Stock Name:铜峰电子
Stock code:600237
Securities code: 600237 Securities abbreviation: Tongfeng Electronic Number: Lin 2020-033
Announcement of Anhui Tongfeng Electronics Co., LTD. 's reply to the inquiry letter of Shanghai Stock Exchange on the post review of the company's 2019 annual report
The board of directors and all the directors of the Company warrant that there is no false record, misleading statement or material omission in the content of this announcement, and bear individual and joint liability for the authenticity, accuracy and completeness of the content.
Anhui Tongfeng Electronics Co., LTD. (hereinafter referred to as the "Company or Tongfeng Electronics") replies and announces the following information in accordance with the "Inquiry Letter for Post Review of the 2019 Annual Report of Anhui Tongfeng Electronics Co., LTD. (Shanghai Official Letter [2020] 0685)" (hereinafter referred to as the "Inquiry Letter") issued by Shanghai Stock Exchange:
Question 1:
The main business of the company is the research and development, production and sales of film capacitors and film materials, and has an integrated industry chain from film to capacitor. The company's thin-film material business is an important raw material for thin-film capacitors, which are widely used downstream. Please make additional disclosure: (1) Explain the basic situation of the company's main business by product, including production and operation mode, cost and expense composition, and analyze the reasons and reasonableness of the changes in revenue and gross profit margin of subdivision business by combining with the situation of comparable companies; (2) Explain whether there is a single or few industry dependence in business development based on the industry distribution and changes of the company's main customers; (3) Disclose by business the names of the five major suppliers in recent three years, procurement content, procurement amount, settlement method, whether they constitute affiliated transactions and specific related relationships.
Reply:
I. Product by product description of the company's main business, including the production and operation mode, cost and expense composition, and combining with the situation of comparable companies to analyze the reasons and rationality of the changes in the revenue and gross profit margin of the segmented business;
(I) The company's product business model
1. Procurement mode
Main materials: polypropylene film product main raw material is polypropylene resin. The company implements the production organization mode based on sales. It makes the required polypropylene resin list according to the production plan and material consumption, combines the reasonable and safe inventory, makes the purchasing plan and issues to the wholly-owned subsidiary WTO Import and Export Organization for purchasing.
Other materials: Except polypropylene resin, the raw materials consumed by other products of the Company are all purchased in China. After selecting qualified suppliers, the company determines the purchase price of raw materials through bidding, and issues the purchase plan of raw materials according to the sales plan.
2. Production mode
For capacitor film, the company adopts the production organization mode of safety inventory and concurrent production by sales to meet the needs of production line running balance and energy saving. For film capacitors, the company mainly produces according to order.
3. Sales model
In addition to a small number of customers adopt the distribution model, other customers mainly adopt the direct sales model.
(II) Cost composition of major products in 2019
Cost item |
Polypropylene film |
Polyester film |
Capacitor products |
Power electronic capacitor |
||||
amount |
structure |
amount |
structure |
amount |
structure |
amount |
structure |
|
Direct material |
15,410.77 |
67.77% |
4,956.24 |
56.46% |
20,347.75 |
81.55% |
6,732.28 |
77.63% |
Fuel power cost |
2,183.48 |
9.60% |
1,354.56 |
15.43% |
457.63 |
1.83% |
138.21 |
1.59% |
Direct wage |
1,040.57 |
4.58% |
398.14 |
4.54% |
2,274.12 |
9.11% |
460.17 |
5.31% |
Manufacturing expense |
4,106.27 |
18.06% |
2,069.98 |
23.58% |
1,872.39 |
7.50% |
1,342.15 |
15.48% |
total |
22,741.09 |
100.00% |
8,778.91 |
100.00% |
24,951.88 |
100.00% |
8,672.81 |
100.00% |
(III) Analyze the reasons and reasonableness of the changes in revenue and gross profit margin of the segmented business based on the situation of comparable companies
The only comparable company in the industry of polypropylene film (BOPP film) and polyester film (BOPET film) is Zhejiang Da Southeast Co., LTD. (002263); According to public information, only Nantong Jianghai Capacitor Co., LTD. (002484) has disclosed relevant data in the industry of power electronic capacitor products. The same industry companies have not separately disclosed the AC capacitor revenue and gross profit margin.
product |
Comparable company |
2019years |
2018years |
||||
Sales revenue (ten thousand yuan) |
Percentage change in sales revenue |
Gross profit margin |
Gross margin change of percentage points |
Sales revenue (ten thousand yuan) |
Gross profit margin |
||
Polypropylene film |
Copper peak electron |
16,585.00 |
-4.77% |
-3.67% |
-8.54 |
17,415.00 |
4.87% |
Greater Southeast |
24,247.80 |
8.55% |
8.56% |
-6.77 |
22,338.04 |
15.33% |
|
Polyester film |
Copper peak electron |
11,255.00 |
-6.33% |
22.57% |
8.67 |
12,016.00 |
13.90% |
Greater Southeast |
73,148.13 |
11.39% |
17.58% |
9.17 |
65,671.20 |
8.41% |
|
Power electronic capacitor |
Copper peak electron |
12,208.02 |
16.09% |
40.50% |
1.98 |
10,515.79 |
38.52% |
Jianghai Stock |
187,577.26 |
8.27% |
30.71% |
3.43 |
173,250.53 |
27.28% |
|
Ac capacitor |
Copper peak electron |
25,919.19 |
-7.90% |
9.10% |
-6.45 |
28,141.26 |
15.55% |
Note: Since the public data of comparable listed companies in the same industry does not distinguish polypropylene film and coating, the company's polypropylene film and coating data are combined and listed in the polypropylene film during the analysis here.
As can be seen from the table above, the change trend of the company's gross profit rate is basically consistent with that of the same industry during the reporting period. The gross profit rate of polypropylene film decreases, the gross profit rate of polyester film increases, and the gross profit rate of power electronic capacitor increases. In 2019, the sales revenue of polyester film industry increased while the company decreased. The main reason is that the company's polyester film products are limited by production capacity. The two production lines have been producing at full capacity, so the output cannot increase. Polypropylene film sales growth in the same industry and the company declined, mainly polypropylene film sales this year compared to last year.
During the reporting period, the gross profit margin of major products changed for the following reasons:
1. Polypropylene film
Polypropylene film gross profit margin decline, the main unit cost rise, unit selling price is basically unchanged. To be specific:
Due to overcapacity in the polypropylene film market, the middle and low-end market is seriously saturated, and affected by the international trade situation, the downstream household appliances market of polypropylene film has been affected, resulting in the production decline in 2019, and the unit price of sales only increased slightly. The No. 1 production line of polypropylene film was put into production in 1989, and the equipment was seriously aging. In 2019, the production line was basically shut down. In 2019, the unit consumption of polypropylene resin increased by 5.69% compared with the previous year, and the unit purchase price increased by 7.12% compared with the previous year. The decrease in output also led to the increase in the unit fixed cost, which eventually led to the increase in the unit cost.
2, polyester film
Polyester film gross profit margin increase is mainly caused by the decrease of unit production cost. In recent years, the price of polyester slicing materials has decreased. In 2019, the price of polyester slicing base material has decreased by 14.28% and the price of polyester slicing master material has decreased by 15.38% compared with the previous year. So the gross profit margin of polyester film rises.
3. Ac capacitor
The decrease of AC capacitor gross profit margin is mainly caused by the increase of unit cost and the decrease of unit selling price. As mentioned above, the unit cost of the Company's polypropylene film increased in 2019, which led to the cost of the film consumed by the Company's AC capacitors increased, and ultimately led to the unit cost of the Company's AC capacitors increased. At the same time, affected by the international trade situation in 2019, the company's export business with high unit price decreased by about 25% compared with the previous year, and the domestic trade sales price decreased compared with the previous year, resulting in the company's AC capacitor unit price decreased.
4. Power electronic capacitor
The increase of the gross profit margin of power electronic capacitors is mainly due to the increase of unit selling price greater than unit cost. In 2019, the output increased by 7.76% compared with the previous year, the average selling price increased by 13.47% compared with the previous year, and the unit production cost increased by 9.71% compared with the previous year. The combined effect of the production and sales volume, the average selling price and the unit cost led to the increase of gross profit margin in 2019 compared with that in 2018.
Ii. Explain whether there is a single or few industry dependence in business development based on the industry distribution and changes of the company's main customers;
(I) Main Customers of polypropylene Film (Year 2019)
As it involves the company's trade secrets and the privacy of customers, the following reply of the company has hidden the relevant information involving trade secrets and customers, please understand the majority of investors.
Serial number |
Customer name |
The industry the customer is in |
Income excluding tax (ten thousand Yuan) |
Polypropylene film income ratio |
1 |
Customer 1 |
Electronic components intermediate industry, terminal products are widely used in many industries |
1,942.98 |
11.72% |
2 |
Customer2 |
Electronic components intermediate industry, terminal products used in household appliances, communications, power grids, rail transit, industrial control, lighting and new energy industries |
990.89 |
5.97% |
3 |
Customer3 |
Electronic components intermediate industry, terminal products can be widely used in a number of industry fields |
730.61 |
4.41% |
4 |
Customer4 |
Electronic component dealer |
616.67 |
3.72% |
5 |
Customer5 |
Electronic components intermediate industry, terminal products can be widely used in a number of industry fields |
581.03 |
3.50% |
|
total |
|
4,862.19 |
29.32% |
(II) Main Customers of AC capacitors (Year 2019)
Serial number |
Customer name |
The industry the customer is in |
Income excluding tax (ten thousand Yuan) |
Ac capacitor revenue ratio |
1 |
Customer1 |
White goods |
3,015.72 |
11.64% |
2 |
Customer2 |
White goods |
2,467.58 |
9.52% |
3 |
Customer3 |
White goods |
2,249.04 |
8.68% |
4 |
Customer4 |
White goods |
2,081.88 |
8.03% |
5 |
Customer5 |
White goods |
1,507.86 |
5.82% |
|
total |
|
11,322.09 |
43.68% |
(III) Major Customers of Power Electronic capacitors (Year 2019)
Serial number |
Customer name |
The industry the customer is in |
Income excluding tax (ten thousand Yuan) |
Power electronic capacitor revenue ratio |
1 |
Customer1 |
Rail transit equipment |
2,358.91 |
19.32% |
2 |
Customer2 |
Transportation equipment |
2,126.06 |
17.42% |
3 |
Customer3 |
Transportation equipment |
2,095.02 |
17.16% |
4 |
Customer4 |
Rail transit equipment |
763.79 |
6.26% |
5 |
Customer5 |
Transportation equipment |
534.95 |
4.38% |
|
total |
|
7,878.73 |
64.54% |
(IV) Major Clients of polyester Film (Year 2019)
Serial number |
Customer name |
The industry the customer is in |
Income excluding tax (ten thousand Yuan) |
Account for the main business income |
1 |
Korea SKC Corporation |
Carbon tape printing |
1,918.84 |
17.05% |
2 |
Customer1 |
Manufacturing of computers, communications and other electronic equipment |
1,535.89 |
13.65% |
3 |
Customer2 |
Manufacturing of computers, communications and other electronic equipment |
1,160.52 |
10.31% |
4 |
Customer3 |
Electronic components intermediate industry, terminal products can be widely used in a number of industry fields |
1,024.58 |
9.10% |
5 |
Customer4 |
Home appliances, communications, power grids, rail transit, industrial control, lighting and new energy industries |
547.30 |
4.86% |
|
total |
|
6,187.12 |
54.97% |
As can be seen from the above, the main customers corresponding to the company's main products are distributed in household appliances, communications, transportation equipment and other industries. Through reasonable allocation of production capacity and sales channels, the company's income does not depend on a single or a few industries. The top five customers of the company's main products in 2019 did not have significant changes compared with previous years.
3. Disclose by business the names of the five major suppliers in recent three years, procurement content, amount of procurement, settlement method, whether they constitute affiliated transactions and specific related relationships.
1) Top five suppliers of polypropylene film products from 2017 to 2019
Product name |
2019years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polypropylene film |
Supplier1 |
Polypropylene resin |
6,262.63 |
Letter of credit |
no |
Supplier2 |
Polypropylene resin |
4,871.93 |
Letter of credit |
no |
|
Supplier3 |
Polypropylene resin |
3,109.57 |
Letter of credit |
no |
|
Supplier4 |
Carton etc |
209.90 |
Bank deposits, acceptance bills |
no |
|
Supplier5 |
splint |
139.98 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
14,594.01 |
|
|
Product name |
2018years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polypropylene film |
Supplier2 |
Polypropylene resin |
6,190.88 |
Letter of credit |
no |
Supplier1 |
Polypropylene resin |
3,634.20 |
Letter of credit |
no |
|
Supplier3 |
Polypropylene resin |
2,506.36 |
Letter of credit |
no |
|
Supplier4 |
Carton etc |
200.06 |
Bank deposits, acceptance bills |
no |
|
Supplier5 |
splint |
160.12 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
12,691.62 |
|
|
Product name |
2017years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polypropylene film |
Supplier2 |
Polypropylene resin |
7,861.93 |
Letter of credit |
no |
Supplier1 |
Polypropylene resin |
4,954.76 |
Letter of credit |
no |
|
Supplier3 |
Polypropylene resin |
2,314.00 |
Letter of credit |
no |
|
Supplier5 |
splint |
193.42 |
Bank deposits, acceptance bills |
no |
|
Supplier6 |
Carton etc |
168.18 |
Bank deposits, acceptance bills |
no |
|
小计 |
|
15,492.28 |
|
|
2) Top five suppliers of polyester film products from 2017 to 2019
Product name |
2019years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polyester film |
Supplier1 |
Polyester slice |
4,867.91 |
Bank deposit |
no |
Korea SKC Corporation |
Polyester slice |
103.41 |
Bank deposit |
yes |
|
Supplier2 |
Paper tube etc |
101.08 |
Bank deposits, acceptance bills |
no |
|
Supplier3 |
Paper tube etc |
90.84 |
Bank deposits, acceptance bills |
no |
|
Supplier4 |
splint |
71.39 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
5,234.64 |
|
|
Product name |
2018years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polyester film |
Supplier1 |
Polyester slice |
5,183.41 |
Bank deposit |
no |
Supplier5 |
Polyester slice |
1,233.21 |
Bank deposit |
no |
|
Supplier6 |
Polyester slice |
553.86 |
Bank deposits, acceptance bills |
no |
|
Supplier2 |
Paper tube etc |
122.21 |
Bank deposits, acceptance bills |
no |
|
Supplier3 |
Paper tube etc |
80.31 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
7,173.00 |
|
|
Product name |
2017years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Polyester film |
Supplier5 |
supplier5 |
7,302.38 |
Bank deposit |
no |
Supplier6 |
supplier6 |
1,053.09 |
Bank deposits, acceptance bills |
no |
|
Korea SKC Corporation |
Korea SKC Corporation |
309.01 |
Bank deposit |
yes |
|
Supplier2 |
supplier2 |
93.93 |
Bank deposits, acceptance bills |
no |
|
Supplier7 |
supplier7 |
77.19 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
8,835.60 |
|
|
Among the above suppliers, except Korea SKC Co., LTD., which is a minority shareholder of the subsidiary, other suppliers have no association with the company.
3) Top five suppliers of AC capacitor products from 2017 to 2019
Product name |
2019years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Ac capacitor |
Tongling Tianyuan New Energy Technology Co. LTD |
Aluminum shell, plastic shell, etc |
2,775.88 |
Bank deposits, acceptance bills |
yes |
Supplier1 |
Zinc wire |
1,474.45 |
Bank deposits, acceptance bills |
no |
|
Supplier2 |
Cover plate etc |
1,418.42 |
Bank deposits, acceptance bills |
no |
|
Supplier3 |
Castor oil |
1,152.70 |
Bank deposits, acceptance bills |
no |
|
Supplier4 |
Cover plate etc |
1,099.74 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
7,921.19 |
|
|
Product name |
2018years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Ac capacitor |
Tongling Tianyuan New Energy Technology Co. LTD |
Aluminum shell, plastic shell, etc |
2,409.52 |
Bank deposits, acceptance bills |
yes |
Supplier 1 |
Zinc wire |
1,803.55 |
Bank deposits, acceptance bills |
no |
|
Supplier 2 |
Cover plate etc |
1,600.91 |
Bank deposits, acceptance bills |
no |
|
Supplier 4 |
Cover plate etc |
1,085.71 |
Bank deposits, acceptance bills |
no |
|
Supplier 3 |
Castor oil |
1,067.75 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
7,967.44 |
|
|
Product name |
2017years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Ac capacitor |
Tongling Tianyuan New Energy Technology Co. LTD |
Aluminum shell, plastic shell, etc |
2,598.72 |
Bank deposits, acceptance bills |
yes |
Supplier1 |
Zinc wire |
2,106.24 |
Bank deposits, acceptance bills |
no |
|
Supplier2 |
Cover plate etc |
1,668.60 |
Bank deposits, acceptance bills |
o |
|
Supplier3 |
Castor oil |
1,213.47 |
Bank deposits, acceptance bills |
o |
|
Supplier4 |
Cover plate etc |
1,111.63 |
Bank deposits, acceptance bills |
o |
|
小计 |
|
8,698.67 |
|
|
Among the above suppliers, except Tongling Tianyuan New Energy Technology Co., Ltd. and the Company are controlled by the same shareholder, other suppliers have no association with the Company.
4) The top five suppliers of power electronic capacitor products from 2017 to 2019 are as follows:
Product name |
2019years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Power electronic capacitor |
Tongling Tianyuan New Energy Technology Co. LTD |
Stainless steel case |
718.04 |
Bank deposits, acceptance bills |
yes |
Supplier1 |
Terminal etc |
610.97 |
Bank deposits, acceptance bills |
no |
|
Supplier2 |
Zinc wire |
592.31 |
Bank deposits, acceptance bills |
no |
|
Supplier3 |
Epoxy resin, polyurethane |
444.77 |
Bank deposits, acceptance bills |
no |
|
Supplier4 |
Electrode etc |
439.99 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
2,806.09 |
|
|
Product name |
2018years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Power electronic capacitor |
Tongling Tianyuan New Energy Technology Co. LTD |
Stainless steel case |
646.56 |
Bank deposits, acceptance bills |
yes |
Supplier3 Epoxy resin, polyurethane |
|
557.19 |
Bank deposits, acceptance bills |
no |
|
Supplier2 |
Zinc wire |
550.08 |
Bank deposits, acceptance bills |
no |
|
Supplier1 |
Terminal etc |
517.91 |
Bank deposits, acceptance bills |
no |
|
Supplier5 |
Stainless steel case |
381.58 |
Bank deposits, acceptance bills |
no |
|
subtotal |
|
2,653.31 |
|
|
Product name |
2017years |
||||
Supplier name |
Procurement content |
Purchase amount (ten thousand Yuan) |
Method of settlement |
Related party or not |
|
Power electronic capacitor |
Supplier2 |
Zinc wire |
514.41 |
Bank deposits, acceptance bills |
no |
Supplier1 |
Zinc wire |
482.56 |
Bank deposits, acceptance bills |
no |
|
Supplier3 |
Epoxy resin, polyurethane |
410.80 |
Bank deposits, acceptance bills |
no |
|
Supplier5 |
Stainless steel case |
376.72 |
Bank deposits, acceptance bills |
no |
|
Tongling Tianyuan New Energy Technology Co. LTD |
Stainless steel case |
348.86 |
Bank deposits, acceptance bills |
yes |
|
subtotal |
|
2,133.34 |
|
|
Among the above suppliers, except Tongling Tianyuan New Energy Technology Co., Ltd. and the Company are controlled by the same shareholder, other suppliers have no association with the Company.
