Half a year after being investigated by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure laws and regulations, *ST Mingcheng (600136) received the "Prior Notice of Administrative Punishment" issued by the Hubei Securities Regulatory Bureau.
ST Mingcheng's announcement on February 25 showed that the company and related executives were fined a total of 15.5 million yuan. The specific matters involved in the penalty include material omissions in the guarantee matters disclosed in the 2020 annual report, false records in the 2020 and 2021 annual reports, and failure to disclose arbitration information as required.
Multiple violations are involved
ST Mingcheng received the "Notice of Case Filing" issued by the CSRC on July 26, 2023, and the CSRC decided to file a case against the company due to the company's suspected illegal information disclosure.
On February 23, 2024, the company received the "Advance Notice of Administrative Punishment" issued by the Hubei Securities Regulatory Bureau. According to the "Notice", *ST Mingcheng is suspected of a number of illegal information disclosure.
First of all, there were material omissions in the guarantee matters disclosed in the company's 2020 annual report. The company has provided guarantees for the loans of related parties Modern Investment to Hubei Cooperation and its subsidiaries, provided guarantees for Yushi Mining's loans to CEIC, provided full guarantees for Xinying Cayman's payment obligations to the AFC, and provided guarantees for Contemporary Football Club's loans to Zeng Mouchao. None of these four guarantees were disclosed in the 2020 annual report, which constituted a material omission under the ** Law.
Secondly, there were false records in the company's 2020 annual report and 2021 annual report. In particular, in the 2021 annual report, the company has problems such as unrecognized liabilities for repurchase obligations, inaccurate revenue recognition, insufficient inventory impairment, and inaccurate goodwill impairment. A total of 98.42 million yuan of inflated income in the financial statements of the 2021 annual report, and the impairment amount was undercounted by 3100 million yuan, undercounting liabilities of 30 million yuan, inflated total profit of 40.9 billion yuan.
Among them, *ST Mingcheng, in the case of its holding subsidiary Xinying Cayman apportioning and recognizing the income of La Liga copyright business in the 21 22 season with 15 million US dollars, recognized the income of La Liga copyright business in the 21 22 season according to 45 million euros in the preparation of the 2021 annual report, did not make full use of the unfavorable information that could be obtained, and the basis for confirming the income was insufficient, resulting in an inflated income of 98.42 million yuan in the 2021 annual report.
In terms of inventory impairment, *ST Mingcheng's VR** (star Iniesta**) film and television drama "Eighteen Years in the Enemy Camp", "Di Renjie" ("Di Renjie's Autumn Official Academy"), V2-Company of Heroes and other projects themselves were unable to shoot and the counterparty lost contact and could not complete the predetermined goals, and there were obvious signs of inventory impairment. Due to the failure to make timely provision for inventory price decline, *ST Mingcheng's 2021 annual report inflated profit of 98 million yuan, and the 2022 annual report inflated total profit of 98 million yuan.
The issue that had the greatest impact on profit in 2021 was the impairment of goodwill. In 2015, *ST Mingcheng acquired Qiangshi Media*** at the time of the acquisition and generated goodwill in the consolidated financial statements of about 3400 million yuan, and the book value of the remaining goodwill at the time of the 2021 annual report is about 21.3 billion yuan.
The notice mentions that in the basic data on which ST Mingcheng's goodwill impairment income is based, there are 9 items such as the film and television drama "Good Girl Wushuang", "Lakeside Murder", TV series "Life", and "Happiness to Ten Thousand Homes", and the income data of 9 items are inconsistent with the actual situation, and there is no objective evidence to support or contradict the objective evidence.
ST Mingcheng's 2021 goodwill impairment test results were inaccurate, resulting in an underprovision for goodwill impairment in the annual report21.3 billion yuan, and the total inflated profit in the consolidated financial statements in 2021 was 21.3 billion yuan.
