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According to the financial association report on January 6 (reporter Wu Chao), the litigation dispute between the two major state-owned enterprises in Nanjing, Soho Holly Corporation (600128.SH) and Nanjing Business & Tourism Corp.,Ltd. (600250.SH), has come to an end. The Nanjing Intermediate People's Court recently made a final judgment in this case, dismissing both parties' appeals and upholding the original judgment. Soho Holly Corporation is to pay Nanjing Business & Tourism Corp.,Ltd. 22.122 million yuan in goods and default penalties, and cover most of the court costs.

This evening, Soho Holly Corporation announced that according to the judgment result, the company should pay the corresponding goods and default penalties to Nanjing Business & Tourism Corp.,Ltd. The company has already made a provision for an estimated liability of 14.5 million yuan in the first half of 2024 regarding this matter, and plans to fully provision the remaining approximately 15.67 million yuan this time. This provision is expected to impact the company's profits and losses in the 2024 fiscal year by about 30.17 million yuan, but it will not cause the company's operating performance in 2024 to decline year-on-year.

Financial association reporters noted that the actual controller of Soho Holly Corporation is the Jiangsu Provincial State-owned Assets Supervision and Administration Commission, while the actual controller of Nanjing Business & Tourism Corp.,Ltd. is the Nanjing Municipal State-owned Assets Supervision and Administration Commission. Additionally, Soho Holly Corporation is registered and has its office at 50 Hongye Building, Zhonghua Road, Qinhuai District, Nanjing, while Nanjing Business & Tourism Corp.,Ltd. is registered and has its office at 18 Xiaoxin Bridge East Street, Qinhuai District, Nanjing. The two parties are only 2 kilometers apart.

However, this litigation dispute has dragged on for a long time, and its origins date back several years. According to relevant announcements, from September 8, 2015, to February 1, 2016, Li Cheng, an employee of Soho Holly Corporation, on behalf of Soho Holly Corporation, successively signed seven sales contracts with Nanjing Business & Tourism Corp.,Ltd., which fulfilled all delivery obligations under the contracts and received payment under four of the sales contracts. However, for the remaining three sales contracts, Soho Holly Corporation refused to fulfill its payment obligations, claiming that the signing of these three contracts was based on Li Cheng forging the company seal.

In April 2016, Nanjing Business & Tourism Corp.,Ltd. filed a civil lawsuit with the Gulou District People's Court of Nanjing due to a sales contract dispute with Soho Holly Corporation. Later, the public security authority submitted the case to the court on the grounds that Li Cheng, the employee handling the business for Soho Holly Corporation, was suspected of contract fraud. After the investigation concluded, the Nanjing People's Procuratorate filed a public prosecution against Li Cheng for suspected embezzlement. In August 2017, the Nanjing Intermediate Court sentenced Li Cheng to thirteen years imprisonment for contract fraud, imposed a fine of 1 million yuan, and ordered Li Cheng to reimburse Nanjing Business & Tourism Corp.,Ltd. for economic losses of 22.122 million yuan.

Given that the company did not receive any reimbursement from Li Cheng, in order to protect the interests of the listed company, in July 2023, Nanjing Business & Tourism Corp.,Ltd. filed a lawsuit against Soho Holly Corporation in Gulou District Court for property damage compensation, requesting that Soho Holly Corporation compensate the principal loss of 22.122 million yuan and interest losses under the sales contracts involved in the case. In January 2024, the Gulou District Court officially accepted the case. In July 2024, the Gulou District Court made a first-instance judgment ordering Soho Holly Corporation to pay Nanjing Business & Tourism Corp.,Ltd. 22.122 million yuan in goods and default penalties.

Subsequently, both Nanjing Business & Tourism Corp.,Ltd. and Soho Holly Corporation were dissatisfied with the first-instance judgment made by the Gulou District Court and filed appeals to the Nanjing Intermediate Court. Nanjing Business & Tourism Corp.,Ltd. believes that the penalty for breach of contract determined in the first-instance judgment is significantly low and is unfair. Soho Holly Corporation believes that the facts of the case determined in the first-instance judgment are unclear and that the applicable law is incorrect. The Nanjing Intermediate Court filed for trial in August 2024, and recently issued a final judgment: both parties' appeals were rejected, and the original judgment was upheld; the total case acceptance fee for the second instance is 0.2296 million yuan, with Nanjing Business & Tourism Corp.,Ltd. bearing 0.0296 million yuan and Soho Holly Corporation bearing 0.1999 million yuan.