Note: ① The main material used for the company's AC capacitors and locomotive capacitors is polypropylene film produced by the company. The AC capacitors and locomotive capacitors listed above are the top five suppliers of materials other than polypropylene film. ② The purchase amount of suppliers listed in the table above is tax inclusive except import purchase.
Question 2:
The annual report disclosed that the company achieved the main business income of 822 million yuan during the reporting period, down 7.15% year-on-year; Net profit of return to mother - 153 million yuan, down 1704.07% year on year; Net operating cash flow reached 121 million yuan, up 1885% year on year. In recent years, the net profit of the company fluctuates greatly. Since 2015, the net profit returned to the mother is respectively RMB 14 million, RMB 210 million, RMB 14 million, RMB 0.1 million and RMB 153 million. (1) Explain the reasons and reasonableness of the sharp decline in the company's net profit during the reporting period by combining the market demand, competition pattern, cost composition, etc.; (2) Explain the reasons for the large fluctuations in the company's performance over a long period of time, especially the reasons for the large losses in the above years, and whether the relevant changes are significantly different from those of comparable companies in the industry; (3) Clarify the accuracy of revenue recognition over the years and explain whether there is inter-period adjustment of revenue and profit in combination with revenue recognition policies, recognition time and fund recovery; (4) In combination with relevant credit policies, payment arrangements, bill discount and other situations, explain the matching between the company's operating cash flow, income and net profit during the reporting period and the reasons. Please comment on the annual audit accountant.
Reply:
I. Combine the market demand, competition pattern, cost structure and other conditions, explain the reasons and rationality of the company's net profit decline in the reporting period;
Comparison of major income statement items in 2019 and 2018
item |
2019annual |
2018annual |
change |
I. Operating income |
82,205.67 |
88,537.72 |
-6,332.05 |
2. Operating costs |
70,365.40 |
72,313.32 |
-1,947.92 |
Iii. Gross Profit (loss marked with "-") |
11,840.27 |
16,224.40 |
-4,384.13 |
Taxes and surcharges |
1,064.66 |
1,025.39 |
39.27 |
Selling expense |
4,642.45 |
3,978.61 |
663.84 |
Administrative expenses |
6,497.63 |
6,420.67 |
76.96 |
Research and development expenses |
2,373.53 |
2,627.41 |
-253.88 |
Financial expense |
1,662.40 |
1,520.11 |
142.29 |
Plus: Other earnings |
354.34 |
261.26 |
93.08 |
Investment income (loss marked with "-") |
-121.36 |
-1.14 |
-120.22 |
Credit impairment loss (loss marked with "-") |
-1,857.45 |
- |
-1,857.45 |
Asset impairment loss (marked with "-") |
-9,320.55 |
-111.71 |
-9,208.84 |
Gain on disposal of assets (loss marked with "-") |
-9.50 |
57.08 |
-66.58 |
Iv. Operating profit (loss marked with "-") |
-15,354.93 |
857.68 |
-16,212.61 |
Plus: non-operating income |
169.33 |
234.29 |
-64.96 |
Less: non-operating expenses |
140.46 |
43.88 |
96.58 |
V. Total profit (total loss marked with "-") |
-15,326.06 |
1,048.09 |
-16,374.15 |
Less: Income tax expense |
902.37 |
6.76 |
895.61 |
Vi. Net Profit (marked with "-" for net loss) |
-16,228.43 |
1,041.33 |
-17,269.76 |
1. Net profit attributable to owner of parent company (net loss marked with "-") |
-15,287.00 |
953.01 |
-16,240.01 |
As can be seen from the table above, the company's net profit and performance fluctuations during the reporting period are mainly caused by the decrease of operating profit margin, the increase of asset impairment loss accrued and accrued, and the increase of credit asset impairment loss accrued. The detailed analysis of the company's operating profit, credit impairment loss and asset impairment loss is as follows:
(1) Operating profit analysis
The changes in revenue, cost and gross profit of main products from 2019 to 2018 are as follows:
product |
project |
Amount/ratio |
change |
|
2019annual |
2018annual |
|||
Polypropylene film |
income |
9,763.62 |
9,695.58 |
68.04 |
cost |
10,446.96 |
9,732.75 |
714.21 |
|
Gross profit |
-683.34 |
-37.17 |
-646.17 |
|
Gross profit margin |
-7.00% |
-0.38% |
-6.62% |
|
Ac capacitor |
income |
25,919.19 |
28,141.26 |
-2,222.07 |
cost |
23,560.38 |
23,764.44 |
-204.06 |
|
Gross profit |
2,358.81 |
4,376.82 |
-2,018.01 |
|
Gross profit margin |
9.10% |
15.55% |
-6.45% |
|
Power electronic capacitor |
income |
12,208.02 |
10,515.79 |
1,692.23 |
cost |
7,263.68 |
6,465.10 |
798.58 |
|
Gross profit |
4,944.34 |
4,050.69 |
893.65 |
|
Gross profit margin |
40.50% |
38.52% |
1.98% |
|
Polyester film |
income |
11,255.11 |
12,015.62 |
-760.51 |
cost |
8,714.98 |
10,345.46 |
-1,630.48 |
|
Gross profit |
2,540.13 |
1,670.16 |
869.97 |
|
Gross profit margin |
22.57% |
13.90% |
8.67% |
|
coating |
income |
6,821.01 |
7,719.24 |
-898.23 |
cost |
6,745.50 |
6,833.62 |
-88.12 |
|
Gross profit |
75.51 |
885.62 |
-810.11 |
|
Gross profit margin |
1.11% |
11.47% |
-10.36% |
|
connector |
income |
9,157.39 |
9,979.32 |
-821.93 |
cost |
9,195.06 |
9,209.72 |
-14.66 |
|
Gross profit |
-37.67 |
769.6 |
-807.27 |
|
Gross profit margin |
-0.41% |
7.71% |
-8.12% |
|
other |
income |
5,488.66 |
8,134.99 |
-2,646.33 |
cost |
4,063.62 |
5,639.29 |
-1,575.67 |
|
Gross profit |
1,425.05 |
2,495.70 |
-1,070.65 |
|
Gross profit margin |
25.96% |
30.68% |
-4.72% |
|
total |
income |
80,613.00 |
86,201.80 |
-5,588.80 |
cost |
69,990.18 |
71,990.38 |
-2,000.20 |
|
Gross profit |
10,622.83 |
14,211.42 |
-3,588.59 |
|
Gross profit margin |
13.18% |
16.49% |
-3.31% |
The above table shows that the company's operating profit decreased mainly by the product polypropylene film, coating, AC capacitor, connector products operating profit decreased significantly compared with last year. The operating profit of polypropylene film, coating and AC capacitor decreased mainly due to the increase of unit cost compared with last year. The increase of unit cost of polypropylene film resulted in a decrease of 8,859,200 yuan in operating profit. The increase in the unit cost of coating resulted in a decrease in the operating profit of 5,675,700 yuan; The increase in unit cost of AC capacitors resulted in a decrease in operating profit of $12,383,800. Company products polypropylene film, coating, AC capacitors in the production process of upstream and downstream relationship, coating, AC capacitors and power electronic capacitors all consumed polypropylene film are produced by the company, the company produces about half of the polypropylene film for self-use, the cost of polypropylene film has a greater impact on the cost of coating, AC capacitors and power electronic capacitors. The company's polypropylene film raw material is imported polypropylene resin, affected by exchange rate fluctuations and crude oil prices, polypropylene resin purchase price increased compared to last year.
The changes in sales volume, price and unit cost of major products, cost structure of major products and purchase price of major raw materials are analyzed as follows:
1. Analysis of changes in sales volume, price and cost of main products in 2019 and 2018
product |
project |
Amount/ratio |
change |
Impact of factor changes on operating profit margin |
|
2019annual |
2018annual |
||||
Polypropylene film |
Income (ten thousand Yuan) |
9,763.62 |
9,695.58 |
68.04 |
|
Cost (ten thousand yuan) |
10,446.96 |
9,732.75 |
714.21 |
|
|
Quantity sold (T) |
* |
* |
* |
* |
|
Average sales price (ten thousand yuan /T) |
* |
* |
* |
* |
|
Unit cost of sales (ten thousand yuan /T) |
* |
* |
* |
* |
|
coating |
Income (ten thousand Yuan) |
6,821.01 |
7,719.24 |
-898.23 |
|
Cost (ten thousand yuan) |
6,745.50 |
6,833.62 |
-88.12 |
|
|
Quantity sold (T) |
* |
* |
* |
* |
|
Average sales price (ten thousand yuan /T) |
* |
* |
* |
* |
|
Unit cost of sales (ten thousand yuan /T) |
* |
* |
* |
* |
|
Ac capacitor |
Income (ten thousand Yuan) |
25,919.19 |
28,141.26 |
-2,222.07 |
|
Cost (ten thousand yuan) |
23,560.38 |
23,764.44 |
-204.06 |
|
|
Sales quantity (10,000) |
* |
* |
* |
* |
|
Average selling price (Yuan/piece) |
* |
* |
* |
* |
|
Unit cost of sales (Yuan/piece) |
* |
* |
* |
* |
|
connector |
Income (ten thousand Yuan) |
9,157.39 |
9,979.32 |
-821.93 |
|
Cost (ten thousand yuan) |
9,195.06 |
9,209.72 |
-14.66 |
|
|
Sales quantity (ten thousand PCS) |
* |
* |
* |
* |
|
Average selling price (yuan /PCS) |
* |
* |
* |
* |
|
Unit cost of sales (yuan /PCS) |
* |
* |
* |
* |
Due to overcapacity in the polypropylene film and coating market, fierce market competition, reduced sales, raw material purchase prices rise year by year, leading to a decline in polypropylene film and coating performance; Under the influence of the international trade situation, the company's main product AC capacitors have significantly reduced the price and sales volume, resulting in a significant decline in AC capacitor performance; Connector products are the new industry field entered by the company in 2017. At the same time, the competition in the connector industry is fierce, and the product upgrading is fast. In 2019, due to project development and market reasons, the company's product structure has changed, leading to the decline of connector product sales.
2. The cost structure of the company's main products in 2019 and 2018 is as follows:
Cost item |
Polypropylene film |
Polyester film |
Capacitor products |
|||
amount |
structure |
amount |
structure |
amount |
structure |
|
(1)2019annual |
||||||
Direct material |
15,410.77 |
67.77% |
4,956.24 |
56.46% |
20,347.75 |
81.55% |
Fuel power cost |
2,183.48 |
9.60% |
1,354.56 |
15.43% |
457.63 |
1.83% |
Direct wage |
1,040.57 |
4.58% |
398.14 |
4.54% |
2,274.12 |
9.11% |
Manufacturing expense |
4,106.27 |
18.06% |
2,069.98 |
23.58% |
1,872.39 |
7.50% |
total |
22,741.09 |
100.00% |
8,778.91 |
100.00% |
24,951.88 |
100.00% |
(2)2018annual |
||||||
Direct material |
13,702.01 |
66.70% |
5,970.05 |
60.72% |
20,753.50 |
81.85% |
Fuel power cost |
2,445.75 |
11.91% |
1,362.35 |
13.86% |
478.00 |
1.89% |
Direct wage |
822.22 |
4.00% |
464.86 |
4.73% |
2,350.60 |
9.27% |
Manufacturing expense |
3,571.45 |
17.39% |
2,035.05 |
20.70% |
1,772.50 |
6.99% |
total |
20,541.43 |
100.00% |
9,832.31 |
100.00% |
25,354.61 |
100.00% |
change |
||||||
Direct material |
1,708.76 |
|
-1,013.81 |
|
-405.75 |
|
Fuel power cost |
-262.27 |
|
-7.79 |
|
-20.37 |
|
Direct wage |
218.35 |
|
-66.72 |
|
-76.48 |
|
Manufacturing expense |
534.82 |
|
34.93 |
|
99.89 |
|
(Follow the above table)
Cost item |
Power electronic capacitor |
coating |
connector |
|||
amount |
structure |
amount |
structure |
amount |
structure |
|
(1)2019annual |
||||||
Direct material |
6,732.28 |
77.63% |
10,756.37 |
80.40% |
4,764.03 |
59.64% |
Fuel power cost |
138.21 |
1.59% |
534.53 |
4.00% |
250.06 |
3.13% |
Direct wage |
460.17 |
5.31% |
678.65 |
5.07% |
1,080.03 |
13.52% |
Manufacturing expense |
1,342.15 |
15.48% |
1,409.38 |
10.53% |
1,893.97 |
23.71% |
total |
8,672.81 |
100.00% |
13,378.93 |
100.00% |
7,988.09 |
100.00% |
(2)2018annual |
||||||
Direct material |
5,727.51 |
77.39% |
10,923.82 |
81.42% |
3,561.59 |
45.61% |
Fuel power cost |
129.77 |
1.75% |
548.05 |
4.09% |
221.91 |
2.84% |
Direct wage |
340.32 |
4.60% |
667.87 |
4.98% |
1,672.79 |
21.42% |
Manufacturing expense |
1,203.33 |
16.26% |
1,276.14 |
9.51% |
2,351.66 |
30.12% |
total |
7,400.93 |
100.00% |
13,415.88 |
100.00% |
7,807.96 |
100.00% |
change |
||||||
Direct material |
1,004.77 |
|
-167.45 |
|
1,202.44 |
|
Fuel power cost |
8.44 |
|
-13.52 |
|
28.14 |
|
Direct wage |
119.85 |
|
10.78 |
|
-592.76 |
|
Manufacturing expense |
138.82 |
|
133.24 |
|
-457.69 |
|
As can be seen from the above table, the company's product costs are mainly material costs. The increase in procurement cost of polypropylene resin, the company's main raw material, directly leads to the increase in material costs of polypropylene film, coating, AC capacitors and power electronic capacitors. In 2019, the company's main raw material polypropylene resin purchase price per ton increased by 721.45 yuan compared to 2018, an increase of 7.12%.
3. Purchase price changes of main raw materials polypropylene resin in 2019 and 2018
project |
2019annual |
2018annual |
variation |
Polypropylene resin |
10,852.93 |
10,131.48 |
721.45 |
Polypropylene resin depends on imports, due to the impact of exchange rate fluctuations, the reporting period of the purchase price increased compared to the previous year. In 2019, the production quantity of polypropylene resin was 12,400 tons, and the impact of polypropylene resin purchase price change on the current cost was about 8.95 million yuan.
(2) The impact of asset impairment losses and credit risk losses
Asset impairment losses and credit risk losses in 2019 and 2018 are as follows:
project |
2019annual |
2018annual |
variation |
Impairment loss on receivables/credit impairment loss |
1,857.45 |
-120.29 |
1,977.74 |
Loss on inventory decline |
3,354.47 |
232.00 |
3,122.47 |
Impairment loss on fixed assets |
5,201.56 |
- |
5,201.56 |
Impairment loss on construction in progress |
764.52 |
- |
764.52 |
subtotal |
11,178.00 |
111.71 |
11,066.29 |
At the end of each year, the company conducts impairment tests on related assets in accordance with the standards. The details of the impairment of various assets are as follows:
(1) Receivables
In 2019, the company learned about the broken capital chain of Guangdong Chigo through daily business transactions and media reports, and evaluated the recoverability of the funds while increasing the efforts of payment collection. Based on the evaluation results, the company set aside 11,846,700 yuan of credit impairment losses in 2019. The company also learned that the end customer of Kunshan Longmeng was bankrupt due to poor management. By assessing the repayment ability of Kunshan Longmeng, the company prudently set aside bad debt reserves, and set aside credit impairment losses of RMB 3.841,300 yuan in 2019.
(2) loss from inventory decline
At the end of the period, the company conducted a decline test on inventory combined with orders in hand, estimated future selling prices, estimated selling expenses and taxes. With the increasing market competition and the impact of RMB exchange rate fluctuations, the gross profit margin of the company's film products, AC capacitor products and connectors all showed a decline. The company tested the inventory decline price and deducted the impairment according to the future market price, etc. In 2019, the total inventory decline loss was RMB 33.5447 million.
(3) Impairment of fixed assets
At the end of the period, the company analyzed whether there were signs of impairment of fixed assets based on factors such as product sales and future market trends, and conducted impairment tests on fixed assets based on the way of obtaining cash flow of fixed assets and the estimation of the present value of future cash flow. In 2019, the company had a large amount of impairment of fixed assets, which was mainly caused by the company's impairment of film production line combined with the sales and expected market conditions of film products. In 2019, the total impairment loss of fixed assets of film production line was RMB 36.692,400.
(4) Impairment of construction in progress
In 2019, the company made provision for impairment of projects under construction. The main subsidiary Hehuijinyuan project is not expected to be pushed forward, and the company made provision for impairment of plant and equipment.
