Lukang Culture (601599): Receiving Regulatory Enquiry Letter

Stock Code: 601599 securities short: Lukang cultural Announcement No.: 2020-037

Jiangsu Lukang culture Limited by Share Ltd receives the annual report of Shanghai Stock Exchange on 2019

Announcement of information disclosure supervision inquiry letter

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.

Jiangsu Lukang culture Limited by Share Ltd (hereinafter referred to as "company" or "Lukang culture") received the information inquiry regulation on the annual report of Jiangsu Lukang culture 2019 issued by the Shanghai stock exchange in June 3, 2020 (the letter of the Shanghai Public Security Bureau [2020] 0652).

Jiangsu Lukang culture 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, the contents and format of annual report no. second (hereinafter referred to as "format code No. second"), and the rules of industry information disclosure guidelines of the Shanghai stock exchange, after the annual audit of the annual report of your company in 2019, it is easier for investors to understand article 17.1 of the Listing Rules of the stock market. Your company further complements the following information.

I. company's main business

1, according to the annual report of the company, the company's film and television sector achieved a revenue of 149 million yuan, down 87.68% compared with the same period last year, and the gross profit margin was 25.75%, an increase of 6.82 percentage points compared to the same period last year, and a net loss of -9.66 billion yuan, resulting in a huge loss. The company said that due to the sluggish industry, the company's film and television sector subsidiaries suffered huge losses. Tianyi film is an important subsidiary of the company's film and television sector. The company is requested to: (1) disclose the income recognition policy and the way of cost collection of the company's film and television section, and explain whether there is any difference between the company and the same industry. Whether (2) the details of the film and television play have been completed in the reporting period, and the reasons for sales have not yet been realized; (3) the reasons and reasonableness of the increase in the gross profit margin of the company in the reporting period; (4) the reporting period of Tianyi TV includes "we are in". The place where dreams begin, including the details of the production of the film and television drama, the income recognized during the reporting period, and combined with the revenue recognition policy statement.

The reasonableness of the earnings confirmation of film and television shows whether there is a cross record adjustment in the current year. Please check and give clear opinions by the company's annual auditor. 2, during the reporting period, only 4 films and TV dramas were released, compared with 16 last year. The 2018 annual report "court of final determination", "one step to the sky", "iron blood bodyguard", "police flower and police dog two", "Kunlun return", "Macao's past desperate throw" has not been released or released, and the 2019 annual report has not disclosed the production and distribution of the above movies and TV dramas. Requests the company to make a supplementary announcement: (1) whether the above film and television plays, the progress of the shooting and distribution, the amount of accumulated investment, and whether the relevant film and television distribution license has been actually released; (2) the revenue recognized during the reporting period, and combined with the above situation, shows whether the company's relevant video theater revenue is reasonable, whether it is different from the company's previous revenue recognition policy, and whether there is any difference. Take account of income and adjust profits in different periods. Please check and give clear opinions by the company's annual auditor.

3, the company's 2018 annual report revealed that in 2019 it was intended to film Liao Junbo, the cost of divorce, the gladiator, dear dad, Cao Cao and the stranger. None of the films were shown in the film and TV drama taken by the company in 2019. Please explain the reasons why the above films and TV dramas were not photographed in the year, and the cost that has been put into operation.

Two. About financial accounting

4. According to the annual report, the goodwill balance of the company is 94 million 880 thousand yuan at the end of the reporting period, and the current amount is 339 million yuan, much higher than the previous year. Among them, the goodwill of the century long was reduced by 163 million yuan, and the reputation of Providence and television was 176 million yuan. In the annual report of the company, the specific process, the selection of key parameters and the disclosure of the basis of the goodwill impairment test are not disclosed. Requests the company to make further disclosures: (1) the criteria, basis and results of the recognition of the assets group or asset portfolio of the impairment of goodwill; (2) the specific calculation process of the impairment test of the goodwill in all years since the assets are listed together, and the basis and rationalism for the specific indicators of the impairment test over the years, including the growth rate of operating income, net profit, gross profit rate, cost rate, net interest rate and free cash. The source and rationality of the key indicators such as the gold flow rate and discount rate; (3) combining the profit forecast during the pre acquisition period and the forecast of the impairment of goodwill in the past years since the acquisition, the actual realization of the performance in the past years is compared, indicating whether there are differences. The difference and the rationality and adequacy of the recognition and impairment of goodwill in different periods of the previous year are explained; (4) according to the above situation, In the past year, whether there should be an allowance for impairment was not mentioned. Please check and comment on the company's annual auditor.

