Original title: Kangmei Pharmaceutical Co., Ltd. Announcement (Series)
Securities Code : 600518 Stock abbreviation: *ST Kangmei No.: Lin 2021-053
Bond Code: 122354 Bond Abbreviation: 15 Kangmei Bond
Bond Code: 143730 Bond Abbreviation: 18 Kangmei 01
Bond code: 143842 Bond abbreviation: 18 Kangmei 04
Preferred stock code: 360006 Preferred stock abbreviation: Kangmeiyou 1
About Kangmei Pharmaceutical Co., Ltd.
Shanghai Stock Exchange "About Kangmei Pharmaceutical Co., Ltd.
Information Disclosure of 2020 Annual Report of Co., Ltd.
Reply Announcement of Regulatory Inquiry Letter
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the content of this announcement, and assume individual responsibility for the authenticity, accuracy and completeness of the content. and joint liability.
Kangmei Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company") received the "Company" issued by the Shanghai Stock Exchange's Listed Company Supervision Department II on May 21, 2021. Inquiry Letter Regarding Information Disclosure Regulatory Inquiry Regarding the 2020 Annual Report of Kangmei Pharmaceutical Co., Ltd. (Shang Zheng Gong Han  No. 0465) (hereinafter referred to as the "Inquiry Letter"), our reply is as follows:
1. About the ability of sustainable operation and risk resolution
The annual report shows that the company's net profit attributable to shareholders of listed companies in 2020 is - 27.7 billion yuan, the owner's equity at the end of the period was -7.185 billion yuan, and the total interest-bearing debt was 33 billion yuan, of which overdue debt was 4.538 billion yuan. The annual auditing accountants are unable to judge whether it is appropriate for the company to use the going concern assumption to prepare the 2020 financial statements. At the same time, it is concerned that the listed company has been applied to the court for bankruptcy and reorganization by creditors. Companies face multiple risks. The company is requested to supplement the disclosure of specific measures to maintain the listed company's ability to continue as a going concern and resolve debt risks in the future, as well as the progress of relevant measures, in conjunction with the special explanation of the board of directors on non-standard opinions.
The company's reply:
The company maintains the ability of listed companies to continue operating and resolves debt risks mainly by focusing on the company Measures such as advantageous industries, revitalizing potential industries, cleaning up marginal side businesses, strengthening payment collection, obtaining creditor support, and carrying out debt restructuring are as follows:
(1) Focus on the company's advantages Industry
Give full play to the company's accumulated experience in planting and processing Chinese herbal medicines to provide a stable supply of goods and higher gross profit space for terminal marketing; integrate and sort out the production plants of Chinese herbal medicines to ensure quality On the premise of being more professional and reducing production costs, the company will give full play to the production capacity advantages of the company's formulated granules modernization and automated production lines to support the company's formulation granules in the core regional market layout and penetration.
(2) Revitalize potential industries
At present, the company manages six professional Chinese herbal medicine trading markets, It is an important platform for the company to connect the resources of high-quality Chinese herbal medicine suppliers. The company will take advantage of the supply chain to speed up the storage layout of authentic herbal medicines, improve the logistics and transportation system, and reduce operating costs and maximize profits on the premise of ensuring timely delivery. On the other hand, the company will also make full use of the management advantages of the Chinese herbal medicine trading market, actively explore the opportunities for bulk commodity trading of Chinese herbal medicines, and expand the new revenue growth point of the Chinese medicine city segment.
(3) Clean up marginal sideline businesses
The company re-evaluates the current development of non-traditional Chinese medicine business The profitability, operation and development capabilities of various businesses, improve the business closure and exit mechanism, accelerate the process of de-diversification, and vigorously clean up non-main business-related sectors through the four major measures of "closing, stopping, merging, and transferring".
(4) Strengthen the collection of payment
The company will strengthen communication with downstream distributors and increase collection We will speed up the collection of receivables and ease the pressure on the company's cash flow by means of legal proceedings, application for execution, etc.
(5) Obtain support from creditors of banks and other financial institutions to ease the company's debt repayment pressure
December 2019 In January, the company signed the "Syndicated Loan Agreement for Kangmei Pharmaceutical Co., Ltd." with 13 banks (hereinafter referred to as "syndicate") that have the company's stock loans. The stock syndicated loan amount is 10.048 billion yuan, the loan interest rate is 4.275%, and the term is For three years, interest is paid twice a year. For details, please refer to the "Announcement on Resolutions of the Seventh Interim Meeting of the Eighth Board of Directors of Kangmei Pharmaceutical in 2019" disclosed by the company on November 29, 2019 and January 18, 2020 and "Announcement on the Progress of Kangmei Pharmaceutical on Signing the Existing Loan Contract with the Syndicate".