Ii. Explain the reasons for the large fluctuations in the company's performance over a long period of time, especially the reasons for the large losses in the above years, and whether the relevant changes are significantly different from those of comparable companies in the industry;
(I) Reasons for large fluctuations in the company's performance over a long period of time, and reasons for large losses in 2016 and 2019
Income statement of the Company from 2015 to 2019
Unit: Ten thousand Yuan
item |
2019annual |
2018annual |
2017annual |
2016annual |
2015annual |
I. Operating income |
82,205.67 |
88,537.72 |
81,336.07 |
59,050.14 |
59,957.25 |
2. Operating costs |
70,365.40 |
72,313.32 |
65,484.94 |
56,046.52 |
53,095.30 |
Iii. Gross Profit (loss marked with "-") |
11,840.27 |
16,224.40 |
15,851.13 |
3,003.62 |
6,861.95 |
Taxes and surcharges |
1,064.66 |
1,025.39 |
1,172.66 |
850.95 |
160.45 |
Selling expense |
4,642.45 |
3,978.61 |
4,195.24 |
3,486.87 |
3,640.50 |
Administrative expenses |
6,497.63 |
6,420.67 |
6,568.37 |
7,040.14 |
6,720.33 |
Research and development expenses |
2,373.53 |
2,627.41 |
3,021.50 |
1,361.64 |
1,683.21 |
Financial expense |
1,662.40 |
1,520.11 |
2,635.22 |
2,189.90 |
3,153.85 |
Plus: Other earnings |
354.34 |
261.26 |
1,984.23 |
- |
- |
Investment income (loss marked with "-") |
-121.36 |
-1.14 |
1,446.57 |
81.31 |
274.04 |
Credit impairment loss (loss marked with "-") |
-1,857.45 |
- |
- |
- |
- |
Asset impairment loss (marked with "-") |
-9,320.55 |
-111.71 |
54.58 |
-10,186.19 |
-3,791.79 |
Gain on disposal of assets (loss marked with "-") |
-9.50 |
57.08 |
2.94 |
-68.63 |
- |
Iv. Operating profit (loss marked with "-") |
-15,354.93 |
857.68 |
1,746.47 |
-22,099.39 |
-12,014.15 |
Plus: non-operating income |
169.33 |
234.29 |
378.93 |
798.13 |
12,865.98 |
Less: non-operating expenses |
140.46 |
43.88 |
25.98 |
8.08 |
141.02 |
V. Total profit (total loss marked with "-") |
-15,326.06 |
1,048.09 |
2,099.42 |
-21,309.34 |
710.80 |
Less: Income tax expense |
902.37 |
6.76 |
648.55 |
521.59 |
-218.21 |
Vi. Net Profit (marked with "-" for net loss) |
-16,228.43 |
1,041.33 |
1,450.87 |
-21,830.93 |
929.02 |
1. Net profit attributable to owner of parent company (net loss marked with "-") |
-15,287.00 |
953.01 |
1,404.14 |
-20,984.06 |
1,400.81 |
As shown in the above table, the company's long-term performance fluctuates largely due to the combined impact of operating profit margin and asset impairment. In 2016, the LED bracket and crystal resonator businesses of the company suffered a large loss, and the operating profit decreased. The company made an impairment of the fixed assets corresponding to the LED bracket business and the inventory corresponding to the crystal resonator business, which resulted in a large loss in that year. In 2019, with the increasingly fierce competition in the polypropylene film market, the price of raw materials also increased, resulting in a decline in the company's operating profit compared with the previous year. The company made an impairment of the inventory with declining prices, and made an impairment of the film production line equipment and other tests with signs of impairment, which resulted in a large loss in that year.
1. Analysis of operating gross profit from 2015 to 2019
Statement of changes in revenue, cost and gross profit of major products from 2015 to 2019
Unit: Ten thousand Yuan
product |
project |
2019annual |
2018annual |
2017annual |
2016annual |
2015annual |
||||
Amount/ratio |
Variable ratio |
Amount/ratio |
Variable ratio |
Amount/ratio |
Variable ratio |
Amount/ratio |
Variable ratio |
Amount/ratio |
||
Polypropylene film |
income |
9,763.62 |
|
9,695.58 |
|
8,632.78 |
|
7,493.55 |
|
14,535.00 |
cost |
10,446.96 |
|
9,732.75 |
|
8,372.62 |
|
8,157.22 |
|
13,926.00 |
|
Gross profit |
-683.34 |
-646.17 |
-37.17 |
-297.33 |
260.16 |
923.83 |
-663.67 |
-1,272.67 |
609.00 |
|
Gross profit margin |
-7.00% |
-6.62% |
-0.38% |
-3.40% |
3.01% |
11.87% |
-8.86% |
-13.05% |
4.19% |
|
Ac capacitor |
income |
25,919.19 |
0.0% |
28,141.26 |
- |
31,083.37 |
- |
22,561.50 |
- |
18,733.00 |
cost |
23,560.38 |
0.0% |
23,764.44 |
- |
25,585.58 |
- |
18,055.13 |
- |
16,628.00 |
|
Gross profit |
2,358.81 |
-2,018.01 |
4,376.82 |
-1,120.97 |
5,497.79 |
991.42 |
4,506.37 |
2,401.37 |
2,105.00 |
|
Gross profit margin |
9.10% |
-6.45% |
15.55% |
-2.13% |
17.69% |
-2.29% |
19.97% |
8.74% |
11.24% |
|
Power electronic capacitor |
income |
12,208.02 |
|
10,515.79 |
|
8,692.38 |
|
7,416.42 |
|
8,099.00 |
cost |
7,263.68 |
|
6,465.10 |
|
5,478.94 |
|
5,425.86 |
|
5,525.00 |
|
Gross profit |
4,944.34 |
893.65 |
4,050.69 |
837.25 |
3,213.44 |
1,222.88 |
1,990.56 |
-583.44 |
2,574.00 |
|
Gross profit margin |
40.50% |
1.98% |
38.52% |
1.55% |
36.97% |
10.13% |
26.84% |
-4.94% |
31.78% |
|
Polyester film |
income |
11,255.11 |
|
12,015.62 |
|
9,920.57 |
|
6,761.70 |
|
8,006.00 |
cost |
8,714.98 |
|
10,345.46 |
|
8,808.74 |
|
8,226.54 |
|
7,500.00 |
|
Gross profit |
2,540.13 |
869.97 |
1,670.16 |
558.33 |
1,111.83 |
2,576.67 |
-1,464.84 |
-1,970.84 |
506.00 |
|
Gross profit margin |
22.57% |
8.67% |
13.90% |
2.69% |
11.21% |
32.87% |
-21.66% |
-27.98% |
6.32% |
|
coating |
income |
6,821.01 |
|
7,719.24 |
|
7,265.00 |
|
7,159.46 |
|
- |
cost |
6,745.50 |
|
6,833.62 |
|
6,875.44 |
|
7,813.10 |
|
- |
|
Gross profit |
75.51 |
-810.11 |
885.62 |
496.06 |
389.56 |
1,043.20 |
-653.64 |
-653.64 |
- |
|
Gross profit margin |
1.11% |
-10.37% |
11.47% |
6.11% |
5.36% |
14.49% |
-9.13% |
-9.13% |
0.00% |
|
connector |
income |
9,157.39 |
|
9,979.32 |
|
5,264.99 |
|
- |
|
- |
cost |
9,195.06 |
|
9,209.72 |
|
4,208.42 |
|
- |
|
- |
|
Gross profit |
-37.67 |
-807.27 |
769.60 |
-286.97 |
1,056.57 |
1,056.57 |
- |
- |
- |
|
Gross profit margin |
-0.41% |
-8.12% |
7.71% |
-12.36% |
20.07% |
20.07% |
0.00% |
0.00% |
0.00% |
|
other |
income |
5,488.66 |
0.0% |
8,134.99 |
- |
8,301.98 |
- |
6,061.91 |
- |
8,571.00 |
cost |
4,063.62 |
0.0% |
5,639.29 |
- |
6,123.69 |
- |
7,979.12 |
- |
8,935.00 |
|
Gross profit |
1,425.05 |
-1,070.65 |
2,495.70 |
317.41 |
2,178.29 |
4,095.50 |
-1,917.21 |
-1,553.21 |
-364.00 |
|
Gross profit margin |
25.96% |
-4.72% |
30.68% |
4.44% |
26.24% |
57.87% |
-31.63% |
-27.38% |
-4.25% |
|
total |
income |
80,613.00 |
- |
86,201.80 |
- |
79,161.07 |
- |
57,454.54 |
- |
57,944.00 |
cost |
69,990.18 |
- |
71,990.38 |
- |
65,453.43 |
- |
55,656.97 |
- |
52,514.00 |
|
Gross profit |
10,622.83 |
-3,588.59 |
14,211.42 |
503.78 |
13,707.64 |
11,910.07 |
1,797.57 |
-3,632.43 |
5,430.00 |
|
Gross profit margin |
13.18% |
-3.31% |
16.49% |
-0.83% |
17.32% |
14.19% |
3.13% |
-6.24% |
9.37% |
As can be seen from the above, the change of the company's operating profit in the reporting period is mainly influenced by the comprehensive fluctuations of the gross profit of each business:
(1) The gross profit in 2016 decreased compared with that in 2015, mainly due to the high loss of the company's LED bracket business in that year;
(2) Gross profit in 2017 increased compared with that in 2016, mainly because the company stopped the loss-making LED business and newly developed connector business; At the same time, the company completed the relocation, installation and debugging of Line 1-4 of polypropylene film, and gradually released the production capacity of polypropylene film, resulting in the sales volume of polypropylene film increased in 2017 compared with 2016, and the gross profit of film business increased.
(3) Gross profit in 2018 was basically the same as that in 2017;
(4) The gross profit in 2019 decreased compared with that in 2018, mainly due to the rising material cost of polypropylene resin affected by RMB exchange rate fluctuations in this year. Meanwhile, the actual production capacity of polypropylene film drawing line could not be fully brought into play, resulting in the rise of unit production cost, which led to the decline of polypropylene film gross profit margin, and the increase of raw material consumption cost of the company's AC capacitors, resulting in the decline of gross profit margin. Under the influence of the international trade situation, the company's main product AC capacitor price has been significantly reduced, resulting in a substantial decline in the performance of AC capacitors, AC capacitor products reduced profit margin.
2. Analysis of asset impairment reserve for each year from 2015 to 2019
Statement of asset impairment losses and credit risk losses from 2015 to 2019
Unit: Ten thousand Yuan
project |
2019annual |
2018annual |
2017annual |
2016annual |
2015annual |
||||
amount |
variation |
amount |
variation |
amount |
variation |
amount |
variation |
amount |
|
Impairment loss on receivables/loss on credit risk |
1,857.45 |
1,977.74 |
-120.29 |
-150.87 |
30.58 |
-2,366.84 |
2,397.42 |
1,199.65 |
1,197.77 |
Loss on inventory decline |
3,354.47 |
3,122.47 |
232.00 |
1,164.74 |
-932.74 |
-3,777.95 |
2,845.21 |
366.13 |
2,479.08 |
Impairment loss on fixed assets |
5,201.56 |
5,201.56 |
- |
-847.58 |
847.58 |
-3,212.64 |
4,060.22 |
3,945.29 |
114.93 |
Impairment loss of intangible assets |
- |
- |
- |
- |
- |
-883.33 |
883.33 |
883.33 |
- |
Impairment loss on construction in progress |
764.52 |
764.52 |
- |
- |
- |
- |
- |
- |
- |
subtotal |
11,178.00 |
11,066.29 |
111.71 |
166.29 |
-54.58 |
-10,240.76 |
10,186.18 |
6,394.40 |
3,791.78 |
At the end of each year, the company conducts impairment tests on related assets in accordance with the standards. The details of the impairment of various assets are as follows:
(1) Receivables
The company has been strengthening its management of receivables. In 2016, the company set aside a large amount of bad debt reserves, mainly due to the fact that a number of receivables entered the litigation stage and the company set aside bad debt reserves according to the litigation results evaluated. In 2019, the company learned about the broken capital chain of Guangdong Chigo through daily business transactions and media reports, and evaluated the recoverability of the funds while increasing the efforts of payment collection. Based on the evaluation results, the company set aside 11,846,700 yuan of credit impairment losses in 2019. The company also learned that the end customer of Kunshan Longmeng was bankrupt due to poor management. By assessing the repayment ability of Kunshan Longmeng, the company prudently set aside bad debt reserves, and set aside credit impairment losses of RMB 3.841,300 yuan in 2019.
(2) loss from inventory decline
At the end of the period, the company conducted a decline test on inventory combined with orders in hand, estimated future selling prices, estimated selling expenses and taxes. In 2016, there were more provisions for inventory declines, mainly due to large losses in the LED bracket and crystal resonator business sold in that year. The company estimated that the net realizable value of the remaining inventory was lower than the book value, resulting in more provisions for inventory declines. In 2017 and 2018, the company's main product business was well developed, and the inventory did not fall in price. In 2019, due to the intensified market competition and the impact of RMB exchange rate fluctuations, the gross profit margin of the company's membrane products, AC capacitor products and connectors all declined. The Company tested the inventory price decline and recorded the impairment based on the future market price, etc.
(3) Impairment of fixed assets
At the end of the period, the company analyzed whether there were signs of impairment of fixed assets based on factors such as product sales and future market trends, and conducted impairment tests on fixed assets based on the way of obtaining cash flow of fixed assets and the estimation of the present value of future cash flow. In 2016, the company's fixed assets impairment provision is more, mainly the company stopped the loss of LED business, its related fixed assets impairment loss provision; In 2019, there was a large amount of impairment of the company's fixed assets, which was mainly caused by the company's impairment of the film production line combined with the sales and expected market conditions of membrane products.
(4) Impairment of intangible assets
In 2016, the impairment of the company's intangible assets was caused by the suspension of the loss-making LED bracket business and the provision for impairment of its related intangible assets.
(5) Impairment of construction in progress
In 2019, the company made provision for impairment of projects under construction. The main subsidiary Hehuijinyuan project is not expected to be pushed forward, and the company made provision for impairment of plant and equipment.
(II) Comparison with comparable listed companies in the same industry
The comparison with the performance trend of listed companies in the same industry is as follows:
Unit: Ten thousand Yuan
Name of comparable company |
Report item |
2019annual |
2018annual |
2017annual |
2016annual |
2015annual |
Greater Southeast |
Operating income |
164,571.55 |
146,536.56 |
104,851.57 |
95,066.56 |
89,814.70 |
Operating profit |
7,031.39 |
1,005.76 |
-57,485.99 |
-19,478.73 |
-14,089.71 |
|
Net profit |
6,019.88 |
3,559.41 |
-57,515.37 |
-19,234.70 |
-347.21 |
|
Jianghai Stock |
Operating income |
212,303.27 |
196,069.90 |
166,681.18 |
122,361.89 |
109,128.83 |
Operating profit |
30,637.69 |
29,572.93 |
23,813.09 |
16,227.46 |
13,801.68 |
|
Net profit |
26,620.25 |
25,785.02 |
20,397.09 |
15,894.26 |
13,688.93 |
|
Copper peak electron |
Operating income |
82,205.67 |
88,537.72 |
81,336.07 |
59,050.14 |
59,957.25 |
Operating profit |
-15,354.93 |
857.68 |
1,746.47 |
-22,030.76 |
-12,014.15 |
|
Net profit |
-16,228.43 |
1,041.33 |
1,450.87 |
-21,830.93 |
929.02 |
As can be seen from the above table, the performance of listed companies in the same industry shows an upward trend year by year. The performance of the company showed an upward trend year by year from 2015 to 2017, and a downward trend year by year from 2017 to 2019. The fluctuating trend of the company's performance is inconsistent with that of listed companies in the same industry.
From the perspective of a single product, there are two listed companies that are identical with our company: Dasoutheast and Jianghai Shares. The main analysis is shown in the "I. (III)" paragraph of Question 1. However, the overall operating performance of Dasoutheast and Jianghai Shares is not comparable with that of the company, mainly for two reasons:
1. The industrial chain of the company differs greatly from that of Dasoutheast and Jianghai
The company formed polypropylene film - metallized polypropylene film - polypropylene film capacitor one-stop pattern, established a complete film capacitor industry chain. The relationship between the company's components and its products is as follows:
公 司 |
|
产 品 |
|
Company film branch production polypropylene film; The coating branch uses polypropylene film, which is produced after steaming and gilding. Capacitor company and power electronic capacitor branch take the coating, through the winding process to produce AC-DC capacitor, power electronic capacitor. Dasoutheast mainly produces various types of thin films, while Jianghai mainly produces electrolytic capacitors. There is a big difference in the production of film capacitors related industry chain products with our own company.
2. The product structure of the company is quite different from that of Dasoutheast and Jianghai
A The sales structure of the company's products is as follows:
Product name |
2019annual |
2018annual |
||
Sales revenue (ten thousand yuan) |
proportion |
Sales revenue (ten thousand yuan) |
proportion |
|
Polypropylene film |
9,763.62 |
12.11% |
9,695.58 |
11.25% |
Ac capacitor |
25,919.19 |
32.15% |
28,141.26 |
32.65% |
Power electronic capacitor |
12,208.02 |
15.14% |
10,515.79 |
12.20% |
Polyester film |
11,255.11 |
13.96% |
12,015.62 |
13.94% |
coating |
6,821.01 |
8.46% |
7,719.24 |
8.95% |
connector |
9,157.39 |
11.36% |
9,979.32 |
11.58% |
other |
5,488.66 |
6.81% |
8,134.99 |
9.44% |
total |
80,613.00 |
100.00% |
86,201.80 |
100.00% |
B The proportion of related products of companies in the same industry in its sales structure is as follows:
Industry company |
product |
2019years |
2018years |
||
Sales revenue (ten thousand yuan) |
proportion |
Sales revenue (ten thousand yuan) |
proportion |
||
Greater Southeast |
Polyester film |
73,148.13 |
44.45% |
65,671.20 |
39.90% |
Polypropylene film |
24,247.80 |
14.73% |
22,338.04 |
13.57% |
|
Main income |
164,571.55 |
|
146,536.56 |
|
|
Jianghai Stock |
Power electronic capacitor |
187,577.26 |
88.35% |
173,250.53 |
88.36% |
Main income |
212,303.27 |
|
196,069.90 |
|
It can be seen from the above table that the product structure of our company is quite different from that of Dasoutheast and Jianghai.
To sum up, the reasons for the large fluctuations in the company's long-term performance and the large losses in 2016 and 2019 are mainly due to the changes in the market environment, which led to the large fluctuations in the performance of major products, and the sales prices of relevant products could not cover the relevant costs and expenses, resulting in the loss of inventory price and the impairment reserve of related fixed assets. The fluctuating trend of the company's performance is inconsistent with that of listed companies in the same industry, mainly because the company's performance is not comparable with that of listed companies in the same industry.
Iii. Clarify the accuracy of revenue recognition over the years and explain whether there is inter-period adjustment of revenue and profit in combination with the revenue recognition policy, recognition time, fund recovery and other situations;
(I) Revenue recognition policy and recognition time
The company's revenue recognition policy and recognition time are as follows:
The Company has transferred the principal risks and rewards of the ownership of the goods to the purchaser; The Company neither retains the continuing management rights associated with ownership nor exercises effective control over the goods sold; The amount of income can be measured reliably; The associated economic benefits are likely to flow to companies; When the associated costs incurred or to be incurred can be reliably measured, recognize the realization of merchandise sales revenue. ① Domestic sales: according to the sales contract signed by the company and the customer, the goods will be distributed by the warehouse or picked up by the customer directly, and the customer has no objection to the quantity and quality of the goods; The amount of sales income has been determined, and the payment for goods has been received or is expected to be recovered; The cost of goods sold can be measured reliably. ② Export sales: the company organizes shipping according to the sales contract with customers. After passing the inspection, the company declares the export through the customs and obtains the export declaration form; The amount of sales income has been determined, and the payment for goods has been received or is expected to be recovered; The cost of goods sold can be measured reliably.
No changes have been made to the revenue recognition policy compared to previous years.
