Securities code: China Hainan Rubber Industry Group Co.Ltd(601118) securities abbreviation: China Hainan Rubber Industry Group Co.Ltd(601118) Announcement No.: 2022026 China Hainan Rubber Industry Group Co.Ltd(601118)
Announcement on the achievement of performance commitments and impairment test results of the subject company of major asset purchase and related party transactions
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. 1、 Basic information of major asset purchases and related party transactions
The company held the 22nd Meeting of the 5th board of directors, the 11th meeting of the 5th board of supervisors and the third extraordinary general meeting of shareholders in 2019 on April 12, 2019 and April 29, 2019 respectively, and deliberated and adopted the proposal on the specific plan for the purchase of major assets and related party transactions of the company, It is agreed that the company will purchase 4200000 shares of R1 company held by the controlling shareholder Haiken holding group through its wholly-owned subsidiary Hainan State Farms Investment Limited (hereinafter referred to as “Nongken investment”) and 810888 shares of R1 company held by 16 management shareholders such as sandana dass by paying cash, with a total of 5010888 shares, accounting for 73.46% of 6820888 shares of R1 company. In May 2019, 5010888 shares of R1 company, the target enterprise involved in this major asset restructuring, were transferred to the company.
2、 Performance commitments and compensation arrangements
(I) performance commitment
Both parties agree that the performance commitment period is 2019, 2020 and 2021. Haiken holding group’s performance commitment to R1 company in the performance commitment period is: the cumulative committed net profit of R1 company in 2019, 2020 and 2021 is not less than US $13.13 million.
(II) determination of performance commitment compensation
According to the profit compensation agreement, the net profit actually realized by R1 company during the performance commitment period is calculated according to the following principles:
1. The preparation of R1 company’s financial statements shall comply with the accounting standards for business enterprises and other laws and regulations of the Ministry of finance of the people’s Republic of China, and be consistent with the accounting policies and accounting estimates of listed companies;
2. Unless required by laws and regulations, during the performance commitment period, the accounting policies and accounting estimates of R1 company shall not be changed without the approval of the shareholders’ meeting of R1 company;
3. Net profit refers to the net profit attributable to the shareholders of the parent company after deducting non recurring profits and losses in the consolidated financial statements of R1 company;
4. R1 company’s promised net profit and realized net profit shall deduct the capital cost corresponding to various financial support (if any) provided by the listed company to R1 company after the completion of this transaction. The capital cost is the interest that R1 company shall calculate according to the annualized interest rate of comparable independent financing cost in Singapore market or other markets in the same period from the date of actual receipt of the above support funds.
Both parties unanimously confirm that after the end of the performance commitment period, the listed company has the right to hire an accounting firm with securities and futures business qualification to review the net profit of R1 company in this period under the profit compensation agreement and issue the special audit report on the realization of performance commitment. The difference between the realized net profit and the promised net profit of R1 company in the performance commitment period will be determined according to the special audit report on the realization of performance commitment issued by the accounting firm.
(III) implementation of performance commitment compensation
If the accumulated net profit realized by R1 company at the end of the performance commitment period does not reach the accumulated committed net profit, Haiken holding group shall compensate the listed company in cash; The listed company will calculate and determine the amount of cash to be compensated by Haiken holding group according to the relevant formula agreed in the profit compensation agreement within 10 working days after the public disclosure of the special audit report on the realization of performance commitments at the end of the performance commitment period, and send a written notice to Haiken holding group to require it to perform its compensation obligations in accordance with the relevant provisions of the profit compensation agreement. The amount of compensation payable in the current period shall be calculated as follows: the amount of compensation payable = (cumulative committed net profit in the performance commitment period – cumulative realized net profit in the performance commitment period) ÷ cumulative committed net profit in the performance commitment period × In this transaction, the listed company purchased 4200000 shares of the target company from Nongken investment. 3、 Impairment test and compensation arrangement
Within three months after the end of the performance commitment period, the listed company shall apply for an accounting firm with securities and futures business qualification to issue an impairment test report on the 4.2 million shares of the target company purchased by the listed company from Nongken investment in accordance with the rules and requirements of the CSRC. Unless it is mandatory by law, the valuation method adopted in the impairment test report shall be consistent with the asset evaluation report on the value of all shareholders’ equity of R1 company issued for the purpose of this transaction. If the ending impairment amount of 4.2 million shares is greater than the total amount of cash compensated by Haiken holding group, Haiken holding group shall make impairment compensation to the listed company in cash.
The calculation method of impairment compensation amount is as follows: the compensation amount of the ending impairment amount = the ending impairment amount of 4.2 million shares – the cumulative compensated cash amount
In any case, Haiken holding group, the compensation obligor, shall bear the compensation for the impairment of 4.2 million shares at the end of the period and the compensation for performance commitment, which is limited to the transaction price of 4.2 million shares. For the excess part (if any), the compensation obligor does not need to compensate.