In December 2020, coordinate with 13 syndicated institutions to change the interest payment method of the syndicated loan (the original fixed interest payment twice a year, and the interest payment days are 1 every year Month and December are now changed to start from January 20, 2020, with a one-off interest payment due. The syndicated loan interest that should have been paid in December 2020 was 400 million yuan and the subsequent payable syndicated loan interest was 885 million yuan, totaling The payment of RMB 1.285 billion has been deferred until January 1, 2023. At present, the signing of the syndicated supplementary agreement with major banks to change the method of interest payment has been completed.
Promote debt settlement with Minsheng BankShenzhen Xiangmi Sub-branch. Minsheng Bank Shenzhen Branch (non-syndicated bank) Agreed to apply to the head office with reference to the relevant conditions of the syndicated loan, coordinate the reduction and exemption of penalty interest, adjustment of interest payment method, loan extension, etc., and the signing of the agreement has been completed. The aforementioned arrangement will help ease the company's repayment pressure, and facilitate the company to plan and centralize funds. Funds to develop the company's advantageous core business.
(6) Actively seek creditors' support for the company to carry out debt restructuring
On April 22, 2021, Guangdong Jiedong Rural Commercial Bank Co., Ltd. applied to the Intermediate People's Court of Jieyang City, Guangdong Province (hereinafter referred to as the "Court") for bankruptcy and reorganization of Kangmei Pharmaceutical Co., Ltd.
The company actively strengthens communication with major creditors such as financial institutions, explores to support the company in debt restructuring through multi-party cooperation, resolves the debt pressure currently faced by the company, and restores the company's traditional Chinese medicine decoction pieces.Value advantage and competitive advantage of the whole industry chain. At present, it has received active support from major creditors.
(7) The court ruled to accept the creditor's application for bankruptcy reorganization of the company
June 2021 On the 4th, the company received the (2021) Yue 52 Poshen No. 1 "Civil Ruling" served by the Intermediate People's Court of Jieyang City, Guangdong Province, and ruled to accept the reorganization application of the creditor Guangdong Jiedong Rural Commercial Bank Co., Ltd. against the company. On the same day, the company received the "Decision Letter" [(2021) Yue 52 Poshen No. 1] served by the Jieyang Intermediate People's Court, and designated Beijing King & Wood Mallesons (Shenzhen) Law Firm as the company's administrator, responsible for The man is Xin Zhiqi. If the company successfully completes bankruptcy and reorganization under the supervision of the administrator, it will help to improve the company's asset-liability structure, strengthen the company's ability to continue operating and improve its profitability.
2. About the inventory of Chinese herbal medicines
The annual report shows that the ending balance of the company's Chinese herbal medicine inventory is 20.98 billion Yuan, mainly due to the retrospective adjustment and increase in 2018, the provision for depreciation in the current period was 19.65 billion yuan, accounting for 71% of the net profit loss in the current period. In 2019, the company made a provision for falling prices of 40 million yuan, and in 2018, there was no provision for falling prices. Our department has requested the company to verify and disclose the actual situation of the inventory of Chinese medicinal materials in the previous inquiry letter of the relevant annual reports, and explain the rationality of the provision for impairment. Report. Up to now, the company has not been able to disclose the specific situation of the inventory of Chinese herbal medicines and the inspection report on special assets.
Please make additional disclosures by the company: (1) The specific situation of the inventory of Chinese medicinal materials, including but not limited to the detailed type, quantity, Quality, price, book value, storage location, relevant third-party appraisal reports, etc.; (2) Combined with the existing data, explain the specific process of calculating the inventory depreciation reserve for Chinese medicinal materials in this period, including but not limited to the selection and basis of main parameters, and On this basis, fully demonstrate whether the amount accrued for impairment is accurate and appropriate; (3) Explain the specific time point when the signs of impairment appear, and explain the rationality of accruing large amounts of impairment in the current period in combination with the previous period of impairment. Prudence, whether there is insufficient provision in the previous period, whether there is any false asset in the previous period and improper retrospective adjustment; (4) The implementation of the special inspection plan for Chinese medicinal materials inventory, the reasons for failing to disclose the special asset inspection report on time and the details of the follow-up Schedule. The annual auditing accountants are invited to express their opinions on questions (1) (2) (3).