(2) The recovery of funds
As of December 31, 2019, the company's account receivable balance and payment collection after maturity are as follows:
Report item |
Amount/proportion |
Ending balance of accounts receivable |
35,119.09 |
Balance of accounts receivable set aside for bad debts on a single basis |
6,836.35 |
Ending balance of accounts receivable after deducting single item provision for bad debts |
28,282.74 |
Amount collected after maturity |
20,475.35 |
Proportion of the amount collected after the period to the ending balance of accounts receivable |
58.30% |
The proportion of the amount collected after the period to the ending balance of accounts receivable after deducting the bad debt reserve for single item |
72.40% |
As of May 31, 2020, the amount of return after maturity is 205 million yuan.
To sum up, the company's revenue recognition policies remain consistent over the years, with accurate revenue recognition and normal collection after the period. The company does not have inter-period adjustment of revenue and profit.
Iv. In combination with relevant credit policies, payment arrangements, bill discount and other situations, explain the matching between the company's operating cash flow, income and net profit during the reporting period and the reasons.
(I) Comparison of credit policies of Top five customers corresponding to main products
Product name |
Customer name |
Account period |
Terms of payment |
||
2019years |
2018years |
2019years |
2018years |
||
Polypropylene film |
Customer1 |
90days |
90days |
Cash + acceptance |
acceptance |
Customer2 |
30days |
30days |
acceptance |
acceptance |
|
Customer3 |
60days |
90days |
acceptance |
acceptance |
|
Customer4 |
90days |
90days |
Cash + acceptance |
Cash + acceptance |
|
Customer5 |
90days |
90days |
acceptance |
acceptance |
|
Ac capacitor |
Customer6 |
90days |
90days |
acceptance |
acceptance |
Customer7 |
120days |
150days |
Telegraphic transfer |
Telegraphic transfer |
|
Customer8 |
90days |
90days |
Telegraphic transfer |
Telegraphic transfer |
|
Customer9 |
6 months |
90days |
TCL gold sheet |
Spot + acceptance |
|
Customer10 |
180days |
180days |
Telegraphic transfer |
Telegraphic transfer |
|
Power electronic capacitor |
Customer11 |
3-6 months |
60days |
Spot + acceptance + Yunxin |
Spot + acceptance |
Customer12 |
90 days after receiving the goods |
90 days after receiving the goods |
Telegraphic transfer |
Telegraphic transfer |
|
Customer13 |
3 months |
30days |
Spot + acceptance |
Spot + acceptance |
|
Customer14 |
3 months |
90days |
Spot + acceptance + Yunxin |
Spot + acceptance |
|
Customer15 |
90 days after receiving the goods |
90 days after receiving the goods |
Telegraphic transfer |
Telegraphic transfer |
|
Polyester film |
Customer16 |
60days |
60days |
Telegraphic transfer |
Telegraphic transfer |
Customer17 |
60days |
60days |
Spot + acceptance |
Spot + acceptance |
|
Customer18 |
60days |
60days |
Spot + acceptance |
Spot + acceptance |
|
Customer19 |
90days |
90days |
Spot + acceptance |
Spot + acceptance |
|
Customer20 |
30days |
30days |
Spot + acceptance |
Spot + acceptance |
The credit policies of top five customers of main products in 2019 and 2018 are basically the same, without any important changes.
(II) Payment arrangements of major suppliers
Product name |
Supplier name |
Account period |
Terms of payment |
||
2019years |
2018years |
2019years |
2018years |
||
Polypropylene film |
Supplier1 |
75-90days |
75-90days |
Letter of credit |
Letter of credit |
Supplier2 |
45-60days |
45-60days |
Letter of credit |
Letter of credit |
|
Supplier3 |
75-90days |
75-90days |
Letter of credit |
Letter of credit |
|
Supplier4 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier5 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Ac capacitor |
Supplier6 |
prepayment |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
Supplier7 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier8 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier9 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier10 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Power electronic capacitor |
Supplier11 |
prepayment |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
Supplier12 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier13 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier14 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Supplier15 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
|
Polyester film |
Supplier16 |
Monthly settlement |
Monthly settlement |
Bank deposit |
Bank deposit |
Supplier17 |
Monthly settlement |
Monthly settlement |
Bank deposit |
Bank deposit |
|
Supplier18 |
3 months |
3 months |
Bank deposits, acceptance bills |
Bank deposits, acceptance bills |
Note: polyester film raw material procurement is concentrated. For the annual purchase amount of 2019 is less than 1 million yuan, the above table does not list the credit policy.
As can be seen from the above table, there have been no important changes in the credit policies of major suppliers in 2019.
(3) Discount of bills in 2019
The amount of discounted notes receivable received in 2019 was 118 million yuan, an increase of 3 million yuan compared with 115 million yuan in 2018, which was basically the same.
(4) Matching of operating cash flow with net profit and income in 2019 and 2018
In 2019, the company's operating revenue and net profit both declined, while operating cash flow increased from the previous year. The specific matching between net operating cash flow and net profit is as follows:
Comparative Statement of Supplementary Information to the 2019 and 2018 cash flow Statements
Unit: Ten thousand Yuan
Supplementary information |
2019annual |
2018annual |
change |
1. Reconciliation of net profit to cash flows from operating activities: |
|
|
|
Net profit |
-16,228.43 |
1,041.33 |
-17,269.75 |
Plus: Reserve for asset impairment |
9,320.55 |
111.71 |
9,208.83 |
Loss on credit impairment |
1,857.45 |
- |
1,857.45 |
Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets |
8,195.72 |
8,006.57 |
189.15 |
Amortization of intangible assets |
94.47 |
94.47 |
- |
Amortization of long-term deferred expenses |
22.26 |
1.28 |
20.98 |
Loss on disposal of fixed assets, intangible assets and other long-term assets (marked with "-" for gain) |
9.50 |
-57.08 |
66.58 |
Loss on retirement of fixed assets (marked with "-" for income) |
75.78 |
32.27 |
43.50 |
Loss from changes in fair value (marked with "-" for gain) |
- |
- |
- |
Financial expenses (marked with "-" for revenue) |
1,426.62 |
1,879.85 |
-453.24 |
Investment losses (marked with "-" for gains) |
8.38 |
1.14 |
7.24 |
Decrease in deferred tax assets (marked with "-" for increase) |
833.93 |
-291.16 |
1,125.09 |
Increase in deferred income tax liabilities (marked with "-" for decrease) |
-25.61 |
231.20 |
-256.81 |
Decrease in inventory (marked with "-" for increase) |
-2,052.27 |
-1,135.72 |
-916.55 |
Decrease in operating receivables (increase marked with "-") |
-2,086.95 |
-5,986.91 |
3,899.97 |
Increase in operating payables (marked with "-" for decrease) |
10,640.31 |
-3,319.81 |
13,960.12 |
Net cash flow from operating activities |
12,091.70 |
609.15 |
11,482.55 |
As can be seen from the above, the mismatch between the net cash flow generated by the company's operating activities in 2019 and the net profit is mainly caused by the higher asset impairment loss accrued this year, the decrease in operating receivables and the increase in operating payables compared with last year. As mentioned above, the company's credit policy, payment arrangement and bill discount are basically consistent with last year, which has little impact on the change of cash flow from the company's operating activities.
1. The impact of asset impairment losses and credit risk losses
In 2019, the company recorded assets impairment losses and credit risk losses totaling 11,779,900 yuan, including reserves for inventory depreciation, fixed assets impairment and construction under construction impairment, accounts receivable impairment, notes receivable impairment and other receivables impairment. The above asset impairment losses and credit risk losses lead to a large difference between the company's net profit and the net cash flow from operating activities in 2019.
2. Impact of changes in operational receivables and payables
The data in the "Comparative Statement of Supplementary Information of Cash flow Statement in 2019 and 2018" show that the net cash flow generated by operating activities in 2019 increased significantly compared with that in 2018, mainly due to the change of operating receivables and payables in 2019 increased by 17,860.08 million yuan compared with the previous year. This year, the company strengthened the management of the collection of small and medium-sized customers and reduced the settlement amount of bills; At the same time, the company should try to settle bills and delay payment when paying suppliers. The following is the comparison of the impact of changes in the balance of major operating receivables and payables on operating cash flow in 2018 and 2019. The operating cash flow in 2019 increased by 10,7911,300 yuan compared with 2018 due to the impact of changes in the balance of notes receivable; The impact of changes in the balance of notes receivable resulted in an increase of RMB 37.6065 million in operating cash flow in 2019 compared to 2018; The impact of changes in accounts receivable balance resulted in an increase of RMB29.219,900 in operating cash flow in 2019 compared to 2018.
Statement of changes in the balance of major operating transaction items at the end of each period from 2017 to 2019
Unit: Ten thousand Yuan
assets |
2019.12.31balance |
2018.12.31balance |
2017.12.31balance |
Impact on operating cash flow |
||
2019annual |
2018annual |
change |
||||
Notes receivable |
14,614.58 |
16,835.55 |
11,521.48 |
2,220.98 |
-5,314.07 |
7,535.05 |
Receivables financing (banker's acceptance) |
4,199.06 |
- |
- |
-4,199.06 |
- |
-4,199.06 |
Other current liabilities (endorsed or discounted bills not due) |
7,455.14 |
- |
- |
7,455.14 |
- |
7,455.14 |
Notes receivable affect subtotal |
/ |
/ |
/ |
5,477.06 |
-5,314.07 |
10,791.13 |
Notes payable |
6,919.60 |
7,500.00 |
11,841.05 |
-580.40 |
-4,341.05 |
3,760.65 |
Accounts payable |
19,605.77 |
15,940.00 |
19,752.03 |
- |
- |
- |
Including: payment for engineering equipment payable |
2,126.35 |
1,290.13 |
5,010.53 |
- |
- |
- |
Operating accounts payable |
17,479.42 |
14,649.87 |
14,741.50 |
2,829.56 |
-91.64 |
2,921.19 |
total |
/ |
/ |
/ |
/ |
/ |
17,472.96 |
Opinion of annual audit accountant:
We believe that the above explanation of the reasons and rationality of the sharp decline in net profit, the explanation of the reasons for large losses in 2016 and 2019 and the comparison with comparable companies in the same industry, and the explanation of the matching between the company's operating cash flow, income and net profit and the reasons in the reporting period are true. There is no inter-period adjustment of revenue and profit.
Question 3:
According to the annual report, at the end of the report, the company's receivables were 266 million yuan, and the new provision for impairment was about 22.56 million yuan, among which the provision for bad debts was about 19.05 million yuan by single item. In 2017 and 2018, impairment reserves were about 2.41 million yuan and 2.29 million yuan respectively. Please make additional disclosure: (1) List the names, transactions, balance receivable, allowance for bad debts and age of the top five accounts receivable objects in the reporting period, and explain whether the allowance for bad debts is sufficient and based on the recovery risk of the relevant funds and accounting estimates of the allowance for bad debts; (2) List the name, transaction items, balance receivable, impairment reserve and age of the company's individual accounts receivable bad debt reserve, explain whether there is a correlation between the object receivable and the company's controlling shareholders and related parties, as well as the relevant basis for the current large amounts of bad debt reserve and the accuracy of accounting judgment; (3) Combined with the current and early stage accounts receivable impairment test, explain whether there is insufficient provision in the early stage, one-time provision for inter-period profit adjustment, and explain the accuracy and compliance of the company's revenue recognition in the early stage. Please comment on the annual audit accountant.
Reply:
I. List the names, transactions, balance receivable, bad debt reserve and aging of the top five accounts receivable objects in the reporting period, and explain whether the provision for bad debt is sufficient and based on the recovery risk of relevant funds and accounting estimates of bad debt provision;
1. Details of the top five receivables in the reporting period are as follows:
Unit: Yuan
name |
Transaction item |
Balance receivable |
Bad debt balance |
Aging of account |
Kunshan Longmeng Electronic Technology Co., LTD |
Sales connector |
21,843,095.02 |
4,741,414.48 |
Within 1 year |
Guangdong Chigo Air Conditioning Co. LTD |
Selling capacitor |
11,846,717.24 |
11,846,717.24 |
Within 2 year |
unit1 |
Selling capacitor |
10,106,601.55 |
505,330.08 |
Within 1 year |
unit2 |
Selling capacitor |
9,973,532.35 |
498,676.62 |
Within 1 year |
unit3 |
Selling capacitor |
8,921,878.13 |
446,093.91 |
Within 1 year |
total |
|
62,691,824.29 |
18,038,232.33 |
|
Among the top five customers, Unit 1, 2 and 3 have strong strength, good cash flow, short aging of less than 1 year, and good payback after the period. Bad debts are deducted and withdrawn according to the expected credit impairment risk, and the account recovery risk is low.
In 2019, Kunshan Longmeng Electronic Technology Co., LTD. (hereinafter referred to as "Kunshan Longmeng") in addition to the provision for bad debts of 900,088.45 yuan according to aging combination, the provision for bad debts of individual amounts of 3,841,326.03 yuan, a total of 4,741,414.48 yuan. The main reasons for single itemization and withdrawal are as follows: Kunshan Longmeng is a trading company, and whether it can recover the payment for goods from customers will directly affect the recovery of the payment for goods from Tongfeng Precision to Kunshan Longmeng. Chongqing Ruigengda, the client of Kunshan Longmeng, is facing debt crisis and many legal actions. Its legal representative Liu Weiwei is listed as the person subject to enforcement for trust-breaking, and its parent company Chongqing FeiRuikang Technology Development Co., Ltd. is subject to judicial freeze of equity and other investment interests of RMB 20.0 million. Based on the principle of prudence, the company anticipates that the possibility of recovering the loan of Kunshan Longmeng to Chongqing Rugenda is low, which will affect the repayment ability of Kunshan Longmeng itself, so it sets aside bad debt reserve for Kunshan Longmeng.
The receivables of Guangdong Chigo Air Conditioning Co., LTD are mainly generated by goods sold in 2018 and 2019. Since July 2019, the age of its accounts receivable has exceeded the credit term agreed in the contract. After repeated claims by the company, it reached a settlement agreement with Chigo Air Conditioning in August 2019, agreeing that Guangdong Chigo should pay 15.00% of the arrears before November 30, 2019. In October 2019, the customer capacitor workshop officially announced to stop production and cease cooperation with the company's film business. As at December 31, 2019, Guangdong Chigo Air Conditioning Co., Ltd. failed to pay the arrears in accordance with the repayment method agreed upon in the settlement Agreement. According to the public information obtained, Guangdong Chigo Air Conditioning Co., Ltd. has been faced with a large number of lawsuits since 2019, and the interim report of 2019 shows that its losses are relatively serious, and its equity holdings in Chigo Air Conditioning (Jiujiang) have been frozen, and there is a risk of capital chain break. According to the above situation and the principle of prudence, the Company will set aside the bad debt reserve for the total amount of receivables of Guangdong Chigo Air Conditioning Co., LTD.
To sum up, the company's bad debt reserves for the receivables of the top five customers are sufficient and reliable.
Ii. List the name of the object, transaction items, balance receivable, impairment reserve and age of the company's single amount of provisions for bad debts of accounts receivable, explain whether there is a relationship between the object receivable and the company's controlling shareholders and related parties, as well as the relevant basis for the large amount of provisions for bad debts and the accuracy of accounting judgment;
1. The details of the provision for bad debts of accounts receivable are as follows:
name |
Transaction item |
Balance receivable |
Balance of bad debt reserve for single item |
Aging of account |
Guangdong Chigo Air Conditioning Co. LTD |
Selling capacitor |
11,846,717.24 |
11,846,717.24 |
Within 2 years |
unit4 |
Sales film |
6,760,362.56 |
6,760,362.56 |
Within 5 years |
unit5 |
Sales support |
3,651,725.02 |
3,651,725.02 |
4-5 years |
Kunshan Longmeng Electronic Technology Co., LTD |
Sales connector |
21,843,095.02 |
3,841,326.03 |
Within 1 year |
unit6 |
Sales coating |
3,401,498.05 |
3,401,498.05 |
More than 5 years |
unit7 |
Sales coating |
3,253,001.54 |
3,253,001.54 |
3-5 years |
unit8 |
Selling electronic components |
2,336,214.70 |
2,336,214.70 |
More than 4 years |
unit9 |
Selling polyester film |
2,095,654.71 |
2,095,654.71 |
More than 5 years |
unit10 |
Sales coating |
1,662,485.47 |
1,662,485.47 |
More than 3 years |
unit11 |
Selling capacitor |
1,531,149.87 |
1,531,149.87 |
3-5 years or more |
unit12 |
Selling capacitor |
1,468,271.96 |
1,468,271.96 |
Within 2 years |
unit13 |
Selling coarse film |
6,471,937.16 |
1,356,187.22 |
1-2 years |
unit14 |
Sales connector |
1,265,329.65 |
1,265,329.65 |
Within 2 years |
unit15 |
Sales film |
1,242,911.31 |
1,242,911.31 |
1-2 years |
unit16 |
Sales film |
1,222,529.18 |
1,222,529.18 |
More than 5 years |
unit17 |
Sales film |
1,141,855.81 |
1,141,855.81 |
More than 5 years |
unit18 |
Sales film |
1,105,095.00 |
1,105,095.00 |
4-5 years |
unit19 |
Sales coating |
999,991.67 |
999,991.67 |
2-5 years or more |
unit20 |
Selling capacitor |
957,500.00 |
957,500.00 |
2-3 years, more than 5 years |
unit21 |
Sales film |
943,661.53 |
943,661.53 |
3-4 years |
unit22 |
Sales film |
879,279.05 |
879,279.05 |
More than 5 years |
unit23 |
Sales of light film, polyester film |
874,612.39 |
874,612.39 |
More than 5 years |
unit24 |
Selling electronic components |
840,366.80 |
840,366.80 |
1-3 years |
unit25 |
Sales support |
711,939.93 |
711,939.93 |
3-5 years |
unit26 |
Sales support |
688,906.56 |
688,906.56 |
4-5 years |
unit27 |
Pin film coating |
617,154.56 |
617,154.56 |
4-5 years or more |
unit28 |
Sales film |
600,920.21 |
600,920.21 |
More than 5 years |
unit29 |
Sales film |
567,394.59 |
567,394.59 |
1-4 years |
unit30 |
Sales coating |
544,384.20 |
544,384.20 |
More than 5 years |
unit31 |
Selling electronic components |
533,908.00 |
533,908.00 |
3-5 years |
unit32 |
Selling coarse film |
500,000.00 |
500,000.00 |
1-3years |
unit33 |
Sales film |
497,382.61 |
497,382.61 |
1-2years |
unit34 |
Sales coating |
496,898.60 |
496,898.60 |
3-4years |
unit35 |
Pin film coating |
486,199.20 |
486,199.20 |
3-5 years or more |
unit36 |
Sales film |
472,999.71 |
472,999.71 |
3-5years |
unit37 |
Sales connector |
452,061.29 |
452,061.29 |
Within 2 years |
unit38 |
Selling polyester film |
413,182.00 |
413,182.00 |
More than 5 years |
unit39 |
Sales of light film, coating film |
404,585.83 |
404,585.83 |
More than 5 years |
unit40 |
Sales coating |
402,513.24 |
402,513.24 |
2-3years |
unit41 |
Sales of light film, coating film |
380,725.19 |
380,725.19 |
More than 5 years |
unit42 |
Sales film |
365,698.50 |
365,698.50 |
4-5years |
unit43 |
Sales film |
364,787.93 |
364,787.93 |
More than 5 years |
unit44 |
Selling coarse film |
346,819.65 |
346,819.65 |
Within 2 years |
unit45 |
Sales coating |
325,538.00 |
325,538.00 |
4-5years |
unit46 |
Selling polyester film |
324,960.70 |
324,960.70 |
More than 5 years |
unit47 |
Selling capacitor |
296,786.88 |
296,786.88 |
2-3 years, more than 5 years |
unit48 |
Sales coating |
291,856.50 |
291,856.50 |
More than 4 years |
unit49 |
Selling polyester film |
207,349.66 |
207,349.66 |
More than 5 years |
unit50 |
Selling electronic components |
200,010.00 |
200,010.00 |
3-5 years |
other |
- |
2,190,795.15 |
2,190,795.15 |
- |
total |
|
91,481,004.38 |
68,363,485.45 |
|
The above is the specific situation of the amount of bad debt reserve for accounts receivable. Except Kunshan Longmeng Electronic Technology Co., Ltd. is the shareholder of Tongfeng Precision, a subsidiary of our company, there is no related party relationship with the company.