It is proposed to warn and fine 15.5 million yuan
Based on *ST Mingcheng's illegal acts, the Hubei Securities Regulatory Bureau intends to decide to give a warning to *ST Mingcheng and impose a fine of 7.6 million yuan. At the same time, a number of company executives were given warnings and fines.
Among them, Yi Rentao, the company's then chairman, was fined 4 million yuanimposed a fine of 1.7 million yuan on the then deputy general manager and chief financial officer;Gao Wei, then deputy general manager and secretary of the board of directors, was fined 1 million yuanYan Aihua, the then general manager and director, was fined 700,000 yuanDirector Yu Lingxiao was fined 500,000 yuan. The above-mentioned fines against the company and its current executives totaled 15.5 million yuan.
The notice mentions that Yi Rentao, as the main person responsible for the company's information disclosure, knows and participates in the four loan guarantee matters of *ST Mingcheng, and signs the 2020 annual report, and should ensure the truthfulness, accuracy and completeness of the 2020 annual report, and is the person in charge directly responsible for the major omissions and illegal acts in the 2020 annual report.
Gao Wei, then deputy general manager and secretary of the board of directors, was aware of and participated in three loan guarantee matters, including Modern Investment, New England Cayman and Modern Football Furniture, and signed the 2020 annual report, and was the other person directly responsible for the material omission and illegal acts in the 2020 annual report.
Li Zhenyu, then deputy general manager and chief financial officer, was aware of the two loan guarantees of Modern Investment and New England Cayman, and signed the 2020 annual report, and was the other person directly responsible for the material omission of illegal acts in the 2020 annual report. Yan Aihua was aware of the New England Cayman guarantee matters, and Director Yu Lingxiao was aware of and participated in the New England Cayman guarantee matters and signed the 2020 annual report, and was the other person directly responsible for the material omission of illegal acts in the 2020 annual report.
ST Mingcheng said that the content involved in the "Prior Notice of Administrative Punishment" received by the company this time did not touch the relevant provisions of the major illegal forced delisting. At present, the company's various business activities are carried out normally. The company will strengthen the standardization of internal governance and improve the quality of information disclosure.
Previously, the auditor resigned
ST Mingcheng has not been doing well in recent years. The company's 2022 annual audited owner's equity attributable to shareholders of listed companies is negative, and the 2022 annual audit report that cannot express an opinion has been issued, and its ** has been put on delisting risk warning from April 28, 2023.
According to the relevant regulations, if the company's 2023 annual financial and accounting report is issued with a qualified opinion, an inability to express an opinion and a negative opinion, the company** will face the risk of mandatory delisting of financial after the disclosure of the 2023 annual report.
However, on January 30, *ST Mingcheng has announced that after the preliminary calculation of the company's financial department, it is expected that the company's ownership equity attributable to shareholders of listed companies in 2023 will be 2500 million to 37.5 billion yuan. At the same time, the company is expected to achieve a net profit of about 2.2 billion yuan to 3.2 billion yuan in 2023, turning losses into profits. However, its non-net profit is still expected to be a loss of 2$500 million to $500 million.
On January 26 this year, *ST Mingcheng announced that its audit institution, Baker Tilly International Accounting Firm (Special General Partnership), was expected to be unable to complete the audit of the company's 2023 annual financial statements on time after careful review of personnel and time arrangements due to heavy audit tasks and changes in project team members, so it submitted a resignation application to the company on January 26, 2024.
In the following days, *ST Mingcheng announced the appointment of Zhongshen Zhonghuan as the company's 2023 annual financial auditor and internal control auditor for a period of one year.
ST Mingcheng has recently issued a risk reminder for the second termination of listing, if Zhongshen Zhonghuan can not complete the audit work on time, or can complete the audit work on time, but its audit report shows that the company's financial report is issued with qualified opinions, unable to express opinions and negative opinions and other types of audit reports, the company will face the risk of financial mandatory delisting. 
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