4、 Completion of performance commitment and impairment test
(I) achievement of performance commitments
From 2019 to 2021, R1 company achieved a cumulative net profit of US $148554 million, US $1.7254 million higher than the promised net profit of US $13.13 million, and all performance commitments were realized. According to the special audit report on the achievement of China Hainan Rubber Industry Group Co.Ltd(601118) major asset restructuring performance commitments issued by Zhongshen Zhonghuan Certified Public Accountants (special general partnership) (Zhonghuan zhuanzi [2022] No. 1710030), It is considered that: China Hainan Rubber Industry Group Co.Ltd(601118) the special statement on the achievement of performance commitments for major asset restructuring during the period from January 1, 2019 to December 31, 2021 is prepared in accordance with the provisions of the administrative measures for major asset restructuring of Listed Companies in all major aspects.
(II) impairment test
1. Impairment test process
(1) In 2018, the company entrusted Beijing zhongqihua Asset Appraisal Co., Ltd. (hereinafter referred to as “zhongqihua”) to evaluate the subject assets of this major asset restructuring as the pricing reference for this transaction. Taking April 30, 2018 as the benchmark date, China enterprise China Appraisal issued the appraisal report on the value of all rights and interests of R1 International shareholders involved in the equity project of China Hainan Rubber Industry Group Co.Ltd(601118) proposed acquisition of R1 company (Zhong Qi Hua Ping Bao Zi [2018] No. 1290). The appraisal value of 100% equity of R1 company on the benchmark date was US $915719 million, about RMB 580501600 calculated according to the exchange rate on the benchmark date. After friendly negotiation between the two parties, The corresponding price of 5010888 shares to be purchased this time is determined to be 655424 million US dollars, of which the corresponding price of 4.2 million shares of agricultural reclamation investment is 54.936 million US dollars.
(2) China Hainan Rubber Industry Group Co.Ltd(601118) has engaged Beijing zhongqihua appraisal to evaluate the value of 100% shareholders’ equity of the subject assets of major asset restructuring as of December 31, 2021, and issued the asset appraisal and consultation report of impairment test project of China Hainan Rubber Industry Group Co.Ltd(601118) acquisition of R1 company’s equity project performance commitment expiration (zhongqihua appraisal Zi [2022] No. 6091). As of December 31, 2021, The assessed value of 100% shareholders’ equity of R1 company is USD 1049874 million.
(3) During the impairment test, China Hainan Rubber Industry Group Co.Ltd(601118) has assessed and performed the following work to China enterprise China:
① We have fully informed China enterprise China of the background, purpose and other necessary information of this appraisal;
② It is prudent to require China enterprise China appraisal. On the premise of not violating its professional standards, in order to ensure that the appraisal results are comparable with the results of the appraisal report on the benchmark date of reorganization, it is necessary to ensure that there are no major inconsistencies in the appraisal assumptions, appraisal parameters and appraisal basis;
③ For the above uncertain or unrecognizable matters, it is necessary to inform them in time and fully disclose them in the asset appraisal and consultation report;
④ Compare whether there is any significant inconsistency between the appraisal report on the benchmark date of reorganization and the appraisal assumptions and parameters disclosed in this appraisal report;
⑤ Whether there is impairment is calculated according to the two evaluation results.
2. Test conclusion
Through the above work, the following conclusions are drawn: as of December 31, 2021, the evaluation value of 100% shareholder’s equity of R1 company, the subject asset injected in this major asset restructuring, is US $1049874 million, which is higher than the evaluation value of 100% shareholder’s equity of R1 company at the time of restructuring, US $915719 million, and there is no impairment.
3. Accountant audit report
The special audit report on China Hainan Rubber Industry Group Co.Ltd(601118) impairment test (Zhonghuan zhuanzi [2022] No. 1710029) issued by Zhongshen Zhonghuan Certified Public Accountants (special general partnership) holds that China Hainan Rubber Industry Group Co.Ltd(601118) has prepared the impairment test report in accordance with the relevant provisions of the law on the administration of major asset restructuring of listed companies of China Securities Regulatory Commission and the profit compensation agreement signed with Hainan Agricultural Reclamation Investment Holding Group Co., Ltd, In all major aspects, it fairly reflects the impairment test conclusion of the underlying assets of major asset restructuring.
Since R1 company has completed the performance commitment agreement and the shareholders’ equity has not been impaired, the counterparty of this restructuring does not need performance compensation and impairment compensation.
It is hereby announced.
China Hainan Rubber Industry Group Co.Ltd(601118) board of directors
April 11, 2022