2. The details of the newly added single item bad debt reserve for accounts receivable in 2019 are as follows:
Unit: Yuan
Customer name |
Balance receivable |
Balance of bad debt reserve for single item |
Basis for drawing |
Amount collected from January to May 2020 |
Guangdong Chigo Air Conditioning Co. LTD |
11,846,717.24 |
11,846,717.24 |
In July 2019, Chigo's receivables exceeded the account. In August, the settlement agreement was signed. In October, the capacitor workshop of the customer officially announced to stop production, and the cooperation with our company's film business stopped. As of December 31, 2019, Chigo did not make the payment as agreed in the agreement, and its financial condition deteriorated, resulting in the risk of rupture of the capital chain. Out of the principle of prudence, the company set aside the bad debts of Chigo in full. Please refer to Question 3 and Reply 1 for details |
148,349.38 |
Kunshan Longmeng Electronic Technology Co., LTD |
21,843,095.02 |
3,841,326.03 |
In 2019, Kunshan Longmeng invested in Tongfeng Precision, transferred customers and production activities to Tongfeng Precision, and changed its business mode into a trading company that only sells its products. In the current state, its client Ruigengda is in debt and is expected to be unable to recover the money, which is expected to affect the company's recovery of the money, and a single bad debt of 3,841,326.03 yuan. Please refer to Question 3 and Reply 3 for details |
4,834,615.66 |
Unit 12 |
1,468,271.96 |
1,468,271.96 |
The specific situation is the same with its parent company, Guangdong Chigo Air Conditioning Co., LTD |
- |
Unit 13 |
6,471,937.16 |
1,356,187.22 |
In 2018, the receivables transferred from Zhengzhou Huaxiang to Xi 'an XD were RMB 1,356,187.22 according to the tripartitic agreement. In 2019, Xi 'an XD refused to bear this amount due to the quality problems of the products sold to it by Zhengzhou Huaxiang, and the bad debt reserve was RMB 1,356,187.22 for a single item. Please refer to Question 3 and Reply 3 for details |
2,530,000.00 |
Unit 14 |
1,265,329.65 |
1,265,329.65 |
In June 2019, Kunshan Camborui stopped returning the payment for goods to the company. After repeated reminders, the company filed a lawsuit against it in December 2019. As of December 31, 2019, the case is not in the process of trial, receivables recovery risk, full single-item calculation and withdrawal of bad debts. |
- |
Unit 24 |
840,366.80 |
840,366.80 |
On January 22, 2019, the company applied to the court for compulsory execution, requiring Biao Jing Microelectronics to return the arrears. On May 23, 2019, the court approved that Biao Jing Microelectronics had no property available for execution, and at this point, it was confirmed that the receivables could not be recovered, and the total amount of bad debts was set aside in the current period. |
- |
Unit 31 |
533,908.00 |
533,908.00 |
On January 24, 2019, the company applied to the court for enforcement, requiring Eperware Technology to return the arrears. On June 26, 2019, the court approved that Eperware Technology had no property available for enforcement, and at this point, it confirmed that the receivables could not be recovered, and the total amount of bad debts would be set aside. |
- |
Unit 32 |
500,000.00 |
500,000.00 |
Heyang Power stopped paying back the arrears in July 2019, but the collection failed, and bad debts were set aside in full amount in this period. |
- |
Unit 37 |
452,061.29 |
452,061.29 |
Since April 2019, the company has stopped repaying the payment for goods to the company. After repeated demands, the company filed a lawsuit against the company in September 2019. There is a risk of the payment recovery, and the whole amount is set aside for bad debts. |
- |
其他 |
313,023.33 |
313,023.33 |
No business dealings in recent years, it is expected that the money cannot be recovered |
- |
合计 |
45,534,710.45 |
22,417,191.52 |
|
9,166,970.85 |
According to the payment collection data from January to May, Kunshan Longmeng Electronics has been in normal business contact with Unit 13. Currently, the payment for daily transactions has been recovered, but the loan receivable for bad debts from Unit 13 that was transferred from Zhengzhou Huaxiang has not been recovered. Guangdong Chigo Air Conditioning Co., Ltd. recovered a small part of the payment, and the rest of the receivables have not been recovered in 2019, and the possibility of recovery of the above amounts is low. Enterprise accounts receivable bad debt reserve basis is sufficient, accounting judgment is accurate.
Iii. In combination with the current and early stage accounts receivable impairment test, explain whether there is insufficient provision in the early stage, one-time provision for inter-period profit adjustment, and explain the accuracy and compliance of the company's revenue recognition in the early stage.
1) The details of bad debt reserve for accounts receivable of newly added single unit in 2019 and the pre-impairment test are as follows:
Unit: Yuan
Name of unit |
December 31, 2019 |
December 31, 2018 |
|||
Aging of account |
Book balance |
Bad debt reserve |
Book balance |
Bad debt reserve |
|
Guangdong Chigo Air Conditioning Co. LTD |
Within 2 years |
11,846,717.24 |
11,846,717.24 |
10,736,209.56 |
775,824.88 |
Kunshan Longmeng Electronic Technology Co., LTD |
Within 1 year |
21,843,095.02 |
4,741,414.48 |
38,288,771.84 |
1,914,438.59 |
Unit 12 |
Within 2 years |
1,468,271.96 |
1,468,271.96 |
1,290,189.34 |
64,509.47 |
Unit 13 |
1-2 years |
6,471,937.16 |
1,611,974.72 |
2,879,218.47 |
143,960.92 |
Unit 14 |
Within 2 years |
1,265,329.65 |
1,265,329.65 |
1,436,768.15 |
71,838.41 |
Unit 24 |
1-3 years |
840,366.80 |
840,366.80 |
840,366.80 |
81,374.18 |
Unit 31 |
3-5 years |
533,908.00 |
533,908.00 |
533,908.00 |
191,354.00 |
Unit 32 |
Within 3 years |
500,000.00 |
500,000.00 |
611,342.80 |
49,253.16 |
Unit 37 |
Within 2 years |
452,061.29 |
452,061.29 |
707,534.70 |
35,376.74 |
other |
- |
313,023.33 |
313,023.33 |
723,543.48 |
59,661.84 |
In total: |
45,534,710.45 |
23,573,067.47
|
58,047,853.14 |
3,387,592.19 |
According to the data in the table above, Guangdong Chigao Air Conditioning Co., LTD., Kunshan Longmeng Electronic Technology Co., LTD., Unit 12,13 and 14 have a large amount of single amount of bad debt withdrawn in 2019, with a total of 17,963,135.77 yuan of bad debt reserves withdrawn in 2019.
Guangdong Chigo Air Conditioning Co., Ltd. has experienced overdue accounts since July 2019 and its collection has decreased significantly compared with the previous period. Meanwhile, according to the 2019 interim report of Guangdong Chigo, Guangdong Chigo has started to suffer serious financial losses, and there is a risk of capital chain rupture. By the end of 2019, the company's settlement agreement with Guangdong Chigo had not been implemented. In accordance with the principle of prudence, the Company has set aside a total amount of RMB 12,474,654.85 for bad debts of Guangdong Chigo and its subsidiaries.
Kunshan Longmeng Electronic Technology Co., LTD. 's client Chongqing Ruigengda had a debt crisis in the early period, but Kunshan Longmeng still has its own production and business activities, and maintains a good state of payment collection, which does not affect the receivable collection of Kunshan Longmeng to Tongfeng Precision; In 2019, Kunshan Longmeng invested in Tongfeng Precision, transferred customers and production activities to Tongfeng Precision, and changed its business mode into a trading company that only sells its products. In 2019, Kunshan Longmeng repeatedly asked Chongqing Rugenda to collect payment for goods and entrusted lawyers to collect payment, but the payment was still not collected at the end of 2019. At the end of 2019, the difficulty in recovering Chongqing Ruigenda's payment will affect the company's payment collection by Kunshan Longmeng. According to the principle of prudence, the total amount of the receivables of Kunshan Longmeng to Chongqing Ruigenda will be set aside as a single bad debt reserve of 3,841,326.03 yuan. The key factors affecting the single item accrual occurred in 2019, so the actual single item accrual of bad debt in 2019.
In December 2018, the Company entered into a tripartite agreement with Unit 13 and Zhengzhou Huaxiang Electronic Information Co., LTD. (hereinafter referred to as "Zhengzhou Huaxiang"), agreeing to convert the creditor's right of Zhengzhou Huaxiang Electronic into the creditor's right of Unit 13. Company 13 has cooperated with the company for many years and the business payment collection is good. The company judges that the risk of payment recovery is small. In 2019, when the company required Unit 13 to pay this amount, Unit 13 refused to bear the receivables formed by the tripartite agreement due to the increased losses caused by the quality problems of materials supplied by Zhengzhou Huaxiang. Therefore, in this period, the accounting treatment of the amount of the company is consistent with the accounting treatment of the receivables of Zhengzhou Huaxiang.
Company 14 has stopped paying the company's loan since June 2019. After repeated demands, the Company filed a lawsuit against it in December 2019. As of December 31, 2019, the case is not in the process of trial, there is a large risk of expected receivables recovery, and the full amount of the single bad debt reserve.
To sum up, the single-item provision for bad debts in the current period is made based on the objective facts and indications of the occurrence in 2019. There is no evidence of the impairment of receivables in the early period, so the company does not have the situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment. The revenue recognition in the early period is accurate and compliant.
Opinion of annual audit accountant:
We believe that the company has sufficient basis for the provision of impairment of accounts receivable, reasonable amount of provision, in line with the provisions of the Accounting Standards for Business Enterprises; The company's explanation of whether the receivables are related to the company's controlling shareholders and related parties, as well as the relevant basis for large amounts of provision for bad debts and the accuracy of accounting judgment are true; There is no situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment. The early income recognition is accurate and compliant.
Question 4:
The annual report shows that the company's inventory at the end of the report is 231 million yuan, and the newly added provision for falling prices is about 33.84 million yuan, among which the main goods in stock is about 21.24 million yuan, and the products in production is about 9.48 million yuan. In 2017 and 2018, the company's inventory depreciation reserve was 1.05 million yuan and 3.83 million yuan respectively. At the end of the report period, the company issued new products of about 39.89 million yuan. The company is requested to make additional disclosure: (1) Disclose the main composition, quantity, storage age, corresponding amount and depreciation reserve of the inventory by business, and explain whether there is any inventory formed by related procurement, if so, please list it separately; (2) The specific composition of newly issued commodities in the current period, the businesses involved, and the reasons and reasonableness for the substantial increase in the current period; (3) Explain whether the reserve for falling prices is sufficient and the relevant basis based on the price change trend of related raw materials and finished products as well as upstream and downstream supply and demand changes; (4) Combined with the situation of impairment test in previous years, explain whether there have been signs of impairment in previous years, whether there is insufficient provision in the early period, one-time provision for inter-period profit adjustment. Please comment on the annual audit accountant.
Reply:
1. Disclose the main composition, quantity, storage age, corresponding amount and depreciation reserve of the inventory by business, and explain whether there is any inventory formed by related procurement. If so, please list it separately;
As of December 31, 2019, the company's main inventory items are as follows:
project |
quantity |
Unit of measurement |
Book balance |
Among them: within 1 year |
More than 1 year |
Reserve for decline |
2019 turnover rate |
Turnover rate in 2018 |
Rate of decline(%) |
||
|
|
I. Finished products |
|||||||||
Polypropylene film |
1,821.27 |
Tons of |
4,777.13 |
4,166.74 |
610.39 |
1,769.14 |
6.50 |
5.46 |
37.03 |
||
coating |
252.34 |
Tons of |
818.32 |
807.05 |
11.26 |
185.34 |
19.11 |
21.61 |
22.65 |
||
Polyester film |
634.39 |
Tons of |
902.78 |
805.64 |
97.15 |
119.34 |
9.96 |
9.25 |
13.22 |
||
Ac capacitor |
23,514.85 |
wanUF |
5,667.49 |
5,352.36 |
315.14 |
1,260.74 |
5.43 |
4.99 |
22.25 |
||
Power electronic capacitor |
66,149.00 |
only |
1,953.66 |
1,622.82 |
330.83 |
65.35 |
4.32 |
4.79 |
3.35 |
||
connector |
29,602.56 |
KPCS |
1,908.80 |
1,692.46 |
216.34 |
577.93 |
5.69 |
6.92 |
30.28 |
||
Crystal device |
2,836.20 |
Ten thousand |
347.62 |
226.34 |
121.28 |
273.03 |
|
|
78.54 |
||
Regenerated particle |
756.80 |
Tons of |
159.54 |
159.54 |
- |
- |
|
|
- |
||
other |
/ |
/ |
1,081.12 |
632.35 |
448.77 |
448.78 |
|
|
41.51 |
||
subtotal |
|
|
17,616.46 |
15,465.30 |
2,151.16 |
4,699.65 |
|
|
26.68 |
||
|
|
Two, in the product |
|||||||||
Intelligent project |
/ |
/ |
1,486.34 |
667.52 |
818.82 |
902.38 |
|
|
60.71 |
||
other |
/ |
/ |
3,003.25 |
3,003.25 |
- |
371.52 |
|
|
12.37 |
||
subtotal |
|
|
4,489.59 |
3,670.77 |
818.82 |
1,273.90 |
|
|
28.37 |
||
total |
|
|
22,106.05 |
19,136.07 |
2,969.98 |
5,973.55 |
|
|
27.02 |
At the end of the period, the company does not have the inventory formed by related purchases. In 2019, the company's related party procurement is mainly to purchase aluminum shell and plastic shell from Tongling Tianyuan New Energy Technology Co., LTD. Tongling Tianyuan New Energy Technology Co., Ltd. is the company's controlling shareholder and Anhui Tongfeng Electronics Group Co., Ltd. is the company's supporting raw material supplier. The company purchases from them as needed and takes the goods immediately after purchase, so there is no inventory formed by related purchase.
At the end of 2019, the price decline rate of intelligent projects was high, which was 60.71% at the end of the year. (1) Due to the shortage of customer funds, although some intelligent projects have been completed, but not settled for a long time, the relevant project funds are expected to be unable to recover, the related project costs have been paid is expected to be unable to recover; (2) Some projects are suspended in 2019, and the cost paid is expected to be unrecoverable. At the end of 2019, a total of 9,023,800 yuan of impairment reserve was set aside for this part of the project.
Ii. The specific composition of newly shipped commodities in 2019, the businesses involved, and the reasons and reasonableness for the substantial increase in 2019;
Goods shipped in 2019 are products that have been shipped to customers but have not been accepted by customers. All goods sent out will be reconciled with customers during the period from January to May 2020, and the revenue will be recognized. The major increase this year is due to the fact that the company did not disclose the goods issued separately when disclosing the inventory details in previous years. According to the statistics, the details of the main goods issued in 2019 and 2018 are compared as follows:
Product name |
Balance at December 31, 2019 |
Balance at December 31, 2018 |
Ac capacitor |
1,944.47 |
1,920.52 |
Power electronic capacitor |
460.74 |
447.46 |
connector |
959.76 |
52.30 |
coating |
185.37 |
102.02 |
total |
3,550.35 |
2,611.29 |
It was found that, except for connector products, the goods shipped at the end of 2019 were basically unchanged compared with the goods shipped at the end of 2018, and did not increase significantly
The connector increased significantly, mainly due to the fact that after Kunshan Longmeng bought into Tongfeng Precision in July 2019, its original customers were gradually transferred to Tongfeng Precision, and the sales to Kunshan Longmeng decreased; Before July 2019, the main customer of our company was Kunshan Longmeng. The transaction method was reconciliation in the month of delivery, that is, the company confirmed revenue in the month of delivery. Therefore, the company sent fewer products at the end of 2018. Since July 2019, Tongfeng Precision products have been sold directly to end customers, with the main transaction mode being delivery in the current month and reconciliation of accounts in the next month, resulting in an increase in goods issued by connectors at the end of the period.
Iii. Explain whether the reserve for price declines is sufficient and relevant basis based on the price change trend of related raw materials and finished products as well as upstream and downstream supply and demand changes;
In 2019, the company's inventory decline reserve mainly for polypropylene film, AC capacitors and intelligent items. The details are as follows:
(1) polypropylene film, AC capacitor
The reasons for the company to reserve for the inventory decline of polypropylene film and AC capacitors are as follows: the selling price of AC capacitors declines year by year, while the selling price of polypropylene film generally declines. The factors such as market saturation, excess capacity and the emergence of substitute products in the market lead to the narrowing of profit margin and the decrease of profitability. The company expects that the future sales price of inventories will be further reduced. Therefore, the company makes a comprehensive judgment that the net realizable value of products will be lower than the book value of inventories, and the depreciation reserve will be set aside.
The impact of price trends of raw materials and finished products as well as upstream and downstream supply and demand changes on the inventory decline reserve test is as follows:
1. The impact of price changes of major raw materials
Polypropylene resin, the main raw material of the company, depends on imports. Affected by exchange rate fluctuations, the purchase price in the reporting period rose compared with the previous year, while the prices of other raw materials fluctuated normally and were basically stable.
The main products of the company are coating, AC capacitors and power electronic capacitors. All the polypropylene films consumed are produced by the company. The cost of polypropylene film has a great impact on the cost of coating, AC capacitors and power electronic capacitors.