The company replies:
(1) The specific situation of the inventory of Chinese medicinal materials, including but not limited to rhizomes , tonic, minerals and other inventory types, quantity, quality, price, book value, storage location, relevant third-party appraisal reports, etc.;
1. Company On December 31, 2020, the book balance of Chinese medicinal materials was 20,978,631,800 yuan, and the classification by product is as follows:
2. Quantity and Quality
(1) Quantity. On November 26, 2020, the company officially launched a special inventory of Chinese herbal medicines. At the same time, Jieyang public security organs also carried out relevant investigation and evidence collection work. In the process of the inventory, it was supported by Jieyang public security organs, professional institutions and agricultural experts. This time, a comprehensive method is adopted to weigh the actual quantity one by one to determine the actual quantity, and register and complete the nameplate information. In view of the fact that the inventory has been under flat management, there are very few relevant personnel, and its storage sites are many and wide, and the inspection work is difficult. As of now, the relevant investigation work of the Jieyang public security organ is still in progress, and the final judgment will be made after the relevant investigation and investigation conclusions are issued.
(2) Quality. One is the stock of roots and minerals. The information on the nameplate on the package of this kind of inventory is incomplete and does not meet the management specifications of the Pharmacopoeia for medicinal materials. After detailed discussion and consultation with various institutions, it is determined that the storage location is used as the batch sample statistics. The relevant sampling work strictly follows the "Sampling Method for Medicinal Materials and Decoction Pieces" in Volume Four of the 2020 Edition of the Chinese Pharmacopoeia, using large samples (more than 1,000 pieces) to sample the originalrandom sampling. Finally, the representative samples obtained are used for testing by professional third-party testing institutions, and the appraisal report of the testing institution is used as the standard for judging their quality. Due to the mixed stock of rhizomes, only about 20% of them can be used as medicinal materials in accordance with the requirements of the Pharmacopoeia, and the others can only be used as extracts or industrial raw materials in pharmaceutical factories; The test results were all lower than the quality recorded on their books. The second is tonic inventory. By adopting methods such as empirical identification and feature description comparison, representative samples are drawn for DNA testing by third-party testing institutions, and the varieties and quality of the testing institutions are inferred based on the identification reports of the testing institutions. The final conclusion is the variety and quality of the samples. times are different from those recorded in its books.
3. Relevant third-party appraisal reports
The company and intermediary agencies use back-to-back methods to conduct sample testing. For identification, the samples were sent to different testing institutions for identification. (1) Sampling for inspection. The intermediary agency sends it to a testing agency with relevant qualifications for testing according to the characteristics of the inventory of Chinese herbal medicines. The sampling of root stock and mineral stock samples strictly follows the "Sampling Method for Medicinal Materials and Decoction Pieces" in Volume Four of the 2020 Edition of the Chinese Pharmacopoeia, and adopts the sampling principle of large samples (more than 1,000 pieces). First, the stock samples of rhizomes are sent to the Pony Test Group Co., Ltd. tested and issued a test report. Second, mineral sampling is carried out by quartet method, and finally representative samples are extracted for testing by the Shanghai Food and Drug Inspection Agency, and a testing report will be issued. The third is that the tonic stocks belonging to the same origin of medicine and food are not in the Chinese Pharmacopoeia, and representative samples are taken and sent to the South China Sea Fisheries Research Institute of the Chinese Academy of Fishery Sciences (listed in the Ministry of Agriculture's list of rare and endangered aquatic wildlife species identification units agency) to conduct DNA molecular identification and issue an identification report. (2) Relevant identification results. The appraisal report submitted by the intermediary agency for inspection and the appraisal report issued by the Traditional Chinese Medicine Research Center of Jinan University entrusted by the company have basically the same appraisal results. The specific test details are as follows:
(2) Combined with the existing data, explain this issue The specific process of calculating the provision for depreciation of Chinese medicinal materials inventory, including but not limited to the selection and basis of main parameters, and fully demonstrating whether the depreciation amount is accurate and appropriate on this basis;
This year, 19,650,464,700 yuan was accrued for the inventory of Chinese medicinal materials, including 13,527,393,100 yuan for rhizome inventories, 220,464,100 yuan for mineral inventories, and 5,902,607,500 yuan for nourishing inventories. . The calculation process is described as follows:
1. Inventory of roots and minerals. First, for this type of inventory, the market value is realized by assuming wholesale sales; second, the market price is formed through market inquiry, considering that the prices of different specifications are different; the third is that the stock of roots and minerals has not been according to specifications. To distinguish, this valuation takes into account a certain screening fee.
