Securities code: 300577 securities abbreviation: Anhui Korrun Co.Ltd(300577) Announcement No.: 2022-019 bond Code: 123039 bond abbreviation: kairun convertible bond
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
The board of directors of Anhui Korrun Co.Ltd(300577) (hereinafter referred to as “the company”, “the company” and ” Anhui Korrun Co.Ltd(300577) “) received the notice on Anhui Korrun Co.Ltd(300577) (GEM notice [2022] No. 65) issued by the management department of GEM companies of Shenzhen Stock Exchange on January 26, 2022. After receiving the letter of concern, the company attached great importance to it and immediately organized relevant departments to jointly study the issues raised in the letter of concern. The replies to the relevant questions mentioned in the attention letter are as follows:
On January 26, 2022, your company disclosed the fifth employee stock ownership plan (Draft) (hereinafter referred to as the draft) and relevant announcements. The draft shows that the shares of the current employee stock ownership plan come from the shares repurchased by the company in the early stage, and the repurchase price range is 18.93 yuan / share – 26.50 yuan / share. Your company plans to transfer them in the form of non transaction transfer at zero consideration. Our department is concerned about this and asks your company to explain the following matters: Question 1. Please explain the basis and rationality for determining the transfer price of the current employee stock ownership plan, and whether the zero consideration conforms to the basic principle of “assuming sole responsibility for profits and losses, bearing their own risks and equal rights and interests with other investors” in the guiding opinions on the pilot implementation of the employee stock ownership plan by listed companies, Whether the interests of specific shareholders are transferred and whether there is any damage to the interests of the company.
reply:
(I) determination basis and rationality of the transfer price
1. The transferee price does not violate the requirements of relevant laws and regulations
In accordance with the company law of the people’s Republic of China, the securities law of the people’s Republic of China and the guidance on the pilot implementation of employee stock ownership plan by listed companies (hereinafter referred to as the “guidance”) The company has formulated and implemented this ESOP in accordance with the provisions of relevant laws, administrative regulations, rules, normative documents and the articles of association, such as the guidelines for self regulatory supervision of listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM (hereinafter referred to as the “guidelines for self regulatory supervision”), The board of directors shall strictly perform various deliberation and disclosure obligations of listed companies. The current rules do not explicitly limit the transfer price of the employee stock ownership plan. The transfer of the employee stock ownership plan by zero consideration does not violate the requirements of relevant laws and regulations.
2. As an alternative to cash compensation, equity is an important part of employee compensation and welfare
The company focuses on the field of high-quality travel and consumer goods. Its main business is the R & D, design, production and sales of leisure bags, suitcases, business bags, clothing and related accessories. Since the outbreak of the epidemic, the company’s luggage and consumer goods market has been greatly impacted, and the company’s performance in 2020 has declined for the first time since its listing. The restricted stock incentive plan launched by the company in 2017 also repurchased and cancelled some restricted shares that can be lifted because the performance assessment in 2020 did not meet the conditions for lifting the restrictions. At present, the epidemic situation in China is generally slowing down and sporadic, but the uncertain factors brought to the industry and market still exist. In order to effectively respond to industry and market changes and fully tap and mobilize the subjective initiative and work enthusiasm of employees, based on the summary of past experience in implementing employee incentive, the current pressure of talent competition, combined with market practice cases and other factors, the board of directors of the company fully demonstrated and agreed by all parties, It is finally determined that the transfer price of the employee stock ownership plan is zero consideration. At the same time, based on the principle of active promotion and restraint equivalence, the employee stock ownership plan has set performance evaluation indicators at the company level and individual level, which closely combines the growth of the company and employees, promotes the long-term consistency of the interests of the company and employees, and jointly contributes to the long-term, stable and healthy development of the enterprise, so as to continuously create value for the shareholders of the company.
Employee stock ownership plan is an important part of the salary and welfare of the participants. It is of great significance for the company to build an organizational system to attract and retain talents, improve the operation and management efficiency of the company, and consolidate the core competitive advantage of the company. The employee stock ownership scheme implemented by zero consideration is an alternative policy for employees’ cash compensation. The combination of cash compensation and equity grant will help to improve the construction of the company’s comprehensive compensation system and realize the long-term binding of the interests of the company and employees.
