FSSS(SH:600399)2018-08-30 16:00Financial Condition - The company reported overdue borrowings and notes payable totaling approximately ¥878.1 million as of June 30, 2018, which increased to approximately ¥1.93 billion by the report date[15]. - The company has been under a delisting risk warning since June 27, 2018, due to negative net assets and consecutive losses in 2016 and 2017[7]. - The company is facing a bankruptcy reorganization application from a creditor, citing inability to repay debts and lack of repayment capacity[12]. - The company has provided guarantees for bank financing of ¥500 million for its controlling shareholder and ¥300 million for its subsidiary, both of which are overdue[14]. - The company reported a significant accounting error affecting total assets and net assets, leading to a negative net asset situation[11]. - The company acknowledges the risk of being declared bankrupt if the reorganization plan is not approved by the court[12]. - The net assets attributable to shareholders at the end of the reporting period were approximately -¥1.20 billion, a decrease of 6.17% from -¥1.13 billion at the end of the previous year[32]. - The company has overdue debts totaling 1,927,105,595.62 CNY, including 1,149,006,501.15 CNY in loans and 778,099,094.47 CNY in notes payable[58]. - The company is facing bankruptcy risks as it received a court application for reorganization due to inability to repay debts[59]. - The company has reported continuous losses for two consecutive years, with the most recent year's net asset being negative[57]. Legal Issues - The company has 47 ongoing lawsuits or arbitrations, with a total amount in dispute of approximately ¥182.1 million[16]. - The company is under investigation by the China Securities Regulatory Commission for suspected information disclosure violations[9]. - There are currently 47 ongoing lawsuits or arbitrations against the company, with a total claim amount of approximately ¥182.15 million[78]. - The company has completed rectification measures as mandated by the Liaoning Regulatory Bureau of the China Securities Regulatory Commission due to internal control and accounting issues[79]. Operational Performance - The company's operating revenue for the first half of 2018 was approximately ¥2.97 billion, representing a 6.94% increase compared to ¥2.77 billion in the same period last year[32]. - The net profit attributable to shareholders for the first half of 2018 was a loss of approximately ¥69.54 million, a decrease of 216.70% compared to a profit of ¥59.59 million in the same period last year[32]. - The net cash flow from operating activities for the first half of 2018 was approximately ¥1.88 million, down 49.98% from ¥3.77 million in the previous year[32]. - The total assets as of the end of the reporting period were approximately ¥8.47 billion, a decrease of 11.41% from ¥9.57 billion at the end of the previous year[32]. - The basic earnings per share for the first half of 2018 was -¥0.053, a decrease of 217.78% compared to ¥0.045 in the same period last year[33]. - The weighted average return on net assets for the first half of 2018 was -5.99%, a decrease of 8.90 percentage points compared to 2.91% in the same period last year[33]. - The company incurred a loss of CNY 69.54 million in the first half of 2018 due to high financial costs and adjustments in sales policies for high-margin military products[44]. - The company achieved a steel production of 318,800 tons and a steel product output of 260,200 tons, remaining stable compared to the same period last year[44]. Management and Governance - The company has identified significant internal control deficiencies affecting the recognition, recording, and reporting of inventory, fixed assets, and construction in progress, leading to substantial accounting errors[19]. - The company ensures that its financial independence is maintained, with a separate financial department and accounting system established[70]. - The company commits to not using its controlling position to interfere with operational decisions of its subsidiaries, ensuring independent business activities[70]. - The company will adhere to market principles and fair pricing in any necessary related transactions, ensuring no harm to other shareholders[70]. - The company has a commitment to uphold the independence of its board and management decisions without interference from its parent group[70]. - The company appointed Zhongzhun Accounting Firm as the auditor for the 2018 financial report, following a decision made at the 2017 annual shareholders' meeting[73]. - The company received an audit report for 2017 with a disclaimer of opinion from Zhongzhun Accounting Firm, indicating unresolved issues[74]. Related Party Transactions - The total amount of related party transactions reached 653,130,000 RMB, with a significant portion benefiting from the resources of the controlling shareholder, Northeast Special Steel Group[84]. - Northeast Special Steel Group's sales to related parties amounted to 70,630,000 RMB, with a price difference of 2.40% compared to market prices[83]. - The company’s related party transactions do not affect its independence, as stated in the report[84]. - The company has confirmed that related party debts do not have a significant impact on its operational results and financial status[87]. Community Engagement and Social Responsibility - The company plans to invest 45,000 RMB to build a 90 square meter cultural room in a poverty-stricken village as part of its poverty alleviation efforts[92]. - The company has established a three-year poverty alleviation plan in collaboration with local government agencies, focusing on improving the living conditions of impoverished households[91]. - The company has actively participated in the identification and support of impoverished households, ensuring accurate records and assistance measures are in place[91]. - The company invested a total of 4.5 million RMB in poverty alleviation projects, helping 86 registered impoverished individuals to escape poverty[96]. - The company has actively engaged in community activities, organizing over 10 village-level events each month to enhance cultural life for residents[95]. Environmental Responsibility - The company has established a comprehensive environmental monitoring system, ensuring compliance with pollution discharge standards[100]. - The company has installed pollution control devices across its production systems, achieving zero discharge of industrial wastewater[101]. - The company has developed emergency response plans for environmental incidents and conducts regular drills to ensure preparedness[103]. Restructuring and Future Plans - The restructuring plan for the controlling shareholder, Northeast Special Steel Group, is still in execution as of the report date, with a new controlling entity expected to be Ningbo Meishan Bonded Port Area Jincheng Shazhou Equity Investment Co., Ltd.[18]. - The company plans to address risks related to debt pressure, litigation risks, and the risk of continued operations due to two consecutive years of losses and negative net assets in the most recent year[62]. - The company aims to improve its asset status and reduce financial leverage with the support of national and local governments, controlling shareholder Northeast Special Steel Group, and creditors[62]. - The company will take measures to introduce funds and technology resources to actively resolve the current financial crisis and enhance sustainable development capabilities[62]. - The company is currently undergoing a restructuring process, with the investor Jincheng Shazhou expected to become the indirect controlling shareholder upon completion[154]. Financial Reporting and Accounting Policies - The financial statements are prepared based on the going concern assumption, with no significant doubts about the company's ability to continue operations in the next 12 months[161]. - The company recognizes identifiable assets, liabilities, and contingent liabilities acquired in a business combination at fair value on the acquisition date[169]. - Goodwill is recognized when the acquisition cost exceeds the fair value of identifiable net assets acquired[169]. - The company assesses impairment of financial assets at the balance sheet date, with objective evidence including significant financial difficulties of the issuer or debtor[184].