Inventory value of rhizomes and minerals = quantity x market price - screening fee
Inventory of rhizomes Valuations are as follows:
Mineral inventories are estimated as follows:
2. Tonic inventory. First, since the tonic inventory is relatively expensive and belongs to a niche market, no market cases of mass sales have been found, and the transaction price is "negotiated" according to its quality, specifications and market conditions; Inquiries from Mao.com, the auction of Xi Leng Yinshe, and visits to the traditional precious and fine medicinal materials market such as Puning Chinese Medicine City, combined with various aspects to determine the reasonable price range.
Tonic inventory value = numberQuantity × market price
The valuation of nourishing inventory is as follows:
The evaluation agency considered the subject of evaluation to be highly professional, so it hired experts in traditional Chinese medicine and fishery to assist in the work. Experts came to the scene to guide the inventory, identification, sampling and sampling, and the evaluators participated in the whole process of supervision and market research. The appraisal agency will make relevant valuation calculations after obtaining the basic data through the above work arrangement, and currently only a preliminary appraisal report can be issued.
(3) Explain the specific time point when the signs of impairment appear, and explain the rationality of accruing large amounts of impairment in the current period in combination with the previous period's provision for impairment. Prudence, whether there is insufficient provision in the previous period, whether there is a situation in which the assets are false and improper retrospective adjustment in the previous period; Defects, the company's inventory management and control execution is insufficient, the management of purchase, sale and storage is not good, and the relevant management process is not reasonable and clear. Therefore, the company has formulated a special verification plan for the inventory of Chinese herbal medicines, carried out asset mapping work all over the country, and hired an evaluation agency to conduct inventory inspections. Evaluate. The base date for inventory assessment is December 31, 2020. As of now, the investigation and handling of relevant cases by the Jieyang Public Security Bureau has not been completed. According to the provisions of the "Accounting Standards for Business Enterprises", the company takes the preliminary assessment value as the Inventory value, the difference between book value and appraised value are temporarily treated as inventory impairment provision. After the Jieyang public security organ has issued the relevant investigation conclusion, it will be dealt with accordingly.
2. The company's inventory of Chinese medicinal materials is mainly based on rhizomes, nourishing precious medicinal materials, and has a certain degree of professionalism, which objectively leads to the need to perform evaluation, valuation and other procedures. longer time. At present, there are many factors affecting the impairment of Chinese herbal medicine inventories. First, the company has poor management and control in the early stage, and the stock of roots and stems is more mixed, and there are not many medicinal materials that fully meet the standards stipulated in the "Chinese Pharmacopoeia". Second, with the continuous maturity of the cultivation technology of rhizome stocks, the cultivated products are circulated in the market, causing their prices to drop sharply; third, the identification of the quality of the mineral stocks is different from the original registered quality, resulting in a great price difference; There is also a huge difference between the existing tonic stock varieties and the original registered varieties, according to the identification and judgment of agricultural experts. In accordance with the relevant provisions of the "Accounting Standards for Business Enterprises" and based on the principle of prudence, the company regards the preliminary appraisal value of the appraisal agency on the appraisal base date as the inventory value, and the difference between the book value and the appraisal value is temporarily treated as an inventory impairment provision.
3. In view of the fact that the original actual controller has always adopted flat management for the company's Chinese herbal medicine inventory assets, the relevant information is not transparent, and the management is not standardized. During the company's special inventory of traditional Chinese medicinal materials, the Jieyang public security organ has also carried out relevant investigation and evidence collection work. At present, the relevant investigation work of the Jieyang public security organ is still in progress, and the final judgment will be made after the relevant investigation conclusion is issued. At present, based on the inventory information available, it is temporarily impossible to judge the specific time point of the signs of impairment, whether there is insufficient provision in the previous period, and whether there is a situation of false assets and improper retrospective adjustment in the previous period.
(4) The implementation of the special inspection plan for Chinese medicinal materials inventory, the reasons for failing to disclose the special asset inspection report on schedule and the specific follow-up time arrangement.
1. Work done. On November 26, 2020, the company officially launched a special inspection of the inventory of Chinese herbal medicines stored in many places, including opening inspection, 100% weighing of each inventory, and taking samples for inspection; and visited a number of Chinese herbal medicine markets for inquiry. price, consult experts in the industry to understand the price, hire agricultural experts for appraisal, and evaluate the valuation of the agency.
2. In view of the fact that the inventory of Chinese herbal medicines has been in a flat management, there are very few people who know about it, and the storage sites are many and wide, and the inventory work is difficult. Up to now, the relevant investigation work of the Jieyang public security organ is still in progress, and the relevant disclosure obligations will be fulfilled after the relevant investigation and investigation conclusions are issued.
