On January 8, 2024, Xingyuan Environmental Factor Company inflated project revenue and was fined 2 million yuan by the regulator. In this incident, only the company's chief financial officer was punished, and the then senior executives have all left their posts and the statute of limitations for administrative penalties has expired. The company stated that due to the adjustment of accounting errors, it will recover the performance commitment compensation from the original shareholders of the subsidiary.
*: Photo.comThe company was fined 2 million yuan for inflating revenue
On January 8, 2024, Xingyuan Environmental Technology Co., Ltd. *** abbreviation: Xingyuan Environment; **300266.SZ) received the "Administrative Penalty Decision" issued by the Zhejiang Securities Regulatory Bureau. Due to the inflated project income and cost of the wholly-owned subsidiary, the company's financial data were falsely recorded, and Xingyuan Environment and the company's chief financial officer were fined respectively.
According to the announcement issued by Xingyuan Environment, the company was suspected of violating laws and regulations in information disclosure, and on July 5, 2023, the China Securities Regulatory Commission decided to file a case against the company; On July 12, 2023, we received a notice of filing from the China Securities Regulatory Commission.
On December 29, 2023, the company received the "Prior Notice of Administrative Punishment" issued by the Zhejiang Securities Regulatory Bureau.
According to the content of the announcement, it has been ascertained by supervision that the company's wholly-owned subsidiary, Hangzhou Zhongyi Ecological Environment Project, was established in 2016 and 2017 in the beautiful town of Changxing County (bid section.
1. Bid 2) PPP project and PPP project of the marine ecological corridor renovation and restoration project on the island in Dongtou District, Wenzhou, have inflated project income and costs, resulting in false records in the financial data and related disclosures of Xingyuan Environment's annual reports from 2016 to 2022.
Among them, the 2016 annual report increased operating income by 9063090,000 yuan, inflated total profit of 2202070,000 yuan; In the 2017 annual report, the operating income increased by 26807660,000 yuan, inflated total profit of 3636860,000 yuan, which also affects the amount of relevant assets and liabilities in the annual report from 2016 to 2022, and there are false records in the amount of assets and liabilities in the annual report.
The Zhejiang Securities Regulatory Bureau decided to order Xingyuan Environment to make corrections, give a warning, and impose a fine of 2 million yuan; Sun Ying, the company's chief financial officer, was given a warning and fined 800,000 yuan.
The performance was under pressure, and the net profit continued to be negative in the past three years
Founded in 1992 and headquartered in Hangzhou, Xingyuan Environment was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange in 2011. The company mainly develops the cornerstone industry of environmental protection equipment represented by filter presses, and lays out innovative businesses represented by energy storage and carbon peaking and carbon neutrality; In addition, the company's comprehensive environmental treatment business also includes water conservancy dredging, comprehensive treatment of rivers and lakes, industrial wastewater treatment, municipal and rural sewage treatment, landscape and other engineering construction services.
In the first three quarters of 2023, Xingyuan Environment achieved operating income of 69.3 billion yuan, a year-on-year decrease of 2673%；Achieved net profit attributable to the parent company - 26 billion yuan, a year-on-year decrease of 7663%。The company's net profit attributable to the parent company in the reporting period of the past three years also continued to be negative.
In 2016, Xingyuan Environment was still in a period of rising performance, when the company achieved an operating income of 201.2 billion yuan, an increase of 127 over the same period last year53%；Achieved net profit attributable to the parent company of 16.4 billion yuan, a year-on-year increase of 6076%。
In 2017, the company still maintained its growth momentum, achieving annual revenue of 276.4 billion yuan, an increase of 37 percent year-on-year35%；Achieved net profit attributable to the parent company of 32.8 billion yuan, an increase of 100 percent year-on-year14%。
However, since the following year, Xingyuan Environment's performance has taken a sharp turn for the worse, and its profits have fallen into a loss. In 2018, the company achieved revenue of 247.7 billion yuan, a year-on-year decrease of 1831%；Achieved net profit attributable to the parent company -129.5 billion yuan, a year-on-year decrease of 45825%。
From 2020 to 2022, Xingyuan Environment achieved operating income of 245.1 billion yuan, 234.2 billion and 135.5 billion yuan, a year-on-year increase of 1753%、-4.44% and -4216%；Respectively, the net profit attributable to the parent company was -52.9 billion yuan, -03.6 billion and -55.2 billion yuan, a year-on-year increase. 19% and -143228%。
Founded in 1993, Zhongyi Ecology, a subsidiary of the inflated revenue, is mainly engaged in environmental engineering, water treatment engineering, landscaping engineering construction, design and greening maintenance management, as well as municipal public works construction contracting.
