Securities code: Polyrocks Chemical Co.Ltd(688669) securities abbreviation: Polyrocks Chemical Co.Ltd(688669) Announcement No.: 2022028 Polyrocks Chemical Co.Ltd(688669)
Announcement on the completion of performance commitments of the acquisition target company
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.
Polyrocks Chemical Co.Ltd(688669) (hereinafter referred to as “the company”) completed the acquisition of 59.06% equity of Anhui Longhua Chemical Co., Ltd. (hereinafter referred to as “Longhua chemical”) and 55% equity of Guangdong Guanzhen Technology Co., Ltd. (hereinafter referred to as “Guanzhen technology”) in 2021. The company hired Lixin certified public accountants to conduct a special audit on the achievement of the promised performance of the acquired enterprise in 2021. Now, the achievement of the performance commitment is announced as follows:
1、 Basic information of assets purchased
(I) acquisition of 59.06% equity of Longhua chemical
On September 16, 2021, the company’s wholly-owned subsidiary Qingyuan pusefuran Chemical Co., Ltd. (hereinafter referred to as “pusefuran”) and 9 natural persons including Jin Xiumin Longhua chemical signed the share transfer agreement between Jin Xiumin, Jin Fei, Jin Xiupin, Jin Jianming, Jin Jianbao, Jin xiuhan, Wu Chaoyi, Lou Limin, Lou Jingwei and Qingyuan pusaifu Phosphorus Chemical Co., Ltd. on Anhui Longhua Chemical Co., Ltd. (hereinafter referred to as “Longhua chemical equity transfer agreement”), and the company acquired 59.06% of the equity of Longhua chemical with its own capital of 752222 million yuan.
The transaction has been deliberated and approved at the 29th meeting of the Fifth Board of directors of the company, and the industrial and commercial change registration of Longhua chemical has been completed on September 28, 2022. For details, the company disclosed it on the website of Shanghai Stock Exchange (www.sse. Com. CN.) on September 16, 2021 Announcement on voluntary disclosure of the acquisition of 59.06% equity of Anhui Longhua Chemical Co., Ltd. by a wholly-owned subsidiary (2021073).
(II) acquisition of 55% equity of Guanzhen Technology
On July 1, 2021, the company and Henan Zhenxiu enterprise service partnership (limited partnership) (hereinafter referred to as “Zhenxiu partnership”) signed the equity transfer agreement on Guangdong Guanzhen Technology Co., Ltd. (hereinafter referred to as “Guanzhen technology equity transfer agreement”). The company invested 132 million yuan with its own or self raised funds
Yuan transferred 55% equity of Guanzhen technology held by Zhenxiu, and completed the industrial and commercial change registration of Guanzhen technology on September 14, 2021. In 2021, the company has paid 60 million yuan for equity transfer. On November 3, 2021, the 32nd meeting of the 5th board of directors of the company reviewed and approved the proposal on purchasing 55% equity of Guangdong Guanzhen Technology Co., Ltd. for details, the company disclosed it on the website of Shanghai Stock Exchange (www.sse. Com. CN.) on November 3, 2021 Announcement on the acquisition of 55% equity of Guanzhen Technology (2021083).
2、 Commitment and achievement
(I) Longhua chemical:
According to the relevant provisions of the equity transfer agreement of Longhua chemical, the accumulated net profit after deducting non recurring profits and losses realized by Longhua chemical from January 1, 2021 to December 31, 2023 (hereinafter referred to as the “performance commitment period”) shall not be less than 39 million yuan.
According to the special audit report on the achievement of performance commitments of Anhui Longhua Chemical Co., Ltd. in 2021 (Xin Hui Shi Bao Zi [2022] No. ze10268) issued by Lixin certified public accountants, after the audit of the financial statements of Longhua chemical in 2021, the accumulated net profit of Longhua chemical in 2021 after deducting non recurring profits and losses was 336898 million yuan. As of December 31, 2021, the completion rate of performance commitments was 86.38%. (II) Guanzhen Technology:
According to the relevant provisions of the equity transfer agreement of Guanzhen technology, the net profit of Guanzhen technology after deducting non recurring profits and losses from 2021, 2022 and 2023 (hereinafter referred to as the “performance commitment period”) shall not be less than 20 million yuan, 30 million yuan and 40 million yuan.
