Industrial Bank sells equity impairment for 294 million yuan, with the Secretary of the Board stating that the decision-making process was compliant.

Investor Question:

With a purchase of 294 million yuan for a 49% equity stake in Copper Capital Mining Industry by Xingye Yinxi, it had previously not been impaired. However, in December 2024, it was impaired down to 170 million yuan, and sold to the related party Hongsheng Construction. Meanwhile, Copper Capital Mining Industry newly obtained a mining right, and its liabilities exceeded 200 million yuan. The transaction was not reviewed by the board of directors; it was only reviewed by the general manager’s office meeting. The due diligence and the basis for the impairment were not disclosed, raising doubts about the compliance of the procedures. The general manager’s office meeting has no authority to decide on the disposal of major assets.

Reply from the Secretary of the Board of Directors (Xingye Yinxi SZ000426):

Thank you for your attention! 1. The company acquired a 49% equity stake in Copper Capital Mining Industry for 294 million yuan in 2018, and paid related fees such as audit and valuation totaling 810,000 yuan. The initial cost of this long-term equity investment totaled 295 million yuan, and subsequent accounting was conducted using the equity method. Since the investment, Copper Capital Mining Industry has been continuously loss-making, and the company has cumulatively recognized investment losses of 36 million yuan using the equity method. In order to prudently and fairly reflect the value of this equity investment, the company engages appraisal institutions each year to conduct impairment tests. In 2022, 2023, and 2024, respectively, the company accrued impairment provisions of 0.06 billion yuan, 0.38 billion yuan, and 0.48 billion yuan, and the total cumulative impairment provisions amounted to 0.91 billion yuan. In summary, the carrying value of the company’s 49% equity stake in Copper Capital Mining Industry is 168 million yuan. 2. Regarding the company’s transfer of its 49% equity stake in Copper Capital Mining Industry, the company strictly implements decision-making authority in accordance with the Articles of Association and relevant systems. This matter falls within the review and approval authority of the general manager’s office meeting and does not reach the standard that requires submission to the board of directors for deliberation. The decision-making procedures are lawful and compliant.

View more Q&A from the Secretary of the Board of Directors>>

Disclaimer: This information has been excerpted by Sina Finance from publicly available information and does not constitute any investment advice. Sina Finance does not guarantee the accuracy of the data; the content is for reference only.

Endless information and precise interpretation—available in the Sina Finance app