5, according to the annual report, the company accounts receivable balance of 1 billion 693 million yuan, down 17.22% compared to the same period, the provision for bad debts in the reporting period was 458 million yuan, an increase of 482% over the same period. Among them, the amount of a single item is significant and the amount of bad debts is raised separately.

The total accounts receivable totaled 174 million yuan for bad debts. Last year, the company did not make any provision. According to the age combination, the provision for bad debts was 284 million yuan, and the annual report did not disclose the details of the provision for bad debts according to the age combination. Company:

(1) supplementary disclosures, according to the age combination, the provision and basis of the provision for bad debt preparation and the provision for bad debts, and indicate whether there is any significant change compared with the previous year. If there is any, explain the reasons and reasonableness; (2) supplement the basis for determining the composition of accounts receivable, and make a significant judgement of the amount of gold, and indicate whether it meets the requirements of accounting standards; (3) explain the debts according to the written instructions. The details of the first five accounts receivable at the end of the end of the collection period include the causes of formation, the amount of money, the age of the account, whether there is any relationship between the other party and the listed company, the relationship between the two parties, the situation and the rationality of the provision for bad debts. (4) explain the causes, amount, age of accounts receivable, and the relationship between the other party and the listed company. In connection with the credit situation of the transaction party and the specific collection situation, the reasons and reasonableness of the previous year's total withdrawal in the current year and whether it meets the requirements of the accounting standards are explained. The auditor is required to verify the above problems and prepare the company's bad debts for the purpose of checking the profits and make clear comments.

6. According to the annual report of the company, the company's other receivables balance is 61 million yuan during the reporting period. During the reporting period, the company provides 265 million yuan for other accounts receivable bad debts, including 260 million yuan for the provision of bad debts. The company is requested to: (1) disclose the composition and causes of other receivables separately; (2) disclose the causes, amount, age of accounts receivable, and the relationship between the other party and the listed company, and explain the reasons and rationality of all the accounts receivable in the current year without considering the credit situation and specific collection conditions. Whether it meets the requirements of accounting standards. The auditor is required to verify the above problems and prepare the company's bad debts for the purpose of checking the profits and make clear comments.

7. According to the annual report, the company's inventory balance is 1 billion 242 million yuan at the end of the reporting period, the provision for inventory depreciation is 184 million yuan, and the reserve for depreciation in inventories is 976% higher than that of last year. The company shall supplement the main contents of the film and television works in the inventory, the completion time or the expected completion time, the progress of the distribution or release, the amount of investment, and so on, so as to calculate the concrete calculation process and rationality of the inventory depreciation. The company also asked the auditor to verify and comment on the reasonableness of the company's provision for inventory depreciation in the current year.

8. According to the annual report, the balance of prepaid accounts at the end of the reporting period is 195 million yuan. The age of 1-2 years is 95 million 266 thousand and 800 yuan, which accounts for 48.75%. The company shall explain the prepaid arrears of the amount exceeding 10 million yuan and the related reasons for the shooting and distribution of the items involved in the film and television, the aging of the accounts, and the specific reasons for the failure to carry forward. Company year please

The auditor checked and made clear opinions. Please inform your company immediately after receiving this inquiry letter, and disclose the reply to this inquiry letter before June 10, 2020, and make corresponding revision and disclosure to the periodic report as required.

In accordance with the requirements of the Shanghai stock exchange, the company will actively organize all parties to reply to the questions involved in the inquiry letter and fulfill the obligation of information disclosure in a timely manner. We invite investors to pay attention to investment risk.

Notice hereby.

Jiangsu Lukang culture Limited by Share Ltd board of directors

June 4, 2020