Deny All Accusations Of Short Selling Agency Bonitas! Bosideng Made Four Clarifications Today To Resume Trading.

Bosideng announced in the HKEx announcement that the company denied all accusations against the company in the Bonitas report.

The report contains misleading, biased, selective, inaccurate and incomplete statements, unwarranted allegations and irresponsible guesses. The company's shares will resume trading at 9 a.m. on June 25th.

In the morning of June 24th, short selling agency Bonitas (Boli Das) suddenly issued a report accusing 03998.HK of making financial fraud.

Affected by shorting, Bosideng's share price fell rapidly from 10 a.m. to 20%. After a slight rebound, it fell again, down more than 24%, and announced a moratorium in the morning.

According to the report released by Bonitas, on the one hand, Bosideng accused Gao Dekang of fabricating a net profit of 807 million yuan since 2015, which reported 174% more. On the other hand, Bosideng chairman of the board of directors, who had made many acquisitions through undisclosed insiders, paid 2 billion yuan artificially. Therefore, the value of Boston's stock was 0.

In the past two years, Bosideng has just experienced a rebound in its performance. In January 9, 2019, it released the first three quarters of fiscal year 2018 performance data. During the reporting period, Bosideng sales increased by 30% over the same period, while other brands also recorded an increase of more than 20%. Earlier this month, agencies including the International Bank of China invited Bosideng to buy the rating.

Clarify 4 points:

1. fictitious profits in declaring financial statements

Despite matching the revenue, the comprehensive China credit report shows that Bosideng exaggerates the net profit reported in its disclosure document of the Hongkong stock exchange. Although the Hongkong exchange's disclosure documents disclosed that Bosideng accumulated a net profit of three yuan for 1 billion 300 million yuan, but the comprehensive China credit report shows that Bosideng Affiliated Companies only created a net profit of RMB 463 million yuan.

For us, evidence shows that Bosideng has created a net profit of RMB 807 million yuan and 174% yuan since 2015.

Respond:

(I) the accounting standards adopted in the above credit reports (Chinese accounting standards applicable to Private Companies) are different from the accounting standards adopted by the company's annual reports (IFRS).

(II) the reporting period for the above credit reports (up to December 31st) is different from the reporting period adopted by the company's annual report (up to March 31st); and

(III) the number of Affiliated Companies covered by the report is far below the number of Affiliated Companies covered by the annual report of the company (at least 80 or more), which does not reflect the overall operation of the group.

2. make overpayments to the undisclosed insider in many acquisitions.

He believed that Chairman Gao used three main fraudulent spanactions to spanfer the cash and stock of Bosideng to the undisclosed Party: Jesse, bang Bao and Tianjin women's clothing.

Mr. Zhou bought and established Jesse in 2008 for only 16 million 500 thousand yuan, and sold the brand to Bosideng in 2011 for RMB 664 million yuan, so that Mr. Zhou got a huge return of up to 3924% in three years.

In 2013, Mr. Zhou bought only 17 million 500 thousand yuan in bond, and sold it to Bosideng for 715 million yuan in 2016, which made Mr. Zhou get a huge return of up to 3986% in three years.

In August 2015, Mr. Zhou purchased Xinyue group for only 530 million yuan, and sold Yonami Jito for RMB 660 million yuan in 2017. It gained a substantial return of 25% in two years.

The core personnel of the high chair plan are undisclosed conspirators, namely, Mr Chow Mei Ho ("Mr. Zhou") and Dr Kong Sheng Yuan (DR Kong Kong). The evidence shows that Mr. Zhou is the undisclosed insider involved in the bond exchange and is the seller of all three major acquisitions. The former executive director of Bosideng, Dr. Kong, became a confused signatory after he left the office to assist President Gao's profiteering activities. He was also an insider not involved in the bond exchange.

Respond:

The cost of the three acquisitions of fashion women's clothing (i.e. "Jesse", "bang Bao", "corleano" and "CORBA") is determined after reference to various factors, including the future profitability of the industry after calculating the P / E ratio, the financial performance at the time of acquisition, the profit guarantee and the payment method (i.e. the combination of cash or cash plus shares) rather than reference to the net asset value of these Target Corp.

In addition, prior to the three acquisition of fashion women's clothing brand, the group has hired internationally known and professional auditors, legal advisers, valuers and / or other advisers to conduct due diligence and valuation. This will provide the board with all the necessary information to consider whether the terms and conditions of the acquisition are fair and reasonable and in conformity with the overall interests of the group and the shareholders of the company. The company has held board meetings (executive directors and independent non-executive directors) to approve the relevant acquisitions. The decision is not made by a single director but by the entire board of directors.

3. dispose of assets without payment.

The Affiliated Companies Shandong ice fly dress Limited ("Shandong ice fly") is the seller of the Shandong property to Chairman Gao. At the time of purchase, chairman Munami Jito paid 10% of the initial cost (RMB 5 million 400 thousand yuan), while the remaining RMB 52 million of Shandong Con Bo Posden was disclosed as "other receivables".

The loss of Boston of Shandong, which is chairman of the board, is missing. It indicates that the payment of Shandong property has been made at some time in fiscal year 2018.

Respond:

As disclosed in the notice of the company's February 17, 2017 date, the price ("cost") of the sale of the property is about 54 million yuan, which is determined by the contracting party after considering the valuation of the property market value of Jiangsu Donghua land real estate valuation Co., Ltd. (an independent valuer firm) in December 31, 2016.

The price has been settled according to the prescribed timetable set out in the sale agreement. Shandong ice fly received 5 million yuan in March 2017 and 49 million yuan in May 2017, respectively. The balance of other receivables recorded in Shandong's ice flying accounts is the internal pool of the group's capital pool managed by the company's wholly owned Affiliated Companies Bosideng international clothing (China) Limited in the year. The amount is then accounted for by the group's internal receivables and is skim off at the level of group merger.

The company can provide documentary support for all payments received. The company considers that it is totally incorrect to dispose of assets at the bargaining price and the buyer's outstanding payment.

4. paid huge dividends to bosiden insider.

Bosideng insider paid huge dividends in the past to Bosideng, which issues more than 65% of its foreign shares.

Respond:

Since the listing of the company on the stock exchange, the company has paid dividends to shareholders in proportion to the proportion of the company almost every year. The company believes that the practice of dividend payment provides stable and satisfactory returns to shareholders and indirectly proves that our company's financial position is sound.