Zhejiang Resources (600070): Annual Report Enquiry Letter

Securities code: 600070 securities short: Zhejiang Fu run Announcement No.: pro 2020-029.

Zhejiang Limited by Share Ltd

Notice on receipt of inquiry letter of Shanghai stock exchange Annual Report

The board of directors and all directors of the company guarantee that there is no false record, misleading statement or major omission in the contents of this announcement, and shall bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.

Zhejiang Fu run Limited by Share Ltd (hereinafter referred to as the "company") received the information inquiry regulation on the 2019 annual report of Zhejiang Fu run Limited by Share Ltd in June 2, 2020, which was issued by the Ministry of supervision of the Shanghai stock exchange, which is issued by the Ministry of supervision of the stock exchange of Shanghai Stock Exchange (Shanghai letter 2020 [0639]).

"Zhejiang rich Limited by Share Ltd:

According to the requirements of rules and regulations for the content and format of company information disclosure of public offering securities, No. second - annual report's content and format (hereinafter referred to as "format code No. second)" and "guidelines for the disclosure of industry information disclosure of Shanghai Stock Exchange", after examining the annual report of your company in 2019, according to the provisions of article 17.1 of the Listing Rules of stock companies, we invite you to enter the company. Step by step and supplement the disclosure of the following information.

I. the operation of the bid. In 2016, the company acquired a 100% stake in Hangzhou Tai Yi Zhi Shang Technology Co., Ltd. In the 2016-2018 year, Tai Yi still achieved the net profit of 61 million 532 thousand and 900 yuan, 86 million 672 thousand yuan and 131 million 957 thousand and 800 yuan after deducting the net profit. In 2019, Tai Yi still achieved operating income of 1 billion 681 million yuan, an increase of 39.6% over the same period last year, but the net profit after deducting the net profit was 75 million 383 thousand and 600 yuan, down 42.9% from the same period last year. The company: (1) supplementary disclosure of the main components of the operating income of Tai Yi Zhi, explaining the reasons for the substantial increase in operating income during the reporting period; (2) combined with the industry situation and the cost and expense situation, and quantifying the reasons and reasonableness of the sharp decline in net profit after the return of the Tai Yi company, and (3) Thailand refers to a sharp decline in the performance after the end of the original performance commitment period. There is no recognition of revenue or profit adjustment. Please check and comment on the above questions.

Two, about performance commitments. Thailand refers to the previous performance commitment period of 2016-2018 years and has completed performance commitments. In July 10, 2018, Fu Haipeng and the company signed a "performance compensation supplementary agreement (two)", which stipulated that if the balance of accounts receivable at the end of 2018 was more than 450 million yuan, the company had the right to cancel the performance award and the stock ownership of the listed company could not be transferred. This commitment directly led to the company's performance award of about 1 in the previous two years. 3 million 123 thousand yuan was cancelled; in November 26, 2018, Jiang Yi GUI and Fu Haipeng signed a letter of commitment on voluntary supplementary performance commitments, supplemental performance commitments for 2019 and 2020. In 2019, the net profit of those who promised to deduct the net profit was no less than 159 million yuan, and realized 75 million 383 thousand and 600 yuan in real terms. The annual report reveals that the company has not yet reached the agreement on employment performance and has agreed with Jiang You Gui and Fu Haipeng. In conjunction with the above circumstances, we invite the company to: (1) explain the reasons and background of the additional commitments made by Jiang Yi GUI and Fu Hai Peng to explain whether there are other undisclosed agreements or agreements with the listed companies or related parties when the original performance commitments are about to be completed. If the company still has significant adverse changes in the company's operations, please sponsor the institutions to verify and express their views; (2) Regarding Thailand's 2019 performance compensation matters, we request the company to disclose further progress. If there is a relevant plan, please ask the company to disclose the compensation method, the amount of compensation, and the impact on the financial statements. If the two sides have not reached an agreement, the company will make a supplementary disclosure of the time schedule, start relevant work as soon as possible, and disclose the progress in a timely manner.

