the "Perpetual Debt Investment Agreement" signed by the company and Shuosheng Technology and its supplementary agreement, explain the conditions and purposes for Shuosheng Technology to convert the company's claims into perpetual bond investment, whether the new perpetual bond investment during the reporting period is in line with the previous agreement arrangement, whether there is a relevant plan for the subsequent new perpetual bond investment, and if so, explain the details;
(2) Explain the review procedures for the company to accept the performance of the second phase of the perpetual bond investment of Shuosheng Technology, whether the relevant review procedures and information disclosure are compliant, and whether there is a situation where the interim report is replaced by a regular report;
(3) Combined with the reply to questions (1) and (2) above, explain whether the accounting treatment of the company's inclusion of the new perpetual bond investment as an equity instrument in the owner's equity is in accordance with the relevant provisions of the Accounting Standards for Business Enterprises.
3. The annual report shows that there are a number of major litigation cases in the company's history, with a cumulative amount of more than 1.1 billion yuan, of which the cumulative amount of "other lawsuits" exceeds 100 million yuan. At the end of the reporting period, the company expects the balance of liabilities to be 20.2792 million yuan. According to public information, the company and a number of wholly-owned subsidiaries were enforced by the court, the company was restricted from high consumption, and Chengdu Xiyou United Petroleum Engineering Technology Co., Ltd., a wholly-owned subsidiary of the company, was listed as a dishonest company by the court; Hebei Jubang Real Estate Development Co., Ltd. (hereinafter referred to as Hebei Jubang), which is actually controlled by Zhang Qinghua, the spouse of Li Liping, the actual controller of the company, was listed as a dishonest company by the court and restricted from high consumption; 6,788,800 shares of the company were frozen, accounting for 54.33% of all the company's shares held by him. Please Xinjin Power:
(1) Self-examination and item-by-item explanation of the specific cases involved in the company's and its subsidiaries being compelled by the court, listed as untrustworthy entities, and restricting high consumption, the subject matter and amount involved, the basic information of the parties to the case, the judgment results, the reasons for the aforementioned entities not performing their obligations in accordance with the enforcement notice, and the specific impact on the company's production and operation, and fully alerting the relevant risks;
(2) Explain the specific case situation involved in the "other litigation", the subject matter and amount involved, the basic information of the case and the parties, the judgment result, and the specific impact on the company's production and operation;
(3) Explain item by item whether the accounting treatment and calculation process of the company for litigation cases comply with the relevant provisions of the Accounting Standards for Business Enterprises, and whether the provision of estimated liabilities is reasonable and sufficient;
(4) Explain the specific circumstances of the case involving Hebei Jubang controlled by Zhang Qinghua being listed by the court as a dishonest company and restricting high consumption, the subject matter and amount involved, the basic information of the parties to the case, the judgment result, the reasons why Hebei Jubang failed to perform its obligations in accordance with the enforcement notice, whether it has an adverse impact on the company, and fully warn of the relevant risks;
(5) Explain whether the freezing of Li Liping's shares is related to the dispute involving the enterprise controlled by Zhang Qinghua, the current financial status of Li Liping and Zhang Qinghua, whether there is a risk of enforcement of the company's shares held by Li Liping, and whether it may have an adverse impact on the company's control.
4. The annual report shows that the company's net profit after deducting non-profits from the first to the fourth quarter of the reporting period was -29.0534 million yuan, -32.1964 million yuan, -16.6354 million yuan and -89.3963 million yuan respectively, and the net profit margin after deducting non-profits in each quarter was -14.18%, -17.53%, -10.94% and -77.17% respectively, which was quite different from the net profit margin after deducting non-profits in each quarter of the previous year. Please Xinjin Power:
(1) According to the business category, combined with the business development, production and sales level, revenue recognition and cost and expense collection process of each quarter, explain the reasons and reasonableness of the large fluctuation of net profit after deducting non-profits in each quarter of the reporting period, whether there is cross-period recognition of revenue and carry-over of costs and expenses, and whether the relevant accounting treatment complies with the relevant provisions of the Accounting Standards for Business Enterprises;
(2) Combined with the industry environment, policy changes, business development mode, supply and demand relationship of the company's various businesses in the past three years, explain the reasons and reasonableness of the large difference between the company's net profit margin after deducting non-profits in each quarter of the reporting period and previous years.