The founding team of the company comes from well-known IT enterprises such as Lenovo and HP. In the process of development, it has introduced a number of senior talents in the luggage industry, talents from the world’s top 500 enterprises, as well as talents from the Internet industry, consumer goods industry and retail industry, so as to create a cross-border management team with differentiation in the industry. Excellent employees have become one of the company’s core competitive advantages, which is very important to the company’s future operation and development. The participants of this ESOP are mainly young and middle-aged talents. If the grant price is high, the greater capital pressure may lead to the inability of core talents to participate. The company’s industry is strongly related to the travel market. Under the background of the continuous existence of uncertain factors such as the epidemic, if employees bear a certain capital contribution cost in the early stage, employees may not be able to obtain the positive income corresponding to their contribution. The pricing of the employee stock ownership plan comprehensively considers the full guarantee of the investment ability and incentive effect of the participants. The company implements the employee stock ownership plan in the way of zero consideration, which helps to alleviate the pressure of employees’ cash contribution and fully ensure the incentive effect. Granting shares to core business backbones to replace cash compensation is conducive to close binding with core talents and common growth, giving full play to the advantages of the company’s organizational talents and promoting the development and growth of the company’s business.
(II) whether it complies with the basic principle of “assuming sole responsibility for profits and losses, bearing risks and equal rights and interests with other investors” in the guiding opinions on the pilot implementation of employee stock ownership plan by listed companies, whether there is any transfer of interests to specific objects, and whether it damages the interests of the company and shareholders
1. ESOP deeply binds the core backbone with the interests of the company, which is conducive to mobilizing and stimulating the creativity of talents, so as to create value for the company
A total of 41 employees participated in the employee stock ownership plan, all of whom are the backbone of the company’s core business. The participants do not include the controlling shareholders and actual controllers of the company, directors, supervisors, senior managers and their affiliates. The company has conducted strict post screening and capability evaluation on the participants before the award, and the number of participants accounts for 0.4% of the total number of the company, which is relatively low. The employees involved this time include the core business backbone of the group’s operation management, OEM manufacturing business and brand management business, including not only the old employees who have made important contributions to the historical development of the company and excellent performance appraisal, but also the senior talents who have outstanding personal background and ability, play an important role in promoting the business development of the company and newly introduced by the company. Among the participants, there are 10 core management talents of the group, who are responsible for the overall operation, financial and human organization management of the company and participate in the enterprise strategic planning; There are 24 core backbones in the OEM manufacturing division, mainly responsible for the maintenance, sales, factory management and operation, new customer expansion and other work of core key customers such as Nike, Decathlon, VF group and Dell; There are 7 core backbones in the brand management division, mainly responsible for brand building, product development, sales and operation for end consumers.
The company implements the employee stock ownership plan in the way of zero consideration, which is an important part of employee compensation and welfare. Talents are the executors of the company’s strategy and play a key role in maintaining the healthy and stable development of the company. The incentive mechanism inherent in the shareholding plan will fully mobilize and stimulate the creativity of talents and have a positive impact on the sustainable operation and performance of the company.
2. Based on the principle of equal incentives and constraints, the company has set performance evaluation indicators, and there is uncertainty whether employees can finally obtain shares. The granting of shares is a substitute for employees’ cash compensation. The risk of stock price fluctuation and taxes shall be borne by the employees themselves, and the company will not make any bottom-up commitment
Based on the principle of equal incentives and constraints, the company has set performance evaluation indicators at the company level for the granting of ESOP shares, formulated strict internal personal performance evaluation objectives for the participants, and determined the final granting shares based on the achievement of company performance and personal performance. The employee stock ownership plan not only considers the existing salary level of employees, but also takes into account the incentive effect of the stock ownership plan on employees. Through the setting of assessment objectives, it promotes the long-term consistency of the interests of the company and employees. If the participants fail to meet the assessment standards, they will not be able to obtain the awarded share. At the same time, the relevant statutory taxes and fees incurred in the employee stock ownership plan shall be borne by each holder in accordance with relevant provisions in accordance with national and other relevant laws and regulations. The shares granted by the employee stock ownership plan through zero consideration are an alternative policy for employees’ cash compensation and an important measure for the company to improve talent attraction and build a comprehensive compensation system. The company does not make any bottom-up commitment to the income of the employee stock ownership plan, and the participants will bear the uncertainty caused by the fluctuation of stock price. Therefore, the liquidity risk, enterprise operation risk, external risk and tax expenses of the company’s shares shall be borne by the participants themselves.