3. Next plan. The first is to comprehensively sort out the company's inventory management system, strengthen inventory management, improve relevant systems and management processes, and improve the comprehensive management level including inventory management. The second is to comprehensively sort out the publicThe company's internal processes and various management systems, adjust and abolish non-standard management systems, strengthen and improve the construction of the company's management system, and comprehensively improve the level of corporate governance. The third is to fully cooperate with the Jieyang public security organs to do a good job in investigation work, and strive to form an investigation conclusion as soon as possible.
4. At present, the company has officially entered the bankruptcy reorganization procedure, and the intermediary agency hired by the manager in the bankruptcy reorganization procedure has made arrangements for asset verification and audit evaluation. . The chairman of the company, the convener of the audit committee of the board of directors, the general manager, the chief financial officer, the secretary of the board of directors and other directors, supervisors and senior managers will require the Shanghai Yinxin Asset Evaluation Co., Ltd. Land and Real Estate Appraisal Co., Ltd. will speed up the special evaluation process and issue a formal evaluation conclusion. Combined with the opinions of the bankruptcy and reorganization intermediary agency for asset verification and audit evaluation, it will disclose the inventory verification of Chinese medicinal materials no later than October 31.
Reply from the annual audit accountant:
Such as the audit report (Xinhui Shi Bao Zi  No. ZA12543) No.) “Forming the Basis for Inability to Express Opinion” Matter (1) stated, “Kangmei Pharmaceutical has a number of major deficiencies in the internal control of financial reporting, which resulted in our failure to obtain complete, accurate and reliable financial information and related financial information during the audit process. Therefore, it is impossible to obtain sufficient and appropriate audit evidence as a basis for expressing an audit opinion on the financial statements as a whole.” The matter that led to the disclaimer also affects the data and information related to the inventory (including the inventory of Chinese herbal medicines). Therefore, we Unable to comment on question (1)(2)(3).
3. About the audit opinion
The audit report shows that the audit report issued by the annual audit accountant in 2020 cannot express Opinions involve continuing operations, capital occupation, engineering projects, medical device inventories, etc.; qualified opinions issued in 2019 involve capital occupation, engineering projects, medical device inventories, etc.; neither the 2019 nor 2020 audit opinions involve Chinese herbal medicine inventories.
Please verify and supplement the disclosure to the annual audit accountant: (1) Compare the contents of the two-year audit report and the company's audit, and explain the specific differences in the two-year audit opinions. Reasons, whether there was a situation in 2019 where qualified opinions were used instead of negative opinions or no opinions were expressed, whether it complied with the requirements of auditing standards and practice standards, and whether there was any purchase of audit opinions and improper performance of audit duties; The actual, accurate and complete audit procedures performed and the specific audit evidence obtained for the inventory of Chinese medicinal materials and their impairment provision; (3) Combined with the company's current period of verification of the inventory of Chinese medicinal materials and the process of impairment provision, compare with the year 2019. The audit procedures and audit evidence obtained on the inventory of Chinese herbal medicines during the audit demonstrate the adequacy of the audit procedures for the inventory of Chinese herbal medicines and the appropriateness of the audit conclusions in 2019.
Annual Audit Accountant Reply:
(1) Compare the contents of the two-year audit report and the company's auditing situation , explain the specific reasons for the differences in the audit opinions in the two years, whether there was a situation where qualified opinions were used instead of negative opinions or inability to express opinions in 2019, whether they complied with the requirements of auditing standards and practice standards, and whether there was any purchase of audit opinions and improper performance of audit responsibilities.
2019 and 2020 audit reports are compared as follows:
2019 led us to publish Items with qualified opinions could not be eliminated in 2020. We explained the status of relevant matters in 2020 in (3), (4) and (5) of the section "Forming the Basis for Inability to Express Opinions" in the 2020 Auditor's Report. In addition, the newly added non-standard opinions in the 2020 audit are as follows:
(1) Kangmei Pharmaceutical has a number of major deficiencies in the internal control of financial reporting, which led to our auditing process. The Company was unable to obtain complete, accurate and reliable financial information and related information, and therefore was unable to obtain sufficient and appropriate audit evidence to serve as the basis for an audit opinion on the financial statements as a whole.
(2) As stated in Financial Statements II and (II) Continuing Operations, Kangmei Pharmaceutical's net profit attributable to the parent company in 2020The total amount is -27,735,943,400, the total owner's equity attributable to the parent company on December 31, 2020 was -7,185,809,500, and the total interest-bearing debt was 33,029,992,000, of which overdue debt was 4,538,943,100, which has not been extended as of the date of this report. These events and circumstances, together with other events described in Note II (II) to the financial statements, indicate that there are multiple material uncertainties that may cast significant doubt on the ability of Kangmei Pharmaceutical to continue as a going concern. Therefore, we cannot judge whether it is appropriate for Kangmei Pharmaceutical to use the going concern assumption to prepare the 2020 financial statements.