Material/product name |
2019years |
2018years |
2017years |
||||
Unit price |
variation |
Rate of change |
Unit price |
variation |
Rate of change |
Unit price |
|
Polypropylene resin (raw material) |
10,852.93 |
721.45 |
7.12% |
10,131.48 |
14.93 |
0.15% |
10,116.55 |
As can be seen from the above table, the purchase price of polypropylene resin, the company's main raw material, has been increasing year by year, and the increase is relatively large in 2019. As a result, rising raw material prices lead to an increase in the book value of the company's ending inventory.
2. Product price trend
(1) Analysis of the change of sales price of polypropylene film and purchase price of main raw materials in recent three years
Material/product name |
2019years |
2018years |
2017years |
||||
Unit price |
variation |
Rate of change |
Unit price |
variation |
Rate of change |
Unit price |
|
Polypropylene resin (raw material) |
10,852.93 |
721.45 |
7.12% |
10,131.48 |
14.93 |
0.15% |
10,116.55 |
Polypropylene film |
20,345.34 |
523.17 |
2.64% |
19,822.17 |
-1,251.81 |
-5.94% |
21,073.98 |
The above table shows that the price of polypropylene film has increased slightly in 2019, but its increase rate is lower than that of its raw material polypropylene resin.
(2) Analysis of the change of main material cost in recent three years in the base period of AC capacitor sales price
Material/product name |
2019years |
2018years |
2017years |
||||
Unit price |
variation |
Rate of change |
Unit price |
variation |
Rate of change |
Unit price |
|
Ac capacitor (yuan/piece) |
4.74 |
-0.10 |
-2.07% |
4.84 |
-0.27 |
-5.28% |
5.11 |
Coating (cost received) (Yuan/ton) |
28,526.45 |
2,400.18 |
9.19% |
26,126.27 |
770.21 |
3.04% |
25,356.05 |
Polypropylene film (cost received) (Yuan/ton) |
21,742.94 |
1,843.85 |
9.27% |
19,899.10 |
-1,149.05 |
-5.46% |
21,048.15 |
Note: The main raw material consumed by AC capacitors is the coating produced by the company, and the main raw material for the coating is the polypropylene film produced by the company.
According to the data in the table above, the selling price of AC capacitors, the company's main product, has been declining year by year. Although the selling price of AC capacitors has decreased by a small margin, the cost of main raw materials has increased significantly, resulting in a substantial increase in the book unit cost of AC capacitor inventory.
To sum up, the company judged that the future product sales price will be stable or decline.
3. Changes in upstream and downstream supply and demand of the company
1. Analysis of upstream supply market
Polypropylene resin, the main raw material of the company, is all dependent on imports, and the company has weak bargaining power when facing suppliers. In recent years, the price of raw polypropylene resin has increased year by year. It is expected that the company's inventory costs will continue to rise in the future.
2. Downstream demand analysis
The polypropylene film product market is in a saturated state, and the overall production capacity of the market is in serious excess. As a result, the bargaining power of the company is weak when facing large customers, and the product price decreases year by year.
The AC capacitors produced by the company are mainly applied to the white goods market. In recent years, the white goods market is affected by the frequency conversion trend of home appliances. In some fields, the AC capacitors are gradually replaced, resulting in greater profit pressure.
To sum up, due to the sharp rise in the price of main raw materials, the book value of inventory rises, while the price of main products is affected by the market, and the overall trend of decline. At the same time, alternative products in downstream industries appear. The company expects that the overall selling price of polypropylene film and AC capacitors will decline in the future, and the gross profit margin will further decrease. Therefore, at the end of 2019, based on the above judgment, the company made provision for inventory decline, and the relevant basis is reasonable.
(2) Intelligent projects
Due to financial constraints of customers, although some intelligent projects have been completed, they have not been settled for a long time, so the relevant project funds are expected to be unable to recover, and the related project costs paid are expected to be unable to recover; Some projects are in a long-term shutdown state, and the cost paid is expected to be unable to recover; At the end of 2019, a total of 9,023,800 yuan of impairment reserve was set aside for this part of the project.
Iv. Combined with the situation of impairment test in previous years, explain whether there have been signs of impairment in previous years, whether there is insufficient provision in the early period, one-time provision for inter-period profit adjustment.
(1) Methods for calculating and withdrawing reserves for declines in inventory prices
The company measures the inventory at the lower of cost and net realizable value on the balance sheet date. If the cost of the inventory is higher than the net realizable value, the company shall make a reserve for inventory decline and record it into current profit and loss. In determining the net realizable value of the inventory, it shall be based on the reliable evidence obtained and take into account the purpose of holding the inventory, the impact of events after the balance sheet date and other factors. For inventories directly used for sale, such as finished products, commodities and materials for sale, the net realizable value of the inventory shall be determined in the normal course of production and operation by the estimated selling price of the inventory less estimated selling expenses and related taxes. For inventories held for the purpose of executing sales or service contracts, the contract price shall be taken as the measurement basis of the net realizable value; If the quantity of inventory held exceeds the quantity ordered under the sales contract, the net realizable value of the excess inventory shall be measured on the basis of the general sales price. The market price shall be used as the measurement basis for the net realizable value of materials used for sale.
The company's inventory decline reserve method conforms to the Accounting Standards for Business Enterprises.
(2) The situation and reasonableness of the provision for inventory declines in each year
Statement of reserves for inventories and inventory declines for 2015-2019
project |
2019 Annual report |
2018 Annual report |
2017 Annual report |
2016 Annual report |
2015 Annual report |
|||||
Book balance |
Reserve for decline |
Book balance |
Reserve for decline |
Book balance |
Reserve for decline |
Book balance |
Reserve for decline |
Book balance |
Reserve for decline |
|
Goods in stock |
13,627.42 |
4,699.65 |
15,977.24 |
2,601.06 |
16,607.74 |
3,212.83 |
13,878.59 |
4,726.58 |
20,861.45 |
5,160.54 |
Raw material |
7,725.87 |
903.45 |
7,537.97 |
606.46 |
7,562.10 |
659.12 |
6,308.40 |
715.88 |
8,642.55 |
349.93 |
Product in process |
4,489.59 |
1,273.91 |
4,254.66 |
325.13 |
4,003.94 |
335.97 |
3,293.70 |
954.99 |
4,250.82 |
520.17 |
Issued goods |
3,989.04 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Revolving material |
161.72 |
- |
159.41 |
- |
205.18 |
- |
- |
- |
160.70 |
- |
Semi-finished product |
98.44 |
98.44 |
110.53 |
99.57 |
126.41 |
126.41 |
160.86 |
143.38 |
190.19 |
60.09 |
Low value consumable goods |
- |
- |
- |
- |
- |
- |
174.64 |
- |
- |
- |
total |
30,092.08 |
6,975.43 |
28,039.81 |
3,632.22 |
28,505.37 |
4,334.33 |
23,816.19 |
6,540.82 |
34,105.71 |
6,090.73 |
Statement of revenue and gross profit of major products from 2015 to 2019
product |
project |
2019years |
2018years |
2017years |
2016years |
2015years |
Polypropylene film |
income |
9,763.62 |
9,695.58 |
8,632.78 |
7,493.55 |
14,535.00 |
Gross profit |
-683.34 |
-37.17 |
260.16 |
-663.67 |
609.00 |
|
Ac capacitor |
income |
25,919.19 |
28,141.26 |
31,083.37 |
22,561.50 |
18,733.00 |
Gross profit |
2,358.81 |
4,376.82 |
5,497.79 |
4,506.37 |
2,105.00 |
|
Power electronic capacitor |
income |
12,208.02 |
10,515.79 |
8,692.38 |
7,416.42 |
8,099.00 |
Gross profit |
4,944.34 |
4,050.69 |
3,213.44 |
1,990.56 |
2,574.00 |
|
Polyester film |
income |
11,255.11 |
12,015.62 |
9,920.57 |
6,761.70 |
8,006.00 |
Gross profit |
2,540.13 |
1,670.16 |
1,111.83 |
-1,464.84 |
506.00 |
|
coating |
income |
6,821.01 |
7,719.24 |
7,265.00 |
7,159.46 |
- |
Gross profit |
75.51 |
885.62 |
389.56 |
-653.64 |
- |
|
connector |
income |
9,157.39 |
9,979.32 |
5,264.99 |
- |
- |
Gross profit |
-37.67 |
769.60 |
1,056.57 |
- |
- |
|
other |
income |
5,488.66 |
8,134.99 |
8,301.98 |
6,061.91 |
8,571.00 |
Gross profit |
1,425.05 |
2,495.70 |
2,178.29 |
-1,917.21 |
-364.00 |
|
subtotal |
income |
80,613.00 |
86,201.80 |
79,161.07 |
57,454.54 |
57,944.00 |
Gross profit |
10,622.83 |
14,211.42 |
13,707.64 |
1,797.57 |
5,430.00 |
At the end of the period, the company conducted a decline test on inventory combined with orders in hand, estimated future selling prices, estimated selling expenses and taxes. In 2016, there were more provisions for inventory declines, mainly due to large losses in the LED bracket and crystal resonator business sold in that year. The company estimated that the net realizable value of the remaining inventory was lower than the book value, resulting in more provisions for inventory declines. In 2017 and 2018, the company's main product business was well developed, and the inventory did not fall in price. In 2019, due to the intensified market competition and the impact of RMB exchange rate fluctuations, the gross profit margin of the company's membrane products, AC capacitor products and connectors all declined. The Company tested the inventory price decline and recorded the impairment based on the future market price, etc.
To sum up, the company's reserve for inventory declines from 2015 to 2019 remained consistent without any change. At the end of each year, in accordance with the Accounting Standards for Business Enterprises and the provisions of the company's accounting policies, the company conducts the inventory decline test. There is no situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment.
Opinion of annual audit accountant:
We believe that the main composition, quantity and age of inventory disclosed by the company are true. At the end of 2019, there is no inventory formed by related party procurement. The company's explanation of the reasons and reasonableness for the substantial increase of goods shipped during the period is reasonable; The company's inventory decline reserve at the end of the period is accurate and based on sufficient basis. There is no situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment.
Question 5:
The annual report disclosed that the company's fixed assets at the end of the report period were 706 million yuan, mainly machinery and equipment and buildings, accounting for 62.25% of the net assets. During the reporting period, the company made a provision for impairment of fixed assets of about 53.2 million yuan, mainly for machinery and equipment of about 51.82 million yuan. However, in 2017 and 2018, the company respectively made an impairment reserve of about 8.47 million yuan and 0 yuan. In addition, nearly 136 million yuan of fixed assets of the company have not yet completed the certificate of property right, and about 33.14 million yuan of fixed assets have limited ownership. (1) List the fixed assets corresponding to the main products of the company, including but not limited to the designed capacity, actual capacity, capacity utilization rate, total investment in the early stage, the current use status, original value and net value of the assets; (2) Combined with the situation of comparable listed companies in the same industry, as well as the design and utilization of the company's product capacity, analyze the match between the fixed assets of the company and the revenue generated in each business segment, clarify whether the fixed assets of the company are consistent with other companies in the industry, and explain the reasons for the differences; (3) In combination with the use status and income generated by the company's fixed assets, explain whether the impairment reserve and relevant basis are fully deducted and withdrawn, and in combination with the impairment test in previous years, explain whether there is insufficient provision in the early stage and one-time provision for inter-period profit adjustment; (4) The method of obtaining the large amount of fixed assets for which the title certificate has not been completed and the reasons for not obtaining the title certificate up to now; (5) Specific matters involved in the above-mentioned fixed assets with limited ownership, including the amount, flow direction and use of the funds obtained from mortgage, and whether they flow to the controlling shareholder and related parties. Please comment on the annual audit accountant.
Reply:
I. Listing the fixed assets corresponding to the main products of the company, including but not limited to the designed capacity, actual capacity, capacity utilization rate, total investment in the early stage, the current use status, original value and net value of the assets;
The company's main products include corresponding fixed assets as follows:
1. Fixed assets corresponding to main products in 2019
Production of main products |
Design capacity |
Actual capacity |
Capacity utilization rate |
Total initial investment (ten thousand yuan) |
Original value (ten thousand yuan) |
Book value (ten thousand yuan) |
Turnover of fixed assets率 |
Current service status |
Polypropylene film |
12000t |
9085t |
76% |
46,439.63 |
46,439.63 |
30,246.61 |
0.61 |
Except line 1 is out of service, others are in use |
coating |
5500t |
4618t |
84% |
19,007.35 |
19,007.35 |
5,044.57 |
2.56 |
In use |
Power electronic capacitor |
/ |
258266only |
/ |
6,586.30 |
6,586.30 |
3,015.38 |
3.94 |
In use |
Ac capacitor |
113500wanUF |
100651wanUF |
89% |
8,869.13 |
8,869.13 |
2,145.10 |
10.87 |
In use |
Polyester film |
5600t |
5627t |
100% |
26,604.66 |
26,604.66 |
10,298.09 |
1.08 |
In use |
connector |
1750kk |
1402kk |
80% |
7,157.81 |
7,157.81 |
4,339.62 |
2.12 |
In use |
total |
|
|
|
114,664.88 |
114,664.88 |
55,089.37 |
|
|
2. Fixed assets corresponding to major products in 2018
Production of main products |
Design capacity |
Actual capacity |
Capacity utilization rate |
Total initial investment (ten thousand yuan) |
Original value (ten thousand yuan) |
Book value (ten thousand yuan) |
Turnover rate of fixed assets |
Current service status |
Polypropylene film |
12000t |
9899.68t |
82% |
46,369.93 |
46,369.93 |
36,879.71 |
0.56 |
In use |
coating |
5500t |
4862t |
88% |
19,891.18 |
19,891.18 |
6,148.43 |
2.47 |
In use |
Power electronic capacitor |
/ |
233670only |
/ |
6,411.29 |
6,411.29 |
3,123.33 |
3.32 |
In use |
Ac capacitor (including DC) |
113500wanUF |
102463wanUF |
90% |
9,848.82 |
9,848.82 |
2,645.49 |
10.36 |
In use |
Polyester film |
5600t |
5563t |
99% |
26,765.01 |
26,765.01 |
12,082.78 |
0.98 |
In use |
connector |
/ |
491 kk |
/ |
4,949.51 |
4,949.51 |
4,292.74 |
2.47 |
In use |
total |
|
|
|
114,235.75 |
114,235.75 |
65,172.48 |
|
|
3. Fixed assets corresponding to major products in 2017
Production of main products
|
Design capacity |
Actual capacity |
Capacity utilization rate |
Total initial investment (ten thousand yuan) |
Original value (ten thousand yuan) |
Book value (ten thousand yuan) |
Current service status |
Polypropylene film |
12000t |
10072.23t |
84% |
46,798.66 |
46,798.66 |
40,371.53 |
In use |
coating |
5500t |
5316.36t |
97% |
19,814.62 |
19,814.62 |
6,741.65 |
In use |
Power electronic capacitor |
/ |
253453只 |
/ |
6,166.99 |
6,166.99 |
3,211.53 |
In use |
Ac capacitor (including DC) |
113500万UF |
105043万UF |
93% |
9,583.67 |
9,583.67 |
2,811.62 |
In use |
Polyester film |
5600t |
5209t |
93% |
26,723.51 |
26,723.51 |
13,746.22 |
In use |
connector |
/ |
200 kk |
/ |
3,923.16 |
3,923.16 |
3,797.45 |
In use |
total |
|
|
|
113,010.61 |
113,010.61 |
70,680.00 |
|
Note: Considering that power electronic capacitors are customized products with many specifications and models, the production capacity of different products produced by the company's production line varies greatly. The designed production capacity is not listed here. Connector product is a new industry entered by the company in 2017. The initial product positioning of the company is not clear. The specifications of the products produced in 2017 and 2018 are large and different, so the design capacity is not listed here.
Ii. Combined with the situation of comparable listed companies in the same industry, as well as the design and utilization of the company's product capacity, analyze the match between the fixed assets of the company and the revenue generated in each business segment, determine whether the fixed assets of the company are consistent with other companies in the industry, and explain the reasons for the differences;
Comparison table of fixed assets, capacity, output and sales revenue of each business module of the company in 2019
Production of main products |
Design capacity |
Actual capacity |
Capacity utilization rate |
Book value |
2019 sales by product |
Consolidated sales revenue |
Polypropylene film |
12000t |
9085t |
76% |
30,246.61 |
20,418.60 |
9,763.61 |
coating |
5500t |
4618t |
84% |
5,044.57 |
14,334.11 |
6,821.01 |
Power electronic capacitor |
/ |
258266只 |
/ |
3,015.38 |
12,080.74 |
12,208.02 |
Ac capacitor (including DC) |
113500万UF |
100651万UF |
89% |
2,145.10 |
26,027.69 |
26,027.69 |
Polyester film |
5600t |
5627t |
100% |
10,298.09 |
12,115.58 |
11,255.11 |
connector |
1750kk |
1402kk |
80% |
4,339.62 |
9,157.39 |
9,157.39 |
total |
|
|
|
55,089.37 |
94,134.12 |
75,232.84 |
Please refer to the reply in paragraph 2 (2) of question 2.2 of this letter. The company does not have comparable listed companies in the same industry, and the match between fixed assets and income of each business segment listed in the same industry cannot be obtained from public data, so it is not clear whether the fixed assets of the company are consistent with other companies in the industry.
Iii. Explain whether the impairment reserve and relevant basis are fully drawn and withdrawn based on the use status and income generated by the company's fixed assets; Combined with the impairment test of previous years, explain whether there is insufficient provision in the early stage, one-time provision for inter-period profit adjustment;
(I) In combination with the use status of the Company's fixed assets and the income generated, explain whether the impairment reserve is fully drawn and withdrawn and the relevant basis.
1. Impairment of fixed assets in 2019
The details are as follows:
Class of fixed assets |
Deduct the amount of impairment |
Machinery and equipment |
5,182.40 |
Transport equipment |
0.42 |
Instrument and meter |
8.22 |
Office equipment and others |
10.52 |
total |
5,201.56 |
2. Impairment calculation and withdrawal method
The company shall conduct impairment tests on the company's fixed assets in combination with the use status of assets and future earnings. The difference between the recoverable amount of the asset and the carrying value of the asset is calculated and deducted. The recoverable amount is recognized as follows:
(1) The polypropylene film No. 1 production line of the stock headquarters, the electronics production line of the subsidiary company, and idle capacitor machinery and equipment of the subsidiary company cannot contribute to the company's operating cash flow through production and operation because they have been stopped or idle. Therefore, the net amount of the fair value of the asset minus the disposal expense shall be taken as the recoverable amount.
(2) The stock headquarters polypropylene film production line 2-6 is expected to continue to operate in the future, and the present value of the expected future cash flow of the asset is taken as its recoverable amount.