5. The company's "high-end equipment manufacturing" business is mainly operated by Jinzhou Xinjinhua Machinery Manufacturing Co., Ltd. (hereinafter referred to as Xinjinhua), a holding subsidiary, and Langfang Xinsaipu Special Equipment Co., Ltd. (hereinafter referred to as Xinsaipu), a wholly-owned subsidiary. According to the annual report, Xinjinhua achieved operating income of 508.4481 million yuan and net profit of 21.8313 million yuan in the reporting period, a year-on-year increase of 64.57% and a decrease of 33.45% respectively, while Xinsaipu achieved an operating income of 28.2078 million yuan and a net profit of -57.14 million yuan, a year-on-year increase of 93.30% and a decrease of 321.04% respectively. Please Xinjin Power:
(1) Combined with the competitive landscape, profitability and core advantages, bargaining power, product price changes, raw material price changes, gross profit margin level changes, orders in hand and other factors of Xinjinhua and Xinsaipu, analyze and explain the reasons and reasonableness of the significant deviation in the direction and degree of changes in operating income and net profit of Xinjinhua and Xinsaipu in the reporting period;
(2) List the specific situation of the top 10 customers of Xinjinhua and Xinsaipu in the past two years, including the name of the customer, the time of signing the contract, the sales content, the delivery time, the amount of revenue recognition, the time and basis for the recovery of the payment, the balance of accounts receivable as of the date of the reply letter, whether there is a sales return, and whether the relevant customers are related to the company, more than 5% of the shareholders, actual controllers, controlling shareholders, directors, supervisors and senior executives;
(3) Explain whether the customers of Xinjinhua and Xinsaipu have changed in the past two years, and if so, explain the reasons, whether there is a situation of cross-period revenue recognition, and whether the revenue recognition is compliant;
(4) Please provide relevant contracts and payment receipts.
6. The Company's "Energy Services" business is mainly operated by RRTL, a Tier 4 overseas subsidiary controlled by its wholly-owned subsidiary, EnergyProspecting Technology USA Inc. (hereinafter referred to as EPT). According to the annual report, EPT achieved operating income of 62.5963 million yuan and net profit of 14.0755 million yuan in the reporting period, a year-on-year decrease of 16.14% and an increase of 217.92% respectively, and the company's overseas income was 100.276 million yuan, the same as in 2022. Please Xinjin Power:
(1) Explain the specific regional distribution, revenue composition, main customers, accounts receivable balance and post-period collection of the company's overseas business, and whether there is any difference with previous years;
(2) Combined with the characteristics of the industry to which RRTL belongs, the reasons and reasonableness of the significant deviation between the direction and degree of changes in operating income and net profit in the EPT reporting period are analyzed and explained in the past two years, such as changes in oil extraction, sales volume, sales and settlement prices, and changes in gross profit margin.
(3) List the specific situation of RRTL's top 10 customers in the past two years, including the name of the customer, the time of signing the contract, the sales content, the delivery time, the amount, time and basis of revenue recognition, the time and amount of payment recovery, the balance of accounts receivable so far, whether there is a sales return, and whether the relevant customers are related to the company, more than 5% of shareholders, actual controllers, controlling shareholders, directors, supervisors and senior executives;
(4) Explain whether there has been any change in RRTL's customers in the past two years, and if so, the reasons, whether there is a situation where revenue is recognized across periods, and whether revenue recognition is compliant;
(5) Please provide relevant contracts and payment receipts.
7. According to the annual report, the balance of accounts receivable at the end of the reporting period of the company was 753.9366 million yuan, of which the balance of accounts receivable with a single provision for bad debts was 235.2018 million yuan, the balance of accounts receivable aged more than five years was 382.2187 million yuan, and in the last two fiscal years, the company made provisions for bad debts of 28.0857 million yuan and 12.8109 million yuan respectively, and wrote off 159.3576 million yuan and 66.2585 million yuan respectively. Please Xinjin Power:
(1) Explain the specific situation of the company's accounts receivable at the end of the reporting period, including the main situation of the customer, the sales time, content, amount, payment collection, and the collection measures taken by the company, explain the basis and reasonableness of the provision for bad debts separately, whether the relevant customer is related to the company, the controlling shareholder, the actual controller, more than 5% of the shareholders, directors, supervisors and senior executives, and whether there is capital occupation or financial assistance;
(2) Explain the specific situation of the provision for bad debts of the company's various businesses at the end of the reporting period, and explain whether the provision for bad debts is sufficient in combination with the company's credit policy, post-period payment and other factors;
(3) Explain the specific situation of the main customers of accounts receivable aged for more than five years at the end of the reporting period, the reasons and reasonableness of the long-term non-collection, the collection measures taken by the company, and whether the relevant bad debt provisions are sufficient;
(4) Explain the specific situation of the accounts receivable written off in the last two fiscal years, including the main situation of the customer, the sales time, content, amount, payment collection, the amount of bad debt provision, and the basis and reasonableness of the company's judgment that the payment cannot be recovered.