(3) As stated in Note XI, (2) and Note XII, (1) 1 of the financial statements, Kangmei Pharmaceutical has a number of pending lawsuits . Due to the inability to judge whether the information provided by Kangmei Pharmaceutical in relation to the pending litigation is complete, we are unable to obtain sufficient and appropriate audit evidence regarding the completeness of the disclosure of contingent events and their possible impact on the financial statements.
The limitation of audit scope caused by the above new item (1) has a significant and wide-ranging impact. This material uncertainty has a material and wide-ranging impact, therefore, we have expressed disclaimer of opinion on Kangmei Pharmaceutical's 2020 financial statements. In 2019, there were no reservations in place of negative opinions or disclaimers. The audit reports for 2019 and 2020 comply with the requirements of auditing standards and practice standards. There is no purchase of audit opinion or improper performance of audit responsibilities.
(2) The audit procedures performed and the specific audit evidence obtained to ensure the authenticity, accuracy and completeness of the inventory of Chinese herbal medicines and their impairment in the current period;
Our main audit procedures and evidence collection for the balance of Chinese herbal medicines at the end of 2020 include (but are not limited to):
(1) From November 26, 2020 to January 23, 2021, we participated in the company's comprehensive inventory of Chinese herbal medicines and implemented the whole process of supervision;
(2) Conduct interviews with experts and appraisers to understand their experience, sampling methods, valuation calculation basis, etc.;
(3) According to the "Chinese Pharmacopoeia" According to the relevant regulations on the sampling of Chinese medicinal materials, sample the stock of Chinese medicinal materials and submit it for inspection, and entrust a statutory identification agency to conduct DNA molecular identification on the stock samples of Chinese medicinal materials;
(4) Review the Chinese herbal medicine test report issued by the third-party appraisal agency; The net realizable value is compared and analyzed with the recent market sales prices of similar or similar products and the evaluation prices of third-party evaluation agencies.
(3) Combined with the company's inspection of the inventory of Chinese herbal medicines in the current period and the process of impairment provision, compare the audit conducted on the inventory of Chinese herbal medicines during the 2019 annual audit The procedures and audit evidence obtained demonstrate the adequacy of the audit procedures for the inventory of Chinese herbal medicines in 2019 and the appropriateness of the audit conclusions.
Kangmei Pharmaceutical's inventory balance at the end of 2019 includes a retrospective adjustment of 20,980,753,400 Chinese medicinal materials increased in 2018, and the related inventory depreciation reserve balance is 39,554,000 yuan.
Due to the large amount and special nature of the above-mentioned inventories, the valuation of the inventories involves significant management judgments. key audit matters.
In the process of auditing Kangmei Pharmaceutical's 2019 financial statements, the main audit procedures we implemented on the existence and pricing of these traditional Chinese medicinal materials include but are not limited to:
(1) Understand the strategic plan of Kangmei Pharmaceutical's reserve and utilization of traditional Chinese medicinal materials, conduct interviews with personnel involved in inventory acquisition, and understand the procurement process;< p cms-style="font-L"> (2) On the same day, compare the photos stored in multiple warehouses on the same day.Close the inventory and monitor the inventory at the same time;
(3) Entrust two statutory identification agencies to carry out DNA molecular identification of nourishing inventory samples;
(4) Review the test report on the content of Chinese herbal medicines issued by experts in the Chinese herbal medicine industry; Accuracy of calculation; compare and analyze the net realizable value of inventory used in the calculation table with the recent market sales price of similar products and the evaluation price of a third-party evaluation agency.
During the implementation of the audit procedure, we reviewed the announcements related to the correction of accounting errors in the previous period; obtained the company's description of the purchase of Chinese herbal medicines, the detailed list of purchases, sales, and inventory of Chinese herbal medicines. Inventory purchase receipt, payment voucher, and account receipt; understand the storage arrangement and storage location of Chinese herbal medicine inventory, and obtain the inventory storage contract and the company's inventory record; obtain the inventory sample test report, inventory impairment measurement data, and evaluation report and other audit evidence.
Based on the audit procedures implemented, we believe that during the audit process of Kangmei Pharmaceutical's 2019 financial statements, we conducted audits on the inventory of Chinese herbal medicines in accordance with the auditing standards. The audit procedures were adequate and the audit conclusions were appropriate.