In November 2015, Xingyuan Environment announced that the company would issue shares and pay in cash for 124.2 billion yuan acquired 100% of the equity of Zhongyi Ecology.
As of the end of June 2023, Zhongyi Ecology has total assets of 236.9 billion yuan, net assets of 2$4.9 billion; In the first half of 2023, Zhongyi Ecology will achieve an operating income of 03 billion yuan, net profit of -15.7 billion yuan.
At that time, the senior executives had all resigned, and the statute of limitations for administrative penalties had expired
It is worth mentioning that in this Xingyuan Environment case, the regulator only imposed an administrative penalty on the company's financial director.
According to the announcement, the directors, supervisors, senior managers and other relevant personnel of Xingyuan Environment in 2016 and 2017 have all resigned, and the statute of limitations for administrative penalties has expired.
The regulator believes that Sun Ying, the chief financial officer of Xingyuan Environment, failed to pay sufficient attention to the matters involved in the case during her tenure and failed to ensure the truthfulness, accuracy and completeness of the information disclosure in the annual report she signed, which violated the provisions of paragraph 3 of Article 82 of the ** Law, and was the person in charge directly responsible for the illegal information disclosure. Therefore, Sun Ying was given a warning and fined 800,000 yuan.
It was found that the senior executives of Xingyuan Environment from 2016 to 2017 had all left. Zhou Liwu, then chairman of the company, resigned in September 2018; Xiong Wenshuo and Fan Changyuan, who were the secretary of the company's board of directors at the time, resigned in May 2016 and October 2018 respectively.
In addition, the management changes of Xingyuan Environment are also more frequent. Since 2016, the company has changed 5 general managers. Shen Shaohong, a senior executive of the company, resigned as deputy general manager in May 2016 and then as vice chairman in January 2019. The current CFO Sun Ying has been in her current position since October 2020 and has previously replaced 4 CFOs.
The Company will pursue the performance commitment compensation
For this information disclosure violation, Xingyuan Environment previously issued the "Assurance Report on the Special Explanation of the Correction of Errors in the Early Period of Xingyuan Environmental Technology Co., Ltd.", which detailed the impact of accounting error adjustments.
It is worth noting that the adjustment of accounting errors involves the issue of compensation for prior performance commitments. In February 2016, Xingyuan Environment completed the acquisition of 100% equity of Zhongyi Ecology and included it in the scope of consolidated statements. At that time, the company signed the "Profit Compensation Agreement" with Wu Jie and other 7 original shareholders of Zhongyi Ecology, and promised that the net profit attributable to shareholders of the parent company after deducting non-recurring profits and losses in 2015, 2016 and 2017 was 92000000000, 1150000000000000000000000000000000000000000,000 yuan, a total of 35075000,000 yuan.
After Xingyuan Environment adjusted the accounting errors in 2016-2017, the net profit attributable to shareholders of the parent company in 2015, 2016 and 2017 was 9437480,000 yuan, 11159030,000 and 13,607820,000 yuan, a total of 34,204330,000 yuan.
According to the "Profit Compensation Agreement", Zhongyi Ecology did not complete the performance commitment indicators in 2016 and 2017, and the performance commitment indicators were not completed during the three-year performance commitment period from 2015 to 2017, that is, Wu Jie and other 7 original shareholders of Zhongyi Ecology need to compensate the listed company.
Xingyuan Environment said that in order to effectively safeguard the interests of the company and all shareholders, the company will attach great importance to the recovery of performance commitment compensation, and plans to arrange a special team and hire professional institutions to conduct research and judgment, and effectively promote the effective development of related work.