Dinglong Delisted; Fined for Misstatements.
Dinglong Culture, which has been delisted from the A-share market, receives a penalty notice.
A penalty decision disclosed by the Guangdong Securities Regulatory Bureau on September 11 shows that Dinglong Culture and related parties were warned and fined for inflating inventory, operating income, and profits, leading to false records in the disclosed 2021 annual report and the 2022 semi-annual report.
It is noteworthy that Dinglong Culture is a company that has delisted from the A-share market and was delisted from the Shenzhen Stock Exchange on September 5.
Guangdong Securities Regulatory Bureau issues a penalty notice to Dinglong Shares
The penalty decision disclosed by the Guangdong Securities Regulatory Bureau on September 11 shows that Xundian Jinlin is a subsidiary of Dinglong Culture's holding subsidiary, Zhongtai Technology. In 2021, Xundian Jinlin inflated the production of titanium concentrate by about 23,000 tons and sold the inflated titanium concentrate through Yunnan Jiumao Trading Co., Ltd. and Kaiyuan Desheng Trading Co., Ltd. to Fumin Longteng Titanium Industry Co., Ltd. (hereinafter referred to as "Longteng Titanium Industry") and Yunnan Copper Industry (Group) Titanium Industry Co., Ltd. (hereinafter referred to as "Yun Copper Titanium Industry"). The titanium concentrate of the above transactions was not actually produced, the goods were not actually delivered, the sales contracts were not actually executed, and the relevant economic benefits did not flow into the enterprise, which does not meet the requirements for revenue recognition in "Enterprise Accounting Standards No. 14 - Revenue".
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The penalty decision believes that Dinglong Culture included the above-mentioned inflated inventory, operating income, and profits in the scope of consolidated financial statements, leading to false records in its disclosed 2021 annual report and 2022 semi-annual report. Among them, in 2021, the inflated inventory was about 9.5808 million yuan, and the inflated total profit was about 2.1472 million yuan, accounting for 16.30% of the disclosed total profit for the period; in the first half of 2022, the inflated operating income was 45.7787 million yuan, and the inflated total profit was 37.9035 million yuan, accounting for 19.72% and 64.10% of the absolute values of the disclosed operating income and total profit for the period, respectively.
In April 2023, Dinglong Culture issued an announcement on the correction of previous accounting errors, correcting and adjusting the 2021 annual report and the 2022 semi-annual report.
The penalty decision believes that the 2021 annual report and the 2022 semi-annual report announced by Dinglong Culture contain false records, violating the provisions of Article 78, Paragraph 2 and Article 79 of the "Securities Law", constituting the illegal acts described in Article 197, Paragraph 2 of the "Securities Law".
The penalty decision points out that the directors, supervisors, and senior management personnel of Dinglong Culture during the period of the case violated the provisions of Article 82, Paragraph 3 of the "Securities Law", constituting the "directly responsible persons in charge and other directly responsible persons" as described in Article 197, Paragraph 2 of the "Securities Law".
Among them, as the then chairman and general manager of Dinglong Culture, Mr. Long presided over the overall work of Dinglong Culture, was responsible for the company's daily operation and management, and also served as a director of Zhongtai Technology and a director of Longteng Titanium Industry and Yun Copper Titanium Industry at the time. He did not fulfill his duties diligently and was the person directly responsible for the above-mentioned illegal acts of information disclosure by Dinglong Culture.Fang, a former director of Dinglong Culture and chairman of Zhongtai Technology, was fully responsible for the operation and management of Zhongtai Technology. He also served as the chairman of Longteng Titanium Industry and Yunnan Copper Titanium Industry, and failed to perform his duties diligently, making him the person in charge directly responsible for the illegal information disclosure by Dinglong Culture.
Wang, a former board secretary, deputy general manager, and acting chief financial officer of Dinglong Culture, was in charge of information disclosure work and, during part of the case period, acted as the overall financial manager. He also served as a director of Zhongtai Technology and a director of Yunnan Copper Titanium Industry, and failed to perform his duties diligently, making him another person directly responsible for the illegal and irregular information disclosure by Dinglong Culture.
Zhang, a former chief financial officer of Zhongtai Technology, investment director of Dinglong Culture, and head of the accounting institution, was in charge of the accounting work of Zhongtai Technology, participated in the review of the titanium concentrate sales business documents involved in the case, and is another person directly responsible for the illegal and irregular information disclosure by Dinglong Culture.
Liu, a former general manager of Xundian Jinlin, was responsible for the daily production management of Xundian Jinlin, presided over the production of titanium concentrate at Xundian Jinlin, signed production reports and other production-related documents of Xundian Jinlin, and participated in the review of the titanium concentrate sales business documents involved in the case, making him another person directly responsible for the illegal and irregular information disclosure by Dinglong Culture.
Taking into account the duration of the illegal actions in this case, the active cooperation of the parties in the investigation and the provision of materials, and the company's retrospective adjustment of relevant financial data, the Guangdong Securities Regulatory Bureau decided, in accordance with Article 197, Paragraph 2 of the Securities Law:
1. To give a warning to Dinglong Culture Co., Ltd. and impose a fine of 5 million yuan;
2. To give a warning to Long and Fang, and impose a fine of 1.5 million yuan each;
3. To give a warning to Wang and impose a fine of 800,000 yuan;
4. To give a warning to Zhang and Liu, and impose a fine of 600,000 yuan each.
On the evening of September 11, Dinglong Culture also issued an announcement confirming the above penalties. Regarding the impact of the penalty on the company, Dinglong Culture stated that as of the date of this announcement, the company's production and operation are normal. The penalty has not had a significant adverse effect on the company's production and operation. In view of the company being fined 5 million yuan, this penalty will have a certain negative impact on the financial aspect.In response to the remedial actions and rectifications, the company stated that in light of the inventory and revenue overstatement issues mentioned in the "Administrative Penalty Decision," the company had disclosed the "Announcement on the Correction of Accounting Errors in the Previous Period" and the corrected relevant periodic reports on the China Securities Regulatory Information Net on April 29, 2023, adjusting the financial report data for the relevant periods.
Dinglong Culture expressed deep regret for the negative impact brought to the company by the matters involved in this administrative penalty and will take it as a lesson. The company will demand that relevant personnel of the company and its subsidiaries seriously learn from the experience and lessons, strengthen their study of relevant laws and regulations, information disclosure rules, and corporate accounting standards, further enhance the standardization and effectiveness of internal governance, strengthen the management of key business segments, improve the level of financial accounting, and truly improve the company's overall standardized operation level and the quality of information disclosure. This is to protect the interests of the company and all shareholders and to promote the healthy, stable, and sustainable development of the company.
The company has recently delisted from the A-share market.
It is worth noting that Dinglong Culture is a company that has delisted from the A-share market.
In August of this year, Dinglong Culture issued an announcement regarding the receipt of the decision to terminate the listing of its shares. The announcement showed that because the company's shares closed at a price below 1 yuan for twenty consecutive trading days from June 19, 2024, to July 16, 2024, through the Shenzhen Stock Exchange trading system, it triggered the termination of listing as stipulated in Article 9.2.1, Item 4 of the "Stock Listing Rules (Revised in 2024)" of the Shenzhen Stock Exchange. The Shenzhen Stock Exchange decided to terminate the listing of the company's shares.
On the evening of September 4, Dinglong Culture issued an announcement regarding the termination of the company's stock listing and delisting, showing that the company's stock was delisted from the Shenzhen Stock Exchange on September 5, 2024.
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