Three, about the freezing of shares. Mr. Jiang has third major shareholders, vice chairman and chairman of Tai Yi Zhi, which has a major impact on the management of the company. During the reporting period, the shares have been frozen by law for several times. At present, the shares held by the company are all frozen by justice and waiting for freezing, and their pledge ratio is 98.35%. The company is requested to: (1) disclose the specific items, amount, reasons for freezing and current progress of the shares being frozen and waiting for freezing, and (2) disclose the related enterprises, including the establishment time, the main business, the related transactions with the company, and the legal proceedings and disputes involved; (3) ask the company to find out whether the Thai company and its subsidiaries exist. (4) whether the relevant internal control policies of the company and Tae Yi can effectively prevent improper agency risks; (5) combined with the above situation, whether the above related matters affect the normal operation and management of the company and Thailand. Please check and give comments.

Four, about impairment of goodwill. The annual report revealed that at the end of 2019, the goodwill account value of 766 million yuan was still formed for the acquisition of Tai Yi, and the value of this year's depreciation is 27 million 573 thousand and 900 yuan. Tayi also achieved a net profit of 75 million 383 thousand and 600 yuan after its deduction in 2019, and completed 47.41% of its performance commitments. In the process of goodwill impairment test, the discount rate and operating income growth rate used in 2019 were quite different from those in 2018. In 2019, the discount rate of cash flow forecast was 11.73% (2018: 12.74%), the operating revenue growth rate of Internet Marketing Service forecast period was -0.05%-0.94% (2018: 11.05%-6.33%), and the business income growth rate of marketing data analysis service forecast period was 10%-7% (2018: 20%-8%). The company: (1) replenish the basis for determining the rate of discount and the growth rate of operating revenue in the 2019 and 2018 impairment tests, indicating the consistency and prudence of the selection of key indicators; (2) indicating whether significant changes have taken place in the operation of the subdivision industry or company in the 2019 year, resulting in a sharp decrease in its operating revenue growth rate, indicating operating income. The reasons for the expected decline are as follows: (3) the specific calculation process of supplementary disclosure of the impairment test of goodwill; and (4) the adequacy of the impairment of goodwill in conjunction with the completion of the 2019 performance of Tai Yi Zhi. Please evaluate the organization's opinion.

Five. Accounts receivable. According to the annual report, the final balance of accounts receivable increased from 456 million in 2016 to 1 billion 45 million at the end of 2019, the compound growth rate was 31.8%, accounting for 22% of total assets. The company is requested to: (1) disclose the composition of accounts receivable by business, explain the reasons for the large increase in accounts receivable; (2) supplement the disclosure of the five accounts receivable objects, amount and age of accounts before the recent 3 years; and (3) disclose the settlement policy of the business and the payment after the period, indicating whether the situation is consistent with the credit policy.

Six, on other illiquid financial assets. The annual report disclosed that the initial balance of other non current financial assets of the company was 294 million yuan, the balance at the end of the year was 446 million yuan, the current period was 152 million yuan, and the impact on the net profit of the current period was -118.11 million yuan. The company is requested to: (1) disclose the specific project composition, reasons for changes and the basis for determining fair value of other non floating financial assets; (2) the basis for confirming the effect of supplementary disclosure on net profit.

Seven, about capital lending. The annual report disclosed that the subsidiary of the company borrowed 1 million 225 thousand yuan from the natural person Wang Liang and Wang Zhiming. The company: (1) supplementary disclosure of the background and interest rate of lending and lending, indicating whether there is a significant difference between the loan interest rate of the bank and the corresponding period; (2) supplemental disclosure of the relationship between two natural persons and the company, indicating the main consideration of a subsidiary's borrowing of small amounts of money from natural persons.

In view of the aforementioned issues, the company shall explain the reasons for its inability to disclose according to the requirements of the code No. second and the guidelines for the disclosure of industry information in the Shanghai stock exchange.

Please inform your company immediately after receiving this inquiry letter, and disclose your reply to this inquiry before June 9, 2020, and make corresponding revision and disclosure of the periodic report as required. "

In accordance with the requirements of the Shanghai stock exchange, the company will actively organize the reply to the annual inquiry letter in conjunction with the annual auditor and other intermediary agencies, and fulfill the obligation of information disclosure in a timely manner.

Notice hereby.

Board of directors of Zhejiang Limited by Share Ltd

June 3, 2020