The Securities Regulatory Commission uncovers the running of scallops in Swertia Island: false financial records

category:Finance
 The Securities Regulatory Commission uncovers the running of scallops in Swertia Island: false financial records


Annual report of loss of profits in 2017 amounted to nearly 280 million yuan

At the end of each month, Swertia Island Proliferation Branch concentrates on carrying forward the cost of bottom-sown shrimp scallops, and takes the fishing area (harvesting coordinates) provided by the family and Zhao Ying at the end of each month as the basis of carrying forward the cost. However, there is no daily record of capture area for reference, and there is no effective means for financial personnel to verify.

Therefore, affected by the reduction of operating costs and non-operating expenditures, the annual report of Swertz Island in 2016 increased assets by 13.114.77 million yuan and profits by 13.114.77 million yuan, accounting for 158.15% of the total disclosed profits in the current period. The total profits in the annual report in 2016 were 82.92.53 million yuan and the net profits were 75.7145 million yuan, with retrospective adjusted after-profit. Total profit was - 48.2223 million yuan, net profit was - 55.4331 million yuan, and performance was changed from profit to loss.

According to the investigation of the SFC, there is a problem of arbitrary carry-over in Swertia Island. Zhangzi Island recorded 57.9 million mu more harvested area in 2017 than the real situation, and some actual harvested sea areas in 2016 were transferred to carry-over costs in 2017, resulting in a false increase in operating costs of 6159.03 million yuan in 2017.

Swertia Island is also suspected of false records in the announcement of its write-off assets and provision for inventory depreciation in April 2018. According to the announcement, 10.76 million mu of shrimp barnyard shellfish stocks were cancelled and 243,000 mu of shrimp barnyard shellfish stocks were depreciated, amounting to 57.5795 million yuan and 60.7216 million yuan, respectively.

However, the investigation by the SFC found that the inventory of Swertia Island did not reflect the objective situation. Among the cancelled sea areas, 285,500 mu, 1976,000 Mu and 361,000 mu of shrimp and shellfish sown in 2014, 2015 and the end of 2016 had been collected in previous years, resulting in a false increase in non-operating expenditure of 247,828,800 yuan, accounting for 42.91% of the cancelled amount. At the end of 2015 and 2016, 638,000 Mu and 0.13,000 mu of shrimp and shellfish sown respectively have been collected in previous years, resulting in a loss of 111,052,000 yuan in the impairment of false added assets.

The results of investigation and accounting show that, affected by the false increase of operating costs, false increase of non-operating expenditure and loss of impairment of false assets, the annual report of Swertia Island Company in 2017 shows a false decrease of profit of 2786.5509 million yuan, accounting for 38.57% of the total disclosed profits in the current period. After retrospective adjustment, the performance is still a loss.

Falsification of scallop sampling results: 120 points were planned and 66 points were not executed

By comparing the autumn surveying records published by Zhangzi Island with the navigation positioning information provided by Beijing Beidou Xingtong Navigation Technology Co., Ltd., it is found that within the autumn surveying days recorded by the company, the position of the ship Zhangzi Island Scientific Research 19 has been confirmed to be very few by its trajectory.

According to the autumn survey plan of Zhangzi Island in 2017, the person in charge of the implementation, recording and reporting of autumn survey is Shi Jingjiang. According to law, the SFC warned Shi Jingjiang and his team members and imposed a fine of 200,000 yuan.

In addition to suspected financial fraud and false records, there are also major problems in information disclosure in Swertia Island.

In October 2017, Swertia Island lost more than 10 million yuan a month. In mid-November, Gou Rong, the companys financial director, found that scallop sales dropped sharply. By the end of November, the loss of Swertia Island was further increased. After the merger, the profit remained only about 50 million yuan, which was far more than 20% different from the full-year profit forecast of 90 million yuan to 110 million yuan in the three-quarter report.

According to the relevant provisions of the Securities Law, in early January 2018, Gou Rong reported to Wu Hougang that there was a big gap between the performance and expectations of the whole year. He should disclose the information within 2 days. However, it was not until January 30 that year that Swertia Island disclosed this information, suspected of not disclosing information in time. Wu Hougang and Gou Rong are directly responsible executives.

According to the China Securities Regulatory Commissions Administrative Penalty and Prior Notification of Market Ban issued by CSRC on Swertz Island, Wu Hougang and Gou Rong were fined 300,000 yuan. The CSRC took measures to ban Wu Hougang from entering the market for life and five years from Gou Rong and others.

At the close of July 10, Swertia Island closed at 3.42 yuan per share, down 2.29%.