8. According to the annual report, the balance of other accounts receivable at the end of the reporting period was 138.9108 million yuan, of which the balance of deposits and deposits, loans and interest, advances and current accounts was 51.1699 million yuan, 50.9789 million yuan and 27.7785 million yuan respectively, and a total of 94.2375 million yuan of bad debt provisions had been made, of which the balance of other receivables aged more than five years was 59.3907 million yuan. Please Xinjin Power:
(1) Explain the specific circumstances of deposits and deposits, loans and interest, advances, and current payments, including the formation time, background, counterparty, agreed repayment time, and payment recovery, whether the counterparty is related to the company, controlling shareholders, actual controllers, shareholders of more than 5%, directors, supervisors and senior executives, and whether there is capital occupation or external financial assistance;
(2) Explain the reasons and reasonableness of other receivables aged more than five years that have not been collected for a long time, the collection measures taken by the company, and whether the relevant bad debt provisions are sufficient.
9. The annual report shows that the original book value of the company's oil and gas assets at the end of the reporting period was 667.8431 million yuan, with a cumulative depreciation of 193.5164 million yuan, and an impairment provision of 21.1165 million yuan in the current period.
Xinjin Power is requested to quantitatively explain the detailed process of impairment testing of oil and gas assets in combination with the development and reserves of relevant oil and gas assets, realized benefits, crude oil prices and trends, orders in hand and other factors during the reporting period, and whether there are important differences in the selection of assumptions, parameters and indicators in the past three years, and if so, please explain the reasons and reasonableness; on this basis, explain whether the impairment provision for oil and gas assets in the reporting period is reasonable and sufficient, and whether there is improper accounting treatment to adjust profits.
10. According to the annual report, during the reporting period, the original value of fixed assets increased by 29.1034 million yuan due to the purchase and construction in progress, and the original value of fixed assets decreased by 100.6748 million yuan due to disposal or scrapping, with a cumulative depreciation of 77.5998 million yuan and a cumulative impairment provision of 795.58 yuan. Please Xinjin Power:
(1) Combined with the current capacity utilization, list the specific circumstances of the increase in fixed assets during the reporting period, including but not limited to the name, type, source and use of the assets involved, the counterparty, the basis for pricing, the payment situation, and whether the counterparty is related to the company, the controlling shareholder, the actual controller, the shareholders of more than 5%, and the directors, supervisors and senior executives;
(2) List and explain the specific circumstances of the company's disposal or scrapping of various types of fixed assets, including but not limited to the name, type, source and use of the assets involved, the closing book balance, accumulated depreciation, provision for impairment, etc., as well as the reasons and reasonableness of the disposal or scrapping, the counterparty, the pricing basis, the recovery of disposal funds, etc., and whether the counterparty is related to the company, the controlling shareholder, the actual controller, more than 5% of the shareholders, directors, supervisors and senior executives.
11. The annual report shows that the closing balance of the company's construction in progress at the end of the reporting period was 58.1959 million yuan, and the new project of "turbomachinery equipment and special equipment manufacturing base" was added during the reporting period, with a budget of 1.1 billion yuan, and the "project notes" part shows that the above-mentioned projects invested 2.72 million yuan during the reporting period, without making provision for impairment, and the "investment status analysis" part shows that the above-mentioned projects invested 22.7504 million yuan during the reporting period.
Please explain the exact amount invested in the "Turbomachinery Equipment and Special Equipment Manufacturing Base" during the reporting period, the specific purpose of the project, the start time, the construction location, the construction and operation entity, the source of funds, the estimated construction period, the current construction progress, and the reasons and reasonableness of the company's continuous loss to carry out large-scale investment in construction projects.
12. The annual report shows that the company's inventory book balance at the end of the reporting period was 302.8142 million yuan, and the provision for inventory decline in the reporting period was 3.7965 million yuan. Please Xinjin Power:
(1) Explain the composition details, inventory age, storage status, whether it corresponds to the orders in hand, and whether it conforms to industry practices and the actual situation of the company;
(2) Combined with factors such as the market environment, changes in the company's overall operating conditions, product pricing model, changes in selling price and cost prices, and the provision for inventory decline of comparable companies in the same industry, it is explained whether the provision for inventory decline in the company's reporting period and previous periods is reasonable and sufficient, and whether it can fully reflect the overall quality of inventory.
