On 15 May, the Centre sent a letter of inquiry into the Mekong Year of Science and Technology, requesting clarification of the reasons for the large decline in corporate business income in 2022 and the first quarter of 2023.

The letter of enquiry shows that in 2022, the net cash flow generated by MTS business income, net profits attributed to shareholders of listed companies, operating activities amounted to $144.185 million, -12761.86 million, and 6.949 million, respectively, a decrease of 28.91 per cent, 580.14 per cent and 108.42 per cent, respectively; the company achieved an operating income of £33.1 million by way of distribution, a decrease of 32.19 per cent, and the marketing cost rate and management cost rate of 23.83 per cent, respectively, an increase of 5.49 per cent and 9.62 per cent, respectively, compared to the previous year. In the first quarter of 2023, the net profits from operating income belonging to shareholders of listed companies amounted to $3,389.68 million and $2,037.61 million respectively, down by 9.84 per cent and 424.81 per cent, respectively, from the same period last year.

Four aspects were raised in response.

The first is a quantitative analysis of corporate business income, the causes and reasonableness of the significant decline in net profits for the period 2022 and the first quarter of 2023, taking into account the characteristics of the company’s sector, the business model of the company, credit policies and settlement patterns, sales prices and cost changes, and the reasons and reasonableness of the changes in net cash flows resulting from business activities.

The second is a supplementary description of the specific circumstances of the 2022-year distribution model, including the criteria for selection of distributors, the pricing mechanisms for distribution, the mode of settlement, the rate of Māori under the distribution model and its changes, the method of identification of sales income, the date of confirmation, and the existence of differences from previous years, whether they are consistent with the relevant provisions of enterprise accounting standards and industry practices.

The third is the quantification analysis of the reasons and reasonableness of the increase in sales costs and management costs in the context of a decline in corporate business income.

The fourth is to verify, on a case-by-case basis, and to indicate whether there are other items that should be deducted in the case of business income deductions, in accordance with the relevant provisions of Regulation No. 1 of the Guide on Self-regulation of Entrepreneurship Boards - Operations.

Annual accountants are invited to verify and make clear comments.

In 2022, the “Electronic Payroll System” for science and technology earned $121.1 million per day, with a rate of 50.81 per cent, 62.85 per cent and 60.45 per cent for nearly three years, respectively, and a business income of $181.555 million for the Galaxy system, with a rate of 49.50 per cent, 82.6 per cent and 60.67 per cent for nearly three years. In 2022, the company achieved a sales income of $311.96 million, or 21.85 per cent of its business income, for the top five clients, a decrease of 13.76 percentage points over the previous year.

Two points were raised.

The first is a quantitative analysis of the significant decline in the Māori rate in the reporting period of the company’s “e-paying password system” and “Business system”, the causes and reasonableness of the significant fluctuations in the Māori rate over the past three years in the company’s above-mentioned product industries, market supply and demand, product pricing strategies, company status, bargaining power, etc.

The second is the presentation of the specific circumstances of the first five major customers of the above-mentioned products of the company, respectively, during the reporting period, including the name of the customer, the history of cooperation, the time of signing of the contract, the content of the sale, the time of dispatch, the amount of income recognition, time and basis, the time of recovery of the goods and the amount of the money, the presentation of the relevant sales contracts and return documents, and the addition of information on the existence of major customer losses during the reporting period.

Annual accountants are invited to verify and make clear comments.

The annual report shows that the banking sector of the major clients of science and technology is accelerating the digitization transition, “the risk that technological innovations undertaken by companies in the field of banking in connection with the digitization of the banking sector can obtain market recognition in a wave of financial science and technology changes” “in 2022, there has been an increase in the number of financial science and technology affiliates, some of which have joined the establishment of science and technology subsidiaries, and 19 banking financial science and technology affiliates have been established”.

Two points were raised.

The first is to complement the specific technological innovations and sales made by companies in conjunction with the digitization transition in the banking sector, the current level of market recognition, and the advantages and disadvantages compared to those of comparable firms in the industry.

The second is to supplement the specific modalities for the digitization of the banking sector, the transition effect, whether its establishment would replace external procurement with a financial science and technology subsidiary, whether it would have a negative impact on the production operations of companies, and the response that companies are proposing and have taken.

At the end of 2022, the balance of other non-illiquid financial assets of megaday science and technology stood at $169.66.18 million, representing the company’s investment in the cloud fund, which generated a fair value change of $5.53 million over the previous year, a significant decrease of $6.51.27 million over the previous year.

Two points were raised.

The first is to provide additional information on the name, opening and end-of-cycle values, the amount of the change, the reasons for the change, the accounting process and the basis for the investment objectives of the cloud fund, and the conformity of the accounting treatment with the enterprise accounting standards.

The second is the nearly three-year operation, combined with major financial data, of the main target for the investment of the cloud fund, which complements the reasons for and the reasonableness of the significant decline in the fair value of the cloud fund at the end of the reporting period.

Annual accountants are invited to verify and make clear comments.

At the end of 2022, the total technical balance of the immaterials of megaday science and technology was $12.82.69 million, mainly related to silver entrepreneurship. Since “the business income of the company’s agglomeration system has not reached its original expectations, and based on the precautionary principle, it is considered that there are indications of a reduction in the value of the intangible assets associated with the system”, a reduction of $41.62 million is envisaged for the current period.

Two points were raised.

The first is to provide additional information on the specific composition of the intangible assets associated with the Galaxy system, including technical types, uses, acquisition patterns.