(3) If part of the production equipment and molds of the subsidiary Tongfeng Precision and its branch are idle, the net amount of the fair value of the asset minus the disposal expense shall be taken as the recoverable amount; The remaining assets are divided into asset groups with the present value of the assets' projected future cash flows as the recoverable amount.
3. Specific calculation process of impairment of fixed assets
According to the use status of each asset and the expected future earnings, the estimated recoverable amount of the discontinued production line and idle equipment is estimated in accordance with the net salvage value rate of assets, and the company has made a provision for impairment of fixed assets according to the calculated results. For the production lines and other equipment that are expected to continue to be used as products, the present value of the expected future cash flow of the asset group is taken as the expected recoverable amount, and the Company has set aside the impairment reserve for fixed assets according to the difference. The details are as follows:
Fixed assets |
Net book value |
Recoverable amount |
Provision for impairment |
Service status |
Method of recognition of recoverable amount |
Polypropylene film production line 1 |
1,443.81 |
107.00 |
1,336.81 |
idle |
Estimated net salvage value |
Polypropylene film production line 2-6 |
32,528.95 |
30,196.52 |
2,332.43 |
In use |
Estimated present value of future cash flows |
Precision idle production equipment and mold |
379.51 |
23.33 |
356.18 |
idle |
Estimated net salvage value |
Precise portfolio of in-use asset groups |
5,339.46 |
4,316.29 |
1,023.17 |
In use |
Estimated present value of future cash flows |
Three electronic production lines |
228.96 |
157.16 |
71.80 |
idle |
Estimated net salvage value |
Capacitors idle machinery and equipment |
90.85 |
9.68 |
81.17 |
idle |
Estimated net salvage value |
total |
40,011.54 |
34,809.98 |
5,201.56 |
|
—— |
(II) In combination with the impairment test of previous years, explain whether there is insufficient provision in the early stage and one-time provision for inter-period profit adjustment
1. Impairment provision in each year
project |
2019years |
2018years |
2017years |
Number of impairment accrued in the current year |
5,201.56 |
- |
847.58 |
Cumulative impairment number for the year |
10,471.21 |
5,320.07 |
5,393.44 |
In 2017, all production equipment related to LED support was discontinued, and the remaining equipment continued to be deducted. In 2017, the total amount of LED production equipment impairment reserve was 8,475,800 yuan. The impairment reserve for fixed assets in 2019 was mainly RMB 3,692,400 for polypropylene film production line and RMB 1,3793,500 for connector production equipment.
2. Whether there is insufficient provision in the early stage and one-time provision for inter-period profit adjustment
Based on the judgment of future sales of products, the company analyzes whether there are signs of impairment of fixed assets. The gross profit of polypropylene film production line products and connector products in recent three years is analyzed as follows:
(1) Reason and rationality analysis of impairment reserve for polypropylene film production line in 2019
A Gross profit analysis of main and by-products of polypropylene film production line in recent three years
product |
project |
2019years |
2018years |
2017years |
Main product
|
income |
9,763.62 |
9,695.58 |
8,632.78 |
Gross profit |
-683.34 |
-37.17 |
260.16 |
|
Gross profit margin |
-7.00% |
-0.38% |
3.01% |
|
by-product
|
income |
1,262.39 |
1,670.36 |
1,224.08 |
Gross profit |
885.18 |
1,179.35 |
803.55 |
|
Gross profit margin |
70.12% |
70.60% |
65.64% |
|
subtotal |
income |
11,026.01 |
11,365.94 |
9,856.86 |
Gross profit |
201.84 |
1,142.18 |
1,063.71 |
|
Gross profit margin |
1.83% |
10.05% |
10.79% |
B company polypropylene film downstream products in recent three years to achieve gross profit analysis table
product |
project |
2019years |
2018years |
2017years |
coating |
income |
6,821.01 |
7,719.24 |
7,265.00 |
Gross profit |
75.51 |
885.62 |
389.56 |
|
Gross profit margin |
1.11% |
11.47% |
5.36% |
|
Ac capacitor |
income |
25,919.19 |
28,141.26 |
31,083.37 |
Gross profit |
2,358.81 |
4,376.82 |
5,497.79 |
|
Gross profit margin |
9.10% |
15.55% |
17.69% |
|
Power electronic capacitor |
income |
12,208.02 |
10,515.79 |
8,692.38 |
Gross profit |
4,944.34 |
4,050.69 |
3,213.44 |
|
Gross profit margin |
40.50% |
38.52% |
36.97% |
|
subtotal |
income |
44,948.22 |
46,376.29 |
47,040.75 |
Gross profit |
7,378.66 |
9,313.13 |
9,100.79 |
|
Gross profit margin |
16.42% |
20.08% |
19.35% |
The data in Table "Analysis of Gross Profit of Main and by-products of polypropylene film production line in Recent three Years" and "Analysis of gross profit of downstream products of polypropylene film of Company B in recent three years" show that although the gross profit of polypropylene film was negative in 2018, the combined gross profit of main and by-products of polypropylene film production line was 10.05%, which was basically the same as that in 2017. The overall profitability of polypropylene film production line is stable; The comprehensive gross profit rate of polypropylene film downstream products produced by the company was 20.08%, which was basically the same as that in 2017. In 2018, the company's polypropylene film downstream products had good profitability and stable profitability. At the same time, the production lines of polypropylene film produced normally in 2018, without long-term idle situation. There was no obvious evidence of impairment reserve in the polypropylene film production line in 2018.
According to the data in Table "Analysis of Gross Profit of Main and by-products of polypropylene film Production line in Recent three Years" and "Analysis of gross profit of downstream products of polypropylene film of Company B in recent three years", the comprehensive gross profit of main and by-products of polypropylene film production line in 2019 was 1.83%, which decreased by 8.22% compared with last year. The gross profit margin of main product polypropylene film was -7.00%, decreased by 6.62% compared with the previous year; The company's production of polypropylene film downstream product gross margin decreased by 3.67% compared to the previous year. At the same time, in 2019, the production line 1 of polypropylene film was discontinued, the market supply of polypropylene film products exceeded the demand, the industry overcapacity was serious, and the cost of its raw material polypropylene resin increased, leading to the continuous decline of polypropylene film gross profit margin. The household appliances capacitor products were affected by the trend of household appliances conversion and the impact of the tariff increase in the United States, leading to the narrowing of the gross profit margin of AC capacitor. Based on the above factors, the company believes that the polypropylene film production line has obvious signs of impairment in 2019. On this basis, the company believes after analysis and judgment that there are signs of impairment in the polypropylene film 1-6 production line and the connector production line, so it carries out impairment test and reserves for impairment of fixed assets. In 2019, the total amount of impairment reserve for fixed assets is RMB 36.692,400.
(2) Reasons and reasonableness analysis of impairment reserve for connectors related production equipment in 2019
product |
project |
2019years |
2018years |
2017years |
connector |
income |
9,157.39 |
9,979.32 |
5,264.99 |
Gross profit |
-37.67 |
769.60 |
1,056.57 |
|
Gross profit margin |
-0.41% |
7.71% |
20.07% |
The company entered the connector industry in 2017. Although the gross profit of connector products in 2018 declined significantly, the business considered by the company is a newly developed business module, and the company is in the exploratory development stage. At the same time, the sales scale of connectors in 2018 increased significantly compared with that in 2017, and the gross profit of products is positive. Taking the above factors into consideration, the company believes that there is no sign of impairment of connector related assets.
In 2019, under the influence of industry market competition and rapid product replacement frequency, the gross profit of connector products is negative, and is expected to continue to decline, with obvious signs of impairment of related assets. Therefore, the impairment test was carried out and the impairment was deducted. In 2019, the total amount of impairment reserve for fixed assets was 13,793,500 yuan.
To sum up: The company believes that it is reasonable to test and reserve for asset impairment in accordance with the asset impairment criteria for obvious signs of impairment of some machines and equipment in 2019. In 2017 and 2018, the impairment reserves that were tested and deducted were reasonable and in line with the development planning and market expectations at that time. There is no situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment.
Iv. How to obtain the large amount of fixed assets whose title certificate has not been completed and the reasons for the failure to obtain the title certificate up to now;
As of December 31, 2019, the fixed assets that have not yet received the title certificate are mainly some factories and supporting buildings built by the company to meet the needs of production and operation.
As of December 31, 2019, the fixed assets that have not completed the ownership certificate are as follows:
Name of fixed assets |
Fixation time |
Book value |
Acquisition mode |
Reasons for not having completed the title certificate |
Film branch five line property |
2015.12.31 |
3,868.53 |
self-built |
Planning, construction and other adjustments are being handled |
Film branch six line property |
2015.12.31 |
3,803.76 |
self-built |
Planning, construction and other adjustments are being handled |
BOPET project plant |
2007.12.31 |
845.83 |
self-built |
Planning, construction and other adjustments are being handled |
Locomotive capacitor No. 8 steel structure workshop |
2013.10.01 |
620.03 |
self-built |
Planning, construction and other adjustments are being handled |
Crystal workshop |
2013.10.01 |
540.55 |
self-built |
Planning, construction and other adjustments are being handled |
Three electronic plant |
2005.05.31 |
531.95 |
self-built |
Planning, construction and other adjustments are being handled |
Locomotive capacitor Building No. 6 |
2013.03.31 |
514.34 |
self-built |
Planning, construction and other adjustments are being handled |
Capacitor No.8 steel structure factory building |
2013.11.30 |
484.43 |
self-built |
Planning, construction and other adjustments are being handled |
Film capacitor production plant one |
2013.03.31 |
352.48 |
self-built |
Fire acceptance is being handled |
Locomotive capacity building |
2006.01.31 |
234.73 |
self-built |
Planning, construction and other adjustments are being handled |
British crystal resonator workshop |
2005.12.31 |
272.79 |
self-built |
Planning, construction and other adjustments are being handled |
Film capacitor production workshop II |
2013.03.31 |
262.91 |
self-built |
Fire acceptance is being handled |
35KV power supply Facilities (housing) |
2013.03.31 |
215.71 |
self-built |
Planning, construction and other adjustments are being handled |
Auxiliary occupancy |
2018.06.01 |
988.69 |
self-built |
Be handling |
total |
|
13,536.73 |
|
|
Because of the production characteristics of the company, the relevant plants and other buildings before the construction of strict planning, design, fire protection, safety, environmental assessment and other necessary approval work. But during the construction process, the company had to adjust the original design accordingly. In order to ensure the implementation progress of the project, the company reported to the relevant management departments during the construction. As a result, after the construction of part of the plant and its supporting buildings reached the usable state, the necessary procedures of planning, construction adjustment, fire control and other examination, acceptance and approval for the certificate of property rights seriously lagged behind. Up to now, the relevant procedures have not been completed. Our company is actively cooperating with relevant departments to check, accept and approve the relevant procedures for the workshop and the supporting buildings without property rights certificate, so as to obtain the relevant procedures and complete the relevant property rights certificate as soon as possible.
5. Specific matters related to the above-mentioned fixed assets with limited ownership, including the amount, flow direction and use of the funds obtained from mortgage, and whether they flow to the controlling shareholder and related parties.
In 2019, the book value of fixed assets with limited ownership totaled RMB 33.142,200. The details are as follows:
unit |
Asset class |
Book value of fixed assets |
Use of mortgage |
Amount of funds obtained |
The purpose and direction of the funds |
Wenzhou Tongfeng Electronic Materials Co., LTD |
Building and building |
363.38 |
The property is used to issue bank acceptance bills to Yongjia Sub-branch of China Construction Bank Co., Ltd. to provide a mortgage guarantee of up to 16.9 million yuan |
Issued a bill of 25 million yuan, of which 20 million yuan was discounted to obtain a net discount of 19,773,800 yuan |
All the bills issued will be used to pay the payment for goods of Tongfeng Electronics, of which 20 million will be discounted for the payment for goods and fees, and the other 5 million will be held by Tongfeng Electronics at the end of the report period, which has not yet been endorsed or discounted |
Tongling Tongfeng Precision Technology Co. LTD |
Machinery and equipment |
2,950.84 |
Jiangsu Financial Leasing Co., LTD. Financial leasing guarantee |
Obtained financing principal of 38.5 million yuan |
Mainly used to pay suppliers for daily purchases |
total |
—— |
3,314.22 |
—— |
—— |
—— |
The Company does not have the situation that the funds obtained from the mortgage flow to the controlling shareholders and related parties.
Opinion of annual audit accountant:
We believe that the information of fixed assets corresponding to the main products disclosed by the company is accurate; Reasonable explanation of the matching between the company's fixed assets and the income generated; At the end of 2019, the provision for impairment of fixed assets is sufficient and reasonable, and there is no situation of insufficient provision in the early period and one-time provision for inter-period profit adjustment; The company's explanation of the way to obtain the large amount of fixed assets for which the title certificate has not been completed and the reasons for failing to obtain the title certificate up to now are reasonable; Supplementary disclosure of the ownership of the limited fixed assets involved in the specific matters true.
Question 6:
According to the annual report, the book monetary fund amount of the company in 2019 is about 258 million yuan, accounting for about 14.67% of the total assets of the company, of which about 62.94 million yuan is limited, mainly for bank acceptance deposit, letter of credit deposit, etc. During the same period, the scale of the company's interest-bearing liabilities was about 188 million yuan, accounting for about 10.69% of the company's total assets. (1) Analyze the security of the company's funds by combining the deposit location, deposit type, interest rate level, average monthly balance, interest income and other factors during the reporting period; (2) Disclose the specific reasons for the above restricted monetary funds, and explain whether the relevant restricted monetary funds are compatible with the scale of corresponding bills and letters of credit; (3) In combination with the company's business model, explain the reasons and reasonableness of more interest-bearing loans while the monetary fund balance is high, whether there are joint or co-managed accounts with the controlling shareholder or other related parties, whether there are actual use of monetary funds by other parties, whether there are potential contractual arrangements and whether there are potential restricted uses. Please comment on the annual audit accountant.
Reply:
I. Analyze the security of the company's funds in combination with the deposit location, deposit type, interest rate level, average monthly balance, interest income and other factors during the reporting period;
(I) The type, deposit and use of the Company's monetary funds as of December 31, 2019 are as follows:
project |
2019 year-end balance |
Proportion of total monetary funds |
remarks |
Monetary funds: |
257,582,216.50 |
100.00% |
|
Including: cash on hand |
6,146.12 |
0.00% |
|
Bank deposit |
194,631,032.92 |
75.56% |
|
Other monetary funds |
62,945,037.46 |
24.44% |
Limited use |
In other monetary funds: |
|
|
|
Letter of credit deposit |
34,845,037.46 |
13.53% |
Limited use |
Bank acceptance deposit |
28,100,000.00 |
10.91% |
Limited use |
The company's ending monetary fund balance is 257,582,216.50 yuan, and the restricted fund is 62,945,037.46 yuan. In addition to the cash on hand, which accounts for a very small proportion, the rest of the monetary fund is deposited in the bank.
(2) Types of deposits, interest rates, average monthly balances and interest income
1. The Company's monetary fund balance at the end of each month in 2019 is as follows:
month |
Month-end balance |
1 |
276,573,479.27 |
2 |
241,744,676.44 |
3 |
241,223,647.54 |
4 |
263,930,522.59 |
5 |
300,283,165.64 |
6 |
309,579,271.67 |
7 |
299,824,109.22 |
8 |
274,059,652.65 |
9 |
247,133,475.70 |
10 |
246,684,111.36 |
11 |
196,852,171.49 |
12 |
257,582,216.50 |
Weighted average balance by month 2019 |
262,955,875.01 |
The low ending balance of monetary funds in January was mainly caused by the failure to complete the renewal of relevant credit after the repayment of the principal of bank acceptance draft and the principal of letter of credit in November.
2. Details of the company's deposits, interest rates and the calculation of interest income are as follows:
project |
Weighted average balance by month 2019 |
Prime rate of interest |
Estimated interest income |
Monetary funds: |
|
|
|
Cash on hand |
12,078.14 |
- |
- |
Bank deposit |
183,711,723.91 |
0.30% |
551,135.17 |
Other monetary funds |
79,232,072.96 |
1.30% |
1,030,016.95 |
In total: |
262,955,875.01 |
- |
1,581,152.12 |
Book interest income: |
|
|
1,638,186.37 |
Difference between book interest income and estimated interest income |
|
|
57,034.25 |
The fund accounts of the company are managed separately. The monetary funds of restricted funds are used to issue bank acceptance bills and letters of credit. The interest income of bank deposits and margin is basically consistent with the actual income, and the difference is caused by the slight difference between the average balance and the actual balance. As of December 31, 2019, the company's monetary funds are deposited safely and the fund account management is compliant.
2. Disclose the specific reasons for the above restricted monetary funds, and explain whether the relevant restricted monetary funds are compatible with the scale of corresponding bills and letters of credit;
The main reason for the limited margin is that the company needs to pay a corresponding proportion of margin when issuing banker's acceptance bill and letter of credit. The specific restrictions are shown in the following table:
Bank name |
Business content |
End of 2019 balance |
Proportion (%) |
Amount of deposit |
Limiting cause |
1) Bank acceptance deposit |
|||||
Industrial Bank Hefei Huizhou Road branch |
Acceptance bill |
40,000,000.00 |
50.00 |
20,000,000.00 |
deposit |
Yongjia Wuniu Branch of China Construction Bank |
Acceptance bill |
25,000,000.00 |
30.00-40.00 |
8,100,000.00 |
deposit |
subtotal |
|
65,000,000.00 |
- |
28,100,000.00 |
|
2) L/C deposit |
|||||
Agricultural Bank of China Tongling Tongdu Sub-branch |
Letter of credit |
USD2,486,000.00 |
100.00 |
EUR2,617,000.00/ RMB20,453,163.50 |
deposit |
Agricultural Bank of China Tongling Tongdu Sub-branch |
Letter of credit |
USD336,000.00 |
105.00 |
USD352,850.00/ RMB2,461,552.17 |
deposit |
Agricultural Bank of China Tongling Tongdu Sub-branch |
Letter of credit |
USD81,000.00 |
100.00 |
RMB700,000.00 |
deposit |
Tongling Branch of Shanghai Pudong Development Bank |
Letter of credit |
- |
|
RMB437,116.29 |
deposit |
Agricultural Bank of China Tongling Tongdu Sub-branch |
Letter of credit |
- |
|
EUR1,381,000.00/ RMB10,793,205.50 |
deposit |
subtotal |
|
RMB20,251,908.60 |
|
34,845,037.46 |
|
total |
|
|
|
62,945,037.46 |
|
1. The letter of credit opened by the company in Agricultural Bank of China is a deposit with a low risk ratio of 100.00%, and some clauses of the letter of credit have a floating rate of 5%. The issuing bank will convert the deposit according to the maximum amount, that is, 105% of the issuing amount will calculate the amount of the deposit; Most of the margin paid at the issuing bank is in Euro currency, while the letter of credit is in US dollar. The issuing bank stipulates that the margin shall be paid in a currency different from the letter of credit, and the amount of margin shall be calculated at a 10% discount.