13. According to the annual report, the balance of the company's long-term equity investment at the end of the reporting period was 295.8702 million yuan, and the impairment provision was 21.00 million yuan, of which the closing balance of investment in Beijing Yifeng Hengtai Intelligent Manufacturing Industry M&A Fund (Limited Partnership), Chengdu Omeike Petroleum Technology Co., Ltd., Quzhou Hetai Clean Energy Investment Partnership (Limited Partnership) and Spartek Systems Inc. was 109.7326 million yuan and 73.0645 million yuan respectively. 66.0963 million yuan and 40.265 million yuan. Please Xinjin Power:
(1) Explain the development and trend of the above-mentioned invested enterprises' industries, market position, competitive landscape, main business development, major customers, main financial data, etc.;
(2) Explain the accounting process of the company's long-term equity investment in the above-mentioned enterprises, and explain whether the company's provision for impairment of the long-term equity investment in the relevant enterprises is sufficient and whether the relevant accounting treatment complies with the relevant provisions of the Accounting Standards for Business Enterprises in combination with the reply to question (1) above.
14. The annual report shows that the book value of goodwill at the end of the reporting period of the company was 82.5471 million yuan, mainly for the goodwill formed by the merger and acquisition of Xinjinhua, and no provision for goodwill impairment was made in the reporting period, and the book value of the asset group was 123.9079 million yuan. The key parameters selected for the relevant goodwill impairment test are quite different from those in 2022. Please Xinjin Power:
(1) Combined with the main operating financial data, product unit price, cost changes, orders in hand in each year, industry development changes and other conditions in the past three years, quantitatively explain whether the selection of assumptions, parameters and indicators in the process of goodwill impairment testing in the past three years is reasonable and prudent, and whether there are differences between the relevant assumptions, parameters and indicators and the actual production and operation conditions in the current period and the forecast period;
(2) Explain in detail the reasons and reasonableness of the large difference between the key parameters selected for the relevant goodwill impairment test and those in 2022;
(3) Combined with the reply to questions (1) and (2) above, explain whether the provision for goodwill impairment in the reporting period and the previous period is reasonable and sufficient, and whether there is any adjustment of profits through improper accounting treatment.
15. The annual report shows that the total purchase amount of the company's top five suppliers during the reporting period was 78.6384 million yuan, an increase of 17.36% over 2022. Please Xinjin Power:
(1) Explain the basic information of the top five suppliers in the past two years, including the time of establishment, registered capital, controlling shareholder and actual controller, whether they are self-produced or purchased product distribution business suppliers, and whether the top five suppliers have any related relationship or other benefit arrangements with the company and its controlling shareholders, actual controllers, directors, supervisors and senior executives, and more than 5% shareholders;
(2) Explain whether there are any material differences between the company's business origin and cooperation with the top five suppliers in the past two years, procurement content, pricing model, payment cycle, etc., and comparable companies in the same industry.
16. According to the annual report, the company acquired 100% of the shares of Hebei Yunfang Construction Engineering Co., Ltd. (hereinafter referred to as Hebei Yunfang) on February 14, 2023, with a purchase price of 0 yuan. From the date of acquisition to the end of the reporting period, Hebei Yunfang's net profit was -14.0634 million yuan. Please Xinjin Power:
(1) Explain the reasons and reasonableness of the company's acquisition of Hebei Yunfang under the condition of continuous losses based on the development of the industry, market demand, major customers, as well as the operating conditions and main financial data of Hebei Yunfang in the past three years;
(2) Explain whether the counterparty of the acquisition has any related relationship or other benefit arrangement with the company, more than 5% of the shareholders, actual controllers, controlling shareholders, directors, supervisors and senior executives;
(3) Explain the financial transactions between the company and Hebei Yunfang since the acquisition, as well as the specific purpose of the transactions.
17. Combined with the replies to all the above questions, Xinjin Power is requested to explain whether the company's audited net assets at the end of 2023 have actually been negative, and check whether there are any situations where stock trading as stipulated in Chapter 9 of the Rules for the Listing of Stocks on the Growth Enterprise Market (Revised in August 2023) of the Shenzhen Stock Exchange should be subject to delisting risk warning and other risk warnings.
The annual audit accountant is requested to verify the above issues and express clear opinions, and at the same time explain in detail the audit procedures, audit evidence and audit conclusions for the perpetual bond investment of Shuosheng Technology, the company's overseas income, accounts receivable, oil and gas assets, inventory, goodwill, etc.
Read and create a comprehensive financial and economic system
Review: Sun Shijian