Baosheng Co., Ltd. Discloses Material Accounting Error Correction, Retrospectively Adjusts 12 Years of Financial Data

On March 13, Baosheng Technology Innovation Co., Ltd. (600973.SH) released the “Correction and Retroactive Adjustment of Prior Period Accounting Errors,” announcing a comprehensive retrospective adjustment of financial statements and notes from 2014 to the first half of 2025. This adjustment spans 12 years and involves multiple core accounts such as consolidated balance sheets and income statements. The company clarified that the correction will not change the nature of profits and losses already disclosed in periodic reports nor affect the total liabilities.

The announcement states that the accounting error correction originated from production cost accounting issues at the company’s controlling subsidiary, Baosheng (Shandong) Cable Co., Ltd. (hereinafter “Baosheng Shandong”). After internal review and on-site verification, it was found that from 2014 to 2020, Baosheng Shandong failed to adjust material standards in real-time based on actual production and operation conditions, resulting in actual material consumption consistently exceeding expectations. This caused discrepancies between the book value of inventory and actual stock value, leading to accounting errors.

Specifically, this accounting deviation directly resulted in Baosheng Shandong overestimating inventory by 58.243 million yuan from 2014 to 2020, and correspondingly underestimating main business costs by the same amount.

The adjustment amounts varied by year: in 2014, operating costs increased by 798,400 yuan, and inventory decreased by the same amount; in 2015, operating costs increased by 7.9129 million yuan, and inventory decreased by 8.7113 million yuan; from 2016 to 2020, annual increases in operating costs exceeded 10 million yuan, with 2019 seeing the largest increase of 13.4968 million yuan, and inventory reduced to 46.3422 million yuan during the same period. Due to the increase in operating costs, the profit totals for each corresponding year were also reduced, with the reduction amount matching the increase in operating costs.

According to accounting standards, Baosheng Co., Ltd. applied a retrospective restatement method to correct the above prior period errors, covering financial statements from 2014 to 2024 and the first half of 2025. The adjustments mainly affected accounts such as inventories, current assets, total assets, undistributed profits, and shareholders’ equity, with no impact on total liabilities.

Taking key financial indicators of the listed company as an example, in the 2016 consolidated balance sheet, inventory before adjustment was 1.027 billion yuan, after adjustment it decreased to 1.015 billion yuan; total assets were adjusted from 8.571 billion yuan to 8.559 billion yuan; shareholders’ equity attributable to the parent company was adjusted from 2.061 billion yuan to 2.053 billion yuan, and minority interests were also reduced by 4.86 million yuan. On the income statement, in 2016, operating costs increased from 13.866 billion yuan to 13.869 billion yuan, total profit decreased from 331 million yuan to 328 million yuan, and net profit attributable to the parent company was adjusted from 266 million yuan to 264 million yuan.

The announcement also mentions that Daxin Certified Public Accountants issued a special audit report confirming that the correction complies with relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange, accurately reflecting the error correction, providing professional endorsement for this financial adjustment.

As a leading enterprise in China’s wire and cable industry, Baosheng Co. mainly engages in the research, production, and sales of wires and cables, with products widely used in power, rail transit, new energy, aerospace, and other fields.

From recent financial data, this retrospective adjustment does not change the company’s overall operating trend. According to Wind Financial Database, in 2023, the company achieved total revenue of 4.38 billion yuan and a net profit of 45.5798 million yuan; in 2024, affected by industry conditions, total revenue slightly increased to 4.636 billion yuan, but net profit turned into a loss of 322 million yuan; in 2025, business conditions gradually improved, with the first three quarters generating revenue of 3.765 billion yuan and a net profit of 83.7503 million yuan, with basic earnings per share of 0.043 yuan.

The announcement also disclosed the approval process for this correction. On March 13, 2026, the company’s 9th Board of Directors held its third meeting, passing the proposal with 11 votes in favor, 0 against, and 0 abstentions. The Board stated that the correction complies with the “Guidelines for Self-Regulation of Listed Companies on the Shanghai Stock Exchange” and other relevant regulations. The corrected financial statements can more objectively and accurately reflect the company’s financial position and operating results, which will help improve the quality of financial information. This proposal did not require shareholder approval.

The company also directly addressed the issue in the announcement and proposed corrective measures, viewing this error as an opportunity to upgrade financial accounting, further strengthen the foundation of financial accounting, enhance professional training for financial personnel, and deepen understanding and implementation of the “Enterprise Accounting Standards.”

Additionally, the company will urge management and responsible personnel to strengthen legal and regulatory learning, improve internal control systems, enhance risk prevention capabilities, and ensure the quality of accounting from the source to prevent similar issues from recurring.

On the same day, Baosheng Co. released its 2025 annual report, showing that the company achieved operating revenue of 47.959 billion yuan in 2025, a year-on-year increase of 3.45%; net profit attributable to shareholders was a loss of 43.8884 million yuan, narrowing from nearly 300 million yuan loss in the previous year.