2. Tongling Sub-branch of Shanghai Pudong Development Bank has paid the L/C in 2019, but due to the bank's error, 437,116.29 yuan of L/C deposit has not been returned to the company's general account. The company is asking Shanghai Pudong Development Bank to find out the cause of the error and refund the relevant funds to the company's general account as soon as possible.
3. The principal of the letter of credit corresponding to the 1.381 million euro margin of the Tongdu Sub-branch of the Agricultural Bank of China has expired before December 31, 2019, and the banking system has delayed the transfer of the relevant margin to the general account of the company in time, and the amount has been transferred to the general account of the company in January 2020.
To sum up, the amount restricted by monetary funds as margin is compatible with the scale of corresponding bills and letters of credit.
Iii. In combination with the company's business model, explain the reasons and reasonableness of more interest-bearing loans while the monetary fund balance is high, whether there are joint or co-managed accounts with the controlling shareholder or other related parties, whether there are actual use of monetary funds by other parties, whether there are potential contractual arrangements and whether there are potential restricted uses.
(I) Main business modes of the Company
1. Company procurement includes import material procurement and domestic material procurement. For the purchase of imported materials, the company adopts the product-for-sale mode of production organization and mainly adopts the settlement of international letter of credit. For domestic material procurement, the company determines the purchase price of raw materials through bidding after selecting qualified suppliers, mainly by paying commercial bills at the expiration of the contract.
2. The company's product sales are divided into domestic sales and foreign sales. In terms of domestic sales, the company mainly adopts the direct sales model, and the payment for sales is given a certain credit period according to the customer's credit status. The payment for domestic sales is basically a commercial draft, unless the interest is borne, the customer rarely settles with the company through telegraphic transfer. And the collection is basically concentrated in the second half of the year. In the aspect of foreign sales, the company realizes the export of products through the subsidiary WTO import and export, and recovers the foreign currency after the expiration of the credit term.
(2) Reasons and reasonableness for the existence of loans with interest
1. As of December 31, 2019, the Company's monetary fund balance is 258 million yuan, and the RMB deposit balance that can be used at any time, excluding margin and foreign currency deposits, is 166 million yuan, which is lower than the interest bearing debt balance of 188 million yuan.
2. The company's loans are mainly guaranteed by the controlling shareholder and the actual controller. Due to the economic downturn, the controlling shareholder and the actual controller of the company face great economic pressure, which brings certain negative effects to the company. In addition, due to the company's poor operation in recent years, the company's credit line has been repeatedly compressed, including the direct cancellation of the line of international letter of credit, and the risk that the company's loan cannot be renewed on time after repayment becomes more and more serious. Therefore, the company must maintain certain safe fund reserves.
3, due to the company's main business model, the company has a certain credit period. The company's domestic sales are basically commercial bills, mainly used for the company's domestic purchase payment; Foreign currency collected from foreign sales is mainly used for full margin of letters of credit for imported materials and payment of international letters of credit due.
4. Every month, the company has to pay about 30 million yuan in cash for employees' salaries, utilities, taxes, interest, etc. From January to April 2020, there are about 88.1 million yuan of financial liabilities due, so the company needs nearly 200,000 yuan in cash from January to April 2020 alone. At the same time, the first half of the year is not the main collection period of the company's domestic sales, the amount of the company's sales collection is small, and the main money received is commercial bills. Therefore, when it is impossible for the company to obtain cash through other channels in the short term, in order to meet the daily production and operation needs of the company, the company must have a certain amount of monetary funds to ensure liquidity.
5. A certain amount of deposit in the company's account can make financial institutions and other creditors feel safe, thus increasing the confidence of both parties to continue cooperation.
In conclusion, it is reasonable and necessary for the Company to have a fund of RMB166 million (net of margin and foreign currency deposits) ready for payment at the end of 2019.
(iii) whether there are joint or co-managed accounts with the controlling shareholder or other related parties, whether there are actual uses of monetary funds by other parties, whether there are potential contractual arrangements and whether there are potential restricted uses
There is no joint or joint management of accounts with the controlling shareholder or other related parties, no actual use of monetary funds by other parties, no potential contractual arrangements or potential restricted uses.
Opinion of annual audit accountant:
We believe that the deposit location, deposit type, interest rate level, average monthly balance and interest income of monetary funds disclosed by the company are true; The reasons for the restricted use of the account disclosed by the Company are true, and there are no other funds in the ending balance of monetary funds that have restrictions on the use and potential recovery risks due to mortgage, pledge or freeze; While the balance of the company's monetary funds is high, the explanation of the reasons and rationality of more interest-bearing loans is true. There is no joint or joint management of accounts with the controlling shareholder or other related parties, no actual use of monetary funds by other parties, no potential contractual arrangements or potential restricted uses.
Question 7:
The annual report shows that the company's other non-current assets in 2019 are 19 million yuan. The year-on-year increase was approximately 57.29%, mainly due to the increase of prepaid equipment. The company is requested to make additional disclosure of the specific matters involved in the above-mentioned other current assets, the amount and time of advance payment and subsequent payment arrangement, verify whether the counterparty involves the controlling shareholder and related party of the company, and explain whether the impairment reserve is fully withdrawn. Please comment on the annual audit accountant.
Reply: Other non-current assets of the company refer to the project and equipment funds prepaid for the purchase and construction of fixed assets and other non-current assets. The prepaid project and equipment money cannot be sold or consumed within an operating cycle. Meanwhile, the company is not held for trading purposes and cannot be realized within one year from the balance sheet date, so it belongs to non-current assets. At the end of the period, because the recognition conditions of assets such as "fixed assets" are not met, the company reclassifies them into the "other non-current assets" account during the presentation of the statement.
Details of other non-current assets of the company at the end of 2019 (prepaid engineering and equipment payments) are as follows:
Supplier name |
Nature of money |
Ending balance |
Whether it is a related party |
Prepayment time |
Tongling Tianyuan New Energy Technology Co. LTD |
Equipment money |
1,000.00 |
yes |
From July to November 2019 |
Unit 51 |
Equipment money |
136.45 |
no |
In 2014 |
Unit 52 |
Equipment money |
99.00 |
no |
2018/10/8、2019/3/2 |
Unit 53 |
Equipment money |
97.86 |
no |
From August to December 2017 |
Unit 54 |
Equipment money |
80.10 |
no |
From June to November 2019 |
Unit 55 |
Equipment money |
34.62 |
no |
From September to December 2019 |
Other non-related party units |
Equipment and engineering funds |
414.53 |
no |
From July to November 2019 |
total |
|
1,862.56 |
|
|
(Follow the above table)
Supplier name |
Subsequent payment arrangement |
Tongling Tianyuan New Energy Technology Co. LTD |
The transaction was approved by the Board of Directors in March 2020 and settled in March 2020. By March 31, 2020, all relevant equipment has been handed over and registered in the account. The balance of equipment purchase has not been paid as of the date of inquiry. |
Unit 51 |
The remaining payment has not been settled due to quality defects of the equipment provided by the other party, and the equipment cannot be used. The company is actively negotiating with the other party for a solution |
Unit 52 |
The relevant equipment will be debugged in February 2020, reach the pre-intended serviceable state and entered into the account after acceptance. By May 31, 2020, the balance payment has not been paid. |
Unit 53 |
The relevant equipment arrived at the factory in 2018. Due to the quality problems of the equipment, the acceptance has not been completed and it cannot be put into use. The company is actively negotiating with the other side for a solution |
Unit 54 |
The relevant equipment entered the factory in January 2020. As of May 31, 2020, the equipment is in the debugging state and has not reached the predetermined usable state. The final hospitality shall be paid after acceptance. |
Unit 55 |
As of May 31, 2020, the equipment has not arrived, and the settlement will be made when the equipment arrives and completes acceptance |
Other non-related party units |
—— |
total |
—— |
Except Tongling Tianyuan New Energy Technology Co., Ltd. is the related party purchasing, others do not involve the company's controlling shareholders and related parties.
For other non-current assets, the Company shall determine whether there are signs of impairment on the balance sheet date. If there are signs of impairment, impairment test shall be conducted according to the accounting policy of long-term asset impairment of the company, and the recoverable amount shall be estimated. The Company believes that the accounting policies related to the provision for asset impairment of the above-mentioned other non-current assets are in line with the provisions of the Accounting Standards for Business Enterprises. As of December 31, 2019, the company's other non-current assets are mainly prepaid equipment purchase funds and engineering funds, and other non-current assets have not shown signs of impairment, so there is no need to make provision for impairment of other non-current assets.
Opinion of annual audit accountant:
We believe that the Company's additional disclosures regarding other current assets are true, and we have not found any material inconsistencies between the information related to the financial statements in the Company's response to the above questions and the relevant information obtained during our audit.
Question 8:
According to the annual report, the company's revenue declined by 7.15% this year, and the net profit attributable to the parent decreased by 1704% compared with the same period last year. However, the company's sales expenses in 2019 increased by about 16.69% compared with the same period last year, among which the growth was mainly for business expenses, transportation fees and non-exempt tariffs. Please list the main composition, purpose and corresponding amount of the sales expenses of the current period, and explain the reasons and rationality of the increase of the above expenses compared with the same period when the revenue and net profit declined year-on-year. Please comment on the annual audit accountant.
Reply:
I. Main components, purposes and amounts of the Company's sales expenses in 2019 are listed as follows:
project |
Main use |
2019years |
2018years |
Operating expenses |
Used for product market maintenance and market expansion |
1,526.96 |
1,316.53 |
Transportation charge |
Used to transport products to the customer's designated place |
1,302.67 |
1,224.22 |
Agency fee |
Responsible for product logistics abroad and customer service |
445.69 |
404.84 |
Employee compensation |
Sales staff compensation |
298.76 |
301.78 |
Travel expense |
Sales link staff daily market maintenance, market development travel expenses |
121.65 |
183.83 |
Storage charge |
Logistics costs for leasing the site to serve customers nearby |
210.38 |
178.62 |
Unexempted duty |
The part of tariff borne by our company due to the 25% tariff imposed by the United States |
441.96 |
- |
other |
Other expenses related to product sales |
294.39 |
368.78 |
total |
|
4,642.45 |
3,978.61 |
2. The reasonableness of the increase of selling expenses when the revenue and net profit decline
In 2019, the company's revenue decreased by 7.15%, net profit decreased by 1704%, and sales expenses increased by 16.69% year-on-year, mainly due to the 16% increase of business expenses for maintaining and expanding the market, and the 25% tariff imposed by the United States, which was borne by the company and RMB 4.42 million.
In recent years, due to the international trade situation and the downward economic trend at home and abroad, the market capacity of polypropylene film and film capacitor products is seriously overgrown, the market competition is becoming increasingly fierce, the market price is further falling, and even the price and cost are inverted.
The company's polypropylene film and film capacitor two leading products, production and sales for a long time has been in the domestic market leader. However, due to the economic downturn, coupled with the influence of international trade situation, the domestic sales and export of related products are facing serious challenges, the company's market position of these two leading products is precarious. After full market research and accurate analysis, the company adopted the following strategies to cope with the fierce market competition: on the one hand, increase the development of new products, make full use of new technology and new technology to meet and guide the market; On the other hand, the company decided to increase the operating expenses to increase the maintenance of the existing market of the leading product and the development of the new market, so as to maintain the market share of the product to the maximum extent. Therefore, the company's business expenses in 2019 increased compared to the previous year.
The measures of the company to increase business expenses for leading products to maintain and expand the market and bear the additional export tariff for maintaining the foreign market have played an obvious effect. The production of polypropylene film products of the company in 2019 only decreased by 0.62% year on year, and the inventory at the end of the year decreased by 5.33% compared with the beginning of the year. In the case of severe contraction of the international and domestic markets, the production of film capacitors only decreased by 8.83%, while the inventory at the end of the year decreased by 9.31% compared with the beginning of the year, making the company's two leading products, polypropylene film and film capacitors, continue to maintain a leading position in the domestic market share.
Opinion of annual audit accountant:
We believe that the company's explanation of the reasons and reasonableness of the increase in selling expenses is true when the revenue and net profit decline year-on-year.
Question 9:
According to the annual report, the company paid about 63 million yuan in cash related to other business activities in 2019, including 54.11 million yuan in expenses and 8.57 million yuan in current payments. The company is requested to list the main specific transaction items, the counterparty and the corresponding amount that form the expenses and current payments during the above period, explain whether there is any correlation or potential correlation with the counterparty, and explain whether the relevant funds flow to the controlling shareholder and the related party. Please comment on the annual audit accountant.
Reply:
I. The main composition of the period expenses in other cash paid in 2019 related to operating activities is as follows
Period expense item |
2019years |
Selling expense |
2,720.22 |
Administrative expenses |
1,982.40 |
Research and development expenses |
492.15 |
Financial expense |
216.63 |
total |
5,411.40 |
(I) Main items of sales expenses are as follows:
project |
Corresponding amount (ten thousand Yuan) |
Transaction item |
Operating expenses |
1,427.01 |
Business expenses incurred in the process of business development and maintenance |
Agency fee |
445.69 |
In 2019, a total of 4,3111,400 yuan was paid for business consulting fees incurred in the process of export trade |
Unexempted duty |
441.96 |
Due to the 25 percent tariff imposed by the United States on Chinese manufactured goods, including capacitors, the company paid a total of 4,419,600 yuan of tariffs to its customers through one-time settlement in 2019. |
Travel expense |
121.65 |
Travel expenses incurred by sales personnel in the process of business development and maintenance |
other |
283.90 |
Other sales expenses paid |
total |
2,720.22 |
|
(II) Composition of main expense items of management expenses is as follows:
project |
Corresponding amount (ten thousand Yuan) |
Transaction item |
Intermediary fee |
348.96 |
Payment of audit fees, evaluation fees, etc |
Business entertainment expenses |
202.25 |
Business entertainment expenses incurred in the course of production and operation |
Rental fee |
228.75 |
Mainly for the subsidiary Tongfeng Precision Suzhou branch business site rental fees |
Vehicle usage fee |
184.25 |
Mainly for the production and operation of the process of vehicle use fees and other transportation expenses |
Travel expense |
171.45 |
Employee travel expenses |
premium |
121.59 |
Equipment and plant insurance costs |
Repair cost |
90.14 |
Building and equipment repair costs |
Office expenses |
71.50 |
Purchase office supplies and other office expenses |
Directors' dues |
66.32 |
Board dues |
Post and telecommunications charges |
58.10 |
Post and telecommunications charges |
Machine material consumption |
49.34 |
Machine and material consumption expense in daily operation |
other |
389.75 |
other |
total |
1,982.40 |
|
(III) Main items of R&D expenses are as follows:
Period expense item |
Corresponding amount (ten thousand Yuan) |
Transaction item |
Fuel and power costs |
351.35 |
Fuel and power costs incurred during research and development |
other |
140.80 |
Mainly for the outsourced research and development expenses of RMB 1.30.00 million |
total |
492.15 |
|
(IV) The composition of major financial expenses is as follows:
Period expense item |
Corresponding amount (ten thousand Yuan) |
Transaction item |
Bank charges |
121.56 |
Mainly for the payment of the loan commission 950,000 yuan |
other |
95.07 |
|
total |
216.63 |
|
Ii. The main composition of current funds among other cash paid in 2019 related to business activities is as follows:
counterparty |
Association relation |
Transaction item |
Corresponding amount (ten thousand Yuan) |
Anhui Tongfeng Electronic Group Co. LTD |
Non-related party |
Return of arrears |
230.00 |
Jiangsu Financial Leasing Co., LTD |
Non-related party |
deposit |
115.00 |
Li Lei |
Non-related party |
Employee loan |
30.00 |
Kunshan Ximak Power Machinery Co., LTD |
Non-related party |
deposit |
22.82 |
Anhui Branch of China Export and Credit Insurance Corporation |
Non-related party |
premium |
17.25 |
Suzhou Baolai Building Materials Co., LTD |
Non-related party |
deposit |
10.00 |
Zhongshan Broad-Ocean Motor Co., Ltd. |
Non-related party |
deposit |
10.00 |
Others are less than 100,000 yuan |
Non-related party |
|
422.24 |
total |
|
|
857.31 |
To sum up, in 2019, the company has no funds flowing to controlling shareholders and related parties except 2.3 million yuan. This year, the controlling shareholder Anhui Tongfeng Electronics Group Co., Ltd. was paid 2.3 million yuan to repay the arrears.
Opinion of annual audit accountant:
We believe that it is true that the company has listed the main specific transaction items, the counterparty and the corresponding amount that form the expenses and current payments during the above period. There is no correlation or potential correlation with the counterparty, and the relevant funds have not flowed to the controlling shareholder or the related party.
Question 10:
At the end of the report period, the controlling shareholder of the company, Tongfeng Group, holds about 94.56 million shares of the company, accounting for 16.76%, and the pledge ratio is 99.94%. Since 2019, the shares of listed companies held by the company's controlling shareholders have been frozen several times by judicial waiting, and some shares may be auctioned by judicial authorities. The company is requested to comprehensively evaluate the debt pressure, credit status, pledge risk and liquidity risk of the controlling shareholder, prudently judge all possible impacts on the listed company caused by relevant matters, including but not limited to stability of control, capital security, guarantee obligations, etc., and timely fulfill the obligation of information disclosure.
Reply:
The controlling shareholder Anhui Tongfeng Electronics Group Co., LTD. (hereinafter referred to as "Tongfeng Group") in recent years, due to the downward economic situation, the financing environment has changed, the operating pressure has increased, and the capital is tight. Up to now, Tongfeng Group holds a total of 94,561,280 shares of the company, accounting for 16.76% of the company's total share capital. The proportion of the company's shares being pledged accounts for 99.94% of its total holdings, and the proportion of judicial freezing and waiting freezing accounts for 100% of its total holdings. In July 2020, due to Tongfeng Group's inability to repay maturing debts, the Intermediate People's Court of Tongling City, Anhui Province has ruled to accept the bankruptcy and liquidation application of Tongling Guofa Venture Capital Co., LTD., a creditor of Tongling City (see the relevant announcement of the Company in designated information disclosure media on July 4, 2020 for details).
The company is a different entity from Tongfeng Group, with independent and complete business and self-management ability. It is independent from the controlling shareholder in terms of business, personnel, assets, institutions, finance and other aspects. As of the disclosure date of this announcement, the Company and Tongfeng Group are no more than operational fund transactions, non-operational fund occupation, illegal guarantees and abnormal asset transactions, which infringe on the interests of the listed company. The current production and operation of the company is normal.
There is still some uncertainty whether the subsequent disposal of the bankruptcy of Tongfeng Group will cause the change of the actual control right of the company. The company will continue to pay attention to the follow-up progress of the above matters and timely fulfill the corresponding information disclosure obligations.
This is to announce.