Fourth, regarding the company's internal control defects
The company's internal control audit has been issued a negative opinion for two consecutive years, showing that There are major deficiencies in continuing operations, financial management, engineering project management, inventory and other asset management, and litigation management. As of the end of 2020, the above-mentioned major deficiencies in internal control have not been rectified. At present, the company's operations continue to suffer losses, there are unresolved large capital occupations, unresolved large due debts, major litigations, bankruptcy reorganization applications and other risk matters, and stocks have been issued a delisting risk warning. The company is requested to additionally disclose the measures that all directors, supervisors and senior management have taken and plan to take in order to improve internal control and mitigate risks.
In response to the aforementioned issues, the company, in accordance with the requirements of the "Format Guidelines No. 2" and other regulations, believes that it is not applicable or that it is really inconvenient to disclose due to special reasons, it should explain that it cannot be disclosed. reason. Please disclose your company immediately upon receipt of this inquiry letter, reply to the above-mentioned matters within 5 trading days, disclose it to the outside world, and revise the periodic report accordingly.
The company replies:
The company intends to take the following measures to improve internal control and mitigate risks:
(1) In terms of financial management, in view of the deficiencies of non-standard financial file management, the company has strengthened the management of the company's financial files, strictly implemented financial internal control measures, sorted out and standardized various types of Set up file management methods to ensure the timely and complete preservation of important business and material data.
(2) Regarding the occupation of large amounts of funds, the company is stepping up efforts to recover the non-operating funds occupied by related parties, and has passed creditor's rights and debts in 2020. 1 billion yuan was recovered by means of offset. On May 18, 2021, the company held the 2020 Annual General Meeting of Shareholders. The meeting reviewed and approved the "Proposal on the Progress of Repayment of Non-operating Funds Occupied by Related Parties and Related Transactions". The company has solved the problem by offsetting creditor's rights and liabilities and receiving cash. A total of 1 billion yuan of occupied funds. The amount still to be resolved is about 8.481 billion yuan. On May 18, 2021, the company held the 2020 Annual General Meeting of Shareholders. The meeting reviewed and approved the "Proposal on Mr. Ma Xingtian and Ms. Xu Dongjin's Change of Commitment to Related Parties' Non-operating Fund Occupation and Repayment Arrangements". The controlling shareholder and its related parties changed non-operating funds. The commitment of the repayment arrangement for capital occupation is to repay the occupied funds in the form of cash plus assets. The assets used to repay the occupied funds include real estate and other real estate owned by the controlling shareholder and its related parties, company equity, motor vehicles and other movable properties, as well as land use rights and bank deposits and other assets. The above-mentioned foreclosed assets will be evaluated by an asset appraisal agency with a business license related to securities and futures business, and the actual value of the foreclosed assets will be confirmed.
(3) Regarding the issue of overdue large debts, the company has drawn up a debt disposal plan for sustainable operations from the main business level, which will be implemented in the future. At the same time, the company hasWith the support of major creditors, the company can reduce the company's debt repayment pressure and resolve the company's debt risks by reducing or exempting penalty interest, adjusting interest payment methods, and extending loan periods, combined with debt restructuring and other methods.
(4) Regarding major lawsuits, the company will actively respond to lawsuits, establish a lawsuit management mechanism, and increase the financial handling system for pending lawsuits. Coordinate with the department, cooperate with the business department and the relevant financial department, set up a litigation management working group, regularly report the progress of the litigation work and the problems faced to the management, and improve the litigation ledger management and related accounting processing.
(5) Regarding the management of engineering projects, the company has established an engineering management department responsible for the management of engineering projects; drafted engineering management systems, engineering bidding and procurement Management methods, engineering visa change management system, engineering settlement management system and other systems standardize the business process of engineering projects, and improve the engineering project management mechanism. At present, these systems are going through the internal opinion collection process; they are equipped with special project file management specialists, so that they can determine their positions and responsibilities; they are equipped with a project file room to sort out the project files by categories, so that some can be checked and found; the project files are purchased. Management system, establish a scientific engineering project file management system, and make engineering project file management more scientific and clearer.
(6) Regarding the issue of asset management, the company has already provided a loss of 20.483 billion yuan for inventory depreciation in 2020, and will continue to strengthen inventory management standards and conduct regular inventory checks in the future. Inventory and rationally assess the value of the inventory to ensure that the inventory accounts are consistent.
