Audit claims deduction of frozen beef business income
*ST PrimaRaise the “alarm” for delisting
Our reporter Li Ting
Just as the annual report was about to be disclosed, *ST Prima was suddenly alerted by its auditing office of “delisting risk” in advance.
On April 25, *ST Xiamen China issued a letter of supervision work, saying that the second management department of listed companies on the Shanghai Stock Exchange learned from the communication with the company’s auditing firm, Unita Zhenqing, that the auditing firm had sent a letter to the company and planned to freeze the company. The operating income of beef is listed as “business income not related to the main business”.
And “deducting the income from the frozen beef business, the company’s 2021 annual report will touch the financial delisting situation, and the company’s shares will be terminated from the listing.”
*ST Xiamen China Securities Department staff told the “Securities Daily” reporter that it was “a bit sudden” for the communication letter from the audit firm. On April 26th, *ST Prima Company once again announced that it had received the supervisory work letter from the Shanghai Stock Exchange. At the same time, it stated in the attachment that the company had replied to the work communication letter of Unity Zhenqing, and said that it would communicate with accountants well in the future. At the same time, The company issued a delisting risk warning for the fifth time.
Auditing firms sound “delisting risk”
For *ST Prima, the financial data in 2021 has a significant impact on the company’s stock delisting.
Since the company divested its color TV business, since 2017, *ST Xiamen China has been in the “*ST” and “ST” state “switching”. In 2020, due to the fact that the operating income is less than 100 million yuan and the deduction of non-net profit is negative, the company will be “*ST” from “ST”.
On January 30 this year, *ST Xiamen China’s performance forecast was considered to be a relatively positive signal from the company. Although the company expects that the net profit before and after the deduction is still in a state of loss, the company “expects that the annual deduction in 2021 has nothing to do with its main business. The operating income after business income and income without commercial substance is 138 million yuan to 200 million yuan.”
The exchange immediately issued an inquiry letter on the same day as the performance announcement. The question directly pointed to the authenticity of the company’s business income, such as the substantial increase in imported beef, and the deduction of the company’s operating income.
However, *ST Prima failed to reply as soon as possible, until it was delayed until March 1. During this period, *ST Xiamen China once changed its annual report auditor accounting firm. According to public information, Unitai Zhenqing “temporarily” replaced the accountant Daxin, who had served the company for three years, on February 10, and changed it to the company’s 2021 Auditor of the Year.
Industry insiders told the “Securities Daily” reporter that for listed companies, changes in accountants are extremely prudent, and it is more “sensitive” to change accountants at this point in time.
*ST Xiamen China, in its reply to the exchange’s inquiry letter on March 2 and March 30, still claimed that since 2018, the main business of the company isagricultural productsAnd food supply chain management and other businesses, agricultural products – meat is the main source of the company’s business income.
It also insisted that the unaudited operating income of the agricultural products-meat-imported frozen beef/pork business in 2021 is about 146 million yuan, which is sustainable, and that this business does not belong to “business institutions that have not formed or are difficult to form a stable business model.” generated income”.
However, in the audit opinions given by Unitai Zhenqing, they all stated that due to the failure to complete all the audit work, the audit opinions have not been formed and the final opinions cannot be issued.
Until April 24th, in the work letter of supervision and risk warning issued by the supervision, Unitai Zhenqing “bypassed” the company and gave a final audit opinion, thinking that combined with the audit evidence obtained, it will operate according to the delisting index of the Shanghai Stock Exchange. Regarding the relevant provisions of income deduction, after discussion by the management committee of the institute, it is planned to list the operating income of the company’s frozen beef as “business income unrelated to its main business“.
Regulatory work letter urges companies to warn of delisting risks
The above-mentioned regulatory work letter emphasizes that “if the income from the frozen beef business is deducted, the company’s 2021 operating income after deduction is less than 100 million yuan and the net profit after deduction is negative. The company’s stock will be suspended from the next trading day after the periodic report is disclosed. , the Shanghai Stock Exchange will make a decision to terminate the listing of the company’s stock within 15 trading days.”
A senior accountant told the “Securities Daily” reporter that the “main business income” was not specified in detail in the accounting standards before, but only the concept of “income”. Usually, the basis for the accountant’s judgment is that the enterprise is in order to achieve its business goals. The income generated by the main activities in the daily activities generally accounts for a larger proportion of the company’s income.
In the communication letter from Unity Zhenqing to *ST Xoceco, it is specifically mentioned that the deduction is based on the “Shanghai Stock Exchange Self-discipline Supervision Guide for Listed Companies No. 2 Business Handling No. 7 – Financial Delisting Indicators: Deduction of Operating Income” ” (hereinafter referred to as “Revenue Deduction Guidelines”).
It is reported that the “Revenue Deduction Guidelines” was released and implemented on November 19, 2021, clarifying the specific deductions of operating income in financial delisting indicators, and improving the enforceability of financial delisting indicators. The purpose is to re-evaluate the shell companies that do not have the ability to continue operations, to extract common methods for such companies to protect their shells by expanding their operating income, and to formulate relevant deduction standards in a targeted manner. Precisely attack shell companies, and strive to achieve “retreat as much as possible”.
Industry insiders believe that the regulations also emphasize the verification requirements and responsibilities of audit institutions, and clarify the purpose of requiring audit institutions to take up the responsibility of “gatekeeper”.
In the supervisory work letter, the Shanghai Stock Exchange reminded *ST Prima China that it should fully remind the company of the delisting risk of the company’s shares based on the content of the letter from Unity Zhenqing and the actual situation of the company, and required the company and its directors, supervisors and senior management to comply with regulations. Timely, accurate and complete disclosure of delisting-related information to protect the legitimate rights and interests of investors, especially small and medium investors.
It is worth mentioning that from 2018 to 2020, the company has been issued a “non-standard opinion audit report” by the auditing firm Dasin for three consecutive years, and believes that there are major uncertainties in the company’s sustainable operation.
Experts said that in the process of the game between audit institutions and the management of listed companies, the annual reports of listed companies were issued with “non-standard” opinions, which often conveyed that there are problems in the financial and corporate governance of listed companies. In recent years, supervision has been continuously strengthened, and non-standard annual reports will face strict inquiries and even investigations by regulatory authorities. Therefore, investors should be more cautious about such companies.
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Responsible editor: Chen Cheng