To sum up, this ESOP acquired the company’s repurchased shares by means of zero consideration transfer, which is an alternative to cash compensation and an important part of employee compensation and welfare. It is conducive to improving the company’s attraction to talents, fully mobilizing and stimulating the vitality of talents and creating long-term value for the company. The employee stock ownership plan sets assessment objectives at the company level and individual level. There is uncertainty about whether the participants can obtain the grant share. All kinds of risks and taxes should be borne by the participants themselves, and the company will not make any promises. Therefore, the employee stock ownership plan complies with the basic principle of “assuming sole responsibility for profits and losses, bearing risks and equal rights and interests with other investors” in the guiding opinions on the pilot implementation of employee stock ownership plan by listed companies, and there is no transfer of interests to specific objects or damage to the interests of the company and shareholders.
Question 2. The draft shows that the company level performance evaluation index of the current employee stock ownership plan is “based on 2020, the growth rate of the company’s operating revenue in 2022 shall not be less than 30%, or the growth rate of net profit attributable to the parent company shall not be less than 30%”. According to the report of the third quarter of 2021, your company achieved an operating revenue of 1.574 billion yuan in the first three quarters, a year-on-year increase of 6.76%; The net profit attributable to shareholders of listed companies was 151 million yuan, a year-on-year increase of 305.62%. In combination with the characteristics of the industry, the business development of the company, the performance changes in the last two years and the first period, please supplement the rationality of the above performance evaluation indicators, whether it is conducive to promoting the competitiveness of the company and whether it can achieve the implementation purpose of the employee stock ownership plan.
reply:
(I) the company’s luggage and consumer goods market is strongly related to travel
At present, the company is mainly engaged in the R & D, design, production and sales of leisure bags, suitcases, business bags, clothing and related accessories. According to the business model, it is divided into OEM manufacturing business and brand management business. In terms of OEM manufacturing business, the company adheres to the strategy of being a high-quality customer and cooperates with world-famous brands such as Nike, Decathlon, VF group, Dell and HP. The product categories include sports and leisure bags, business bags, other functional soft bags, clothing, trolley cases, etc. Brand management business, around its own brand “90 tiktok”, Tmall, Jingdong, millet, jitter and other channels to carry out operations.
The company’s industry is the luggage and consumer goods market, which is a highly competitive market. Its main products are strongly related to the travel market. According to the information of the State Administration of culture and tourism and the Bureau of statistics, in 2020, the number of tourists in China was 2.879 billion, a decrease of 3.022 billion or 52.1% over the same period last year; China’s tourism revenue was 2.23 trillion yuan, a decrease of 3.50 trillion yuan or 61.1% over the same period last year. The epidemic had a great impact on the travel market. The OEM manufacturing business of the company is a labor-intensive industry. At present, the company has production bases in Chuzhou, Indonesia and India. After the outbreak of the epidemic, the demand for OEM in the end-to-end manufacturing industry continued to decline due to the unstable demand of customers. Up to now, the overseas epidemic situation is still severe. Although the epidemic situation in China is slowing down, the sporadic epidemic continues to disturb the market.
(II) after the outbreak of the epidemic, the company’s performance fluctuated greatly, and fell for the first time since its listing in 2020. The outbreak of the epidemic in 2020 had a great impact on the company’s industry, and the company’s performance fell for the first time since its listing in 2020. The performance changes of the company in the last two years and one period are as follows:
Unit: RMB 10000
Project 2019 2020 January September 2021
Operating income 269481.86 194381.43 157416.33
Net profit attributable to the parent company 22600.42 7795.41 15125.14
The company disclosed the performance forecast for 2021 on January 28, 2022. In 2021, the company’s operating revenue is expected to be 220-250 million yuan, and the net profit attributable to the parent company is expected to be 145 million yuan
– 195 million yuan. Among them, the impact of the company’s non recurring profits and losses on the net profit attributable to the shareholders of the listed company is about 70 million yuan, mainly due to the high amount of government subsidies included in the profits and losses in 2021. The net profit of the company after deducting non recurring profits and losses in 2021 is expected to be 95 million yuan to 123 million yuan.
In contrast, before the epidemic, the company’s performance showed a rapid growth trend. From 2017 to 2019, the operating revenue was 1162436600 yuan, 2048070200 yuan and 2694818600 yuan respectively, with an average annual compound growth rate of 52.26%. After the outbreak of the epidemic in 2020, the company’s operating revenue for the current year was 1943.8143 million yuan, a year-on-year decrease of 27.87%. It is expected that it will not return to the pre epidemic level in 2021. The company’s main products are bags, which have a strong correlation with the travel market. Considering the severe global epidemic prevention situation caused by unstable factors such as recently mutated strains, the impact of the epidemic on the travel market in the future remains