(7) Regarding the issue of going concern and bankruptcy reorganization, on June 4, 2021, the company received the ( 2021) Guangdong 52 Poshen No. 1 "Civil Ruling", ruling to accept the creditor Guangdong Jiedong Rural Commercial Bank Co., Ltd.'s application for the company's reorganization. On the same day, the company received the "Decision Letter" (2021) Yue 52 Po No. 1 served by the Jieyang Intermediate People's Court, and designated Beijing King & Wood Mallesons (Shenzhen) Law Firm as the company's administrator. Through bankruptcy and reorganization, it will help to completely resolve the company's debt risks, improve the company's asset-liability structure, gradually restore the company's profitability, and strengthen the company's ability to continue operating.
Kangmei Pharmaceutical Co., Ltd.
Board of Directors
June 24, 2021
Securities Code: 600518 Securities Abbreviation: *ST Kangmei No.: Lin 2021-054p>
Bond Code: 122354 Bond Abbreviation: 15 Kangmei Bond
Bond Code: 143730 Bond Abbreviation: 18 Kangmei 01
Bond code: 143842 Bond abbreviation: 18 Kangmei 04
Preferred stock code: 360006 Preferred stock abbreviation : Kangmeiyou 1
Kangmei Pharmaceutical Co., Ltd. on the court's approval
During the reorganization of the company Announcement of Continuation of Business
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and that the contents of this announcement are true , accuracy and completeness are individually and jointly liable.
Important content reminder:
● Recently, Kangmei Pharmaceutical Co., Ltd. (hereinafter referred to as "the company" ”) received the (2021) Yue 52 Po No. 1 "Reply Letter" served by the Intermediate People's Court of Jieyang City, Guangdong Province (hereinafter referred to as the "Court" or "Jieyang Intermediate Court"), Jieyang Intermediate Court agreed that the company will continue to operate during the reorganization open for business.
● Jieyang Intermediate Court hasIt was ruled that the company entered the reorganization process, but the company still has the risk of being declared bankrupt due to the failure of the reorganization. If the company is declared bankrupt, the company will be subject to bankruptcy liquidation. According to Article 13.4.14 of the "Stock Listing Rules", the company's shares will face the risk of being terminated from listing.
On June 4, 2021, the Jieyang Intermediate Court ruled to accept the bankruptcy and reorganization of the company, and on the same day designated Beijing King & Wood Mallesons (Shenzhen) Law Firm as company management people. The company recently received the (2021) Yue 52 Po No. 1 "Reply Letter" served by the Jieyang Intermediate Court, and the Jieyang Intermediate Court agreed that the company will continue to operate during the reorganization. The relevant content is hereby announced as follows:
1. (2021) The main content of the "Reply Letter" No. 1 of Guangdong 52 Po 1
On June 7, 2021, the company administrator submitted the "Report on Requesting the People's Court to Permit Kangmei Pharmaceutical Co., Ltd. to Continue Business" and "Continuing Business of Kangmei Pharmaceutical Co., Ltd." to Jieyang Intermediate Court "Analysis Report" and applied to Jieyang Intermediate People's Court for permission to continue operating during the company's reorganization. After review, the Jieyang Intermediate People's Court held that in order to minimize the company's economic losses, safeguard the economic interests of creditors and related parties, maintain the debtor's value and influence, and maintain the stability of employees and society, after research, it was agreed that the company would continue to operate during the reorganization. The Jieyang Intermediate People's Court requires the administrator to strictly manage and supervise the company's operations in accordance with the law to ensure that the company operates in compliance with laws and regulations.
2. Risk warning
(1) The court has ruled that the company has entered into the reorganization process, but the company There is still a risk of being declared bankrupt due to a failed reorganization. If the company is declared bankrupt, the company will be subject to bankruptcy liquidation. According to Article 13.4.14 of the "Stock Listing Rules", the company's shares will face the risk of being terminated from listing.
(2) If the company implements and completes the reorganization, the reorganization plan will help improve the company's asset-liability structure and increase the company's profitability. However, if the company's follow-up operations and financial indicators do not meet the requirements of relevant regulatory requirements such as the "Stock Listing Rules", the company's shares still have the risk of being terminated from listing.
The company will fully cooperate with the court and the administrator to promote the reorganization related work. The information disclosure media designated by the company are China Securities Journal, Shanghai Securities News, and Securities Times. "Securities Daily" and the website of the Shanghai Stock Exchange (), all company information is subject to the information disclosed in the above designated media.
Investors are requested to pay attention to the company's announcement and pay attention to investment risks.
Kangmei Pharmaceutical Co., Ltd.
Board of Directors
June 24, 2021Massive information, Accurate interpretation, all in Sina Finance APP