Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(A joint stock company incorporated in the People's Republic of China with limited liability under the Chinese corporate name "東方證券股份有限公司" and carrying on business
in Hong Kong as "東方證券" (in Chinese) and "DFZQ" (in English))
(Stock Code: 03958)
ANNOUNCEMENT
IN RELATION TO THE PROVISION FOR INDIVIDUAL CREDIT IMPAIRMENT
This announcement is made by 東 方 證 券 股 份 有 限 公 司 (the "Company") pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules")) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and Rule 13.09(2) and Rule 13.10B of the Listing Rules.
The 15th meeting of the fourth session of the board of directors (the "Board") and the 10th meeting of the fourth session of the supervisory committee (the "Supervisory Committee") of the Company were convened on October 30, 2019 by way of on-site meeting, at which the Resolution in Relation to the Provision for Individual Credit Impairment was considered and approved. Details are set out below:
-
OVERVIEW OF PROVISION FOR ASSET IMPAIRMENT
According to the relevant provisions of the China Accounting Standards for Business Enterprises (the "CASBE") and the accounting policies of the Company, in order to reflect more truly and fairly the financial position of the Company as at September 30, 2019 and the operating results during the period from January to September 2019, the Company intends to make provision for
credit impairment for the stock-pledged financing project of the financier, Dalian ChangfuRuihua Group Co., Ltd. ( 大連長富瑞華集團有限公司) ("ChangfuRuihua"), with the stocks of Dalian Holding ( 大連控股) (600747.SH) being the pledge.
- EFFECT ON THE COMPANY OF THE PROVISION FOR ASSET IMPAIRMENT
The provision for individual credit impairment totaled RMB459.5461 million, and as a result of which, total profit and net profit of the Company for September 2019 were decreased by RMB459.5461 million and RMB344.6596 million, respectively.
- 1 -
-
DESCRIPTION OF PROVISION FOR ASSET IMPAIRMENT
In June 2014, the financier, ChangfuRuihua, pledged the stocks of Dalian Holding ( 大 連 控 股) (600747.SH) with the Company for the stock-pledged repurchase business and the initial transaction amount reached RMB800.00 million. According to the requirements of the underlying agreement, the original repurchase date of the transaction shall fall in June 2017. However, the financier failed to perform its repurchase obligation as agreed. The Company strived for recourse by taking various actions, including judicial proceedings but in vain due to different situations and difficulties. According to the relevant provisions of the CASBE and the relevant accounting policies of the Company, the Company made provision for impairment based on the difference between the book value and the estimated recoverable amount and has made an accumulated provision for credit impairment of RMB191.2265 million by the end of the first half of 2019.
On September 20, 2019, according to the Risk Alert Announcement on Share Trading Suspension and Possible Delisting 《( 關 於 公 司 股 票 停 牌 暨 可 能 被 終 止 上 市 的 風 險 提 示 性 公 告》) disclosed by Dalian Holding ( 大連控股) (600747.SH), the daily closing price of its shares had been lower than the par value of the shares for 20 consecutive trading days and therefore was confronted with the risk of delisting. The Company believed that, the aforesaid issue would have a material impact on the estimated recoverable amount of the underlying stock-pledgedrepurchase business. Taking into comprehensive consideration of the credit standing of the financier, the potential transferee, the net asset value and the shareholding ratio of the pledged stocks, the Company made a provision for individual credit impairment of RMB459.5461 million and an accumulated provision for credit impairment of RMB650.7726 million based on the difference between the book value and the estimated recoverable amount.
On October 19, 2019, according to the Announcement on Share Delisting of Dalian Dafu Holding Co., Ltd. 《( 大連大福控股股份有限公司關於公司股票終止上市的公告》) further disclosed by Dalian Holding ( 大連控股) (600747.SH), it received the Decision on Share Delisting of Dalian Dafu Holding Co., Ltd. 《( 關於大連大福控股股份有限公司股票終止上市的決定》) issued by the Shanghai Stock Exchange (Shanghai Stock Exchange Self-regulatory Decision [2019] No. 215) on October 18, 2019, stating that the Shanghai Stock Exchange determined to delist its shares. The Company will follow up the progress and get well prepared for the recourse.
IV. THE OPINION OF THE BOARD ON PROVISION FOR ASSET IMPAIRMENT OF THE COMPANY
The Board is of the view that the provision for individual credit impairment is in line with the CASBE and the accounting policy of the Company, and gives a true and fair view of the actual assets and financial position of the Company. The Board agrees to the provision for impairment.
- 2 -
- THE OPINION OF INDEPENDENT NON-EXECUTIVE DIRECTORS ON PROVISION FOR ASSET IMPAIRMENT OF THE COMPANY
The independent non-executive directors of the Company are of the view that the provision for individual credit impairment is well substantiated, and the decision-making process is lawful, complies with the CASBE and the accounting policy of the Company, reflects more truly and fairly the actual asset status and financial position of the Company, is in the interest of the Company as a whole and provides true, reliable and accurate accounting information to investors. The decision-making process is in line with the requirements of relevant laws, regulations and the Articles of Association of the Company and does not prejudice the interest of the Company and its shareholders as a whole, in particular minority shareholders.
VI. THE OPINION OF THE AUDIT COMMITTEE ON PROVISION FOR ASSET IMPAIRMENT OF THE COMPANY
The Audit Committee of the Company is of the view that the provision for individual credit impairment is in line with the CASBE and the accounting policy of the Company. It reflects more truly and fairly the financial position of the Company as at September 30, 2019 and the operating results for January to September 2019, which helps to provide more accurate accounting information to investors and does not prejudice the interest of the Company and its shareholders as a whole, in particular minority shareholders.
VII. THE OPINION OF THE SUPERVISORY COMMITTEE ON PROVISION FOR ASSET IMPAIRMENT OF THE COMPANY
The Supervisory Committee is of the view that the provision for individual credit impairment is in line with the CASBE and the accounting policy of the Company. The Supervisory Committee agrees to the provision for impairment.
By order of the Board of Directors
PAN Xinjun
Chairman
Shanghai, the PRC
October 30, 2019
As at the date of this announcement, the Board of Directors comprises Mr. PAN Xinjun and Mr. JIN Wenzhong as executive Directors; Mr. LIU Wei, Mr. WU Junhao, Mr. CHEN Bin, Mr. LI Xiang, Ms. XIA Jinghan, Mr. XU Jianguo and Mr. DU Weihua as non-executive Directors; and Mr. XU Guoxiang, Mr. TAO Xiuming, Mr. WEI Anning, Mr. XU Zhiming and Mr. JIN Qinglu as independent non-executive Directors.
- 3 -