According to the special audit report on the achievement of performance commitments of Guangdong Guanzhen Technology Co., Ltd. in 2021 issued by Lixin Certified Public Accountants (Xin Hui Shi Bao Zi [2022] No. ze10269). After the audit, the annual net profit of Longzhen chemical technology is RMB 202137 million, which is less than the annual net profit of Longzhen Chemical Technology of RMB 20.21 million. The cumulative performance commitment completion rate was – 183.62%. 3、 Reasons why Guanzhen technology failed to achieve its performance commitment in 2021 and the measures to be taken by the company
Since May 2021, the business environment of the target company has changed. Affected by multiple factors such as the decline of the epidemic, the oversupply of protective clothing market, power restriction policy, shipping factors, the rise of raw material prices and so on, the actual performance of the target company does not meet expectations. According to the special audit report on the achievement of performance commitments of Guangdong Guanzhen Technology Co., Ltd. in 2021 (Xin Hui Shi Bao Zi [2022] No. ze10269) issued by Lixin Certified Public Accountants (special general partnership), the net profit of Guanzhen technology attributable to the owner of the parent company after deducting non recurring losses in 2021 is -167237 million yuan. Therefore, Guanzhen technology failed to achieve the performance promised in the share transfer agreement in 2021.
The company hired Yinxin asset evaluation Co., Ltd. to conduct impairment test on the asset group related to Guanzhen technology’s goodwill held by the company, and issued the asset evaluation report on the recoverable amount of the asset group of Guangdong Guanzhen Technology Co., Ltd. involved in Polyrocks Chemical Co.Ltd(688669) proposed goodwill impairment test (Yinxin pingbao Zi (2022) Hu No. 0939), the specific contents are as follows:
Project goodwill testing process
In 2021, Polyrocks Chemical Co.Ltd(688669) acquired 55% equity of Guangdong Guanzhen Technology Co., Ltd., and the merger cost was 132 million yuan, which was recognized after deducting the dividends of the acquiree from the actual payment; The fair value of identifiable net assets on the acquisition date of Guangdong Guanzhen Technology Co., Ltd. is the net assets on the acquisition date plus the formation of goodwill issued by Yinxin Asset Appraisal Co., Ltd. on March 31, 2021 as the base date
The total increase in the fair value of net assets in the Yinxin pingbao Zi [2021] Hu No. 1744 report is 212779 million yuan; The difference between the merger cost and the fair value of the identifiable net assets of the acquiree is recognized as goodwill of 1107221 million yuan, so the amount of goodwill is 1107221 million yuan as of December 31, 2021.
The scope of this appraisal is the recognition of the asset group in which the goodwill of Guangdong Guanzhen Technology Co., Ltd. is located
The corresponding long-term assets on the benchmark date.
On the benchmark date of December 31, 2021, under the assumptions listed in this report and the recoverable limit of the asset group, the recoverable amount of the asset group of Shangyu of Guangdong Guanzhen Technology Co., Ltd. determined by the income method on the benchmark date is 136.3 million yuan.
The book value of the goodwill asset group including 100% equity is 264355 million yuan, which is settled in the impairment test of high goodwill
The recoverable amount is 136.3 million yuan, so there are signs of goodwill impairment
The provision for impairment of goodwill is 704027 million yuan.
In order to safeguard the interests of the listed company and shareholders, the company has negotiated with the counterparty on matters related to the re adjustment of the valuation of the target company since the end of 2021, and issued a benchmark date of
In the appraisal report on December 31, 2021, the appraisal report on the value of all equity assets of shareholders of Guangdong Guanzhen Technology Co., Ltd. involved in Polyrocks Chemical Co.Ltd(688669) proposed to understand the equity value (Yin Xin Ping Bao Zi [2022] Hu No. 0938), the appraisal result of the value of all equity of shareholders of the subject company is 155 million yuan by income method and 38.985 million yuan by asset-based method. Both parties agree to appropriately adjust the valuation of all equity of the target company. After adjustment, the valuation of all equity of the target company is 1090909 yuan, and the total consideration of the company’s acquisition of 55% equity is adjusted to 60 million yuan. Since the company has paid 60 million yuan of equity transfer, the company has paid all the consideration for the completion of this transaction, and there is no need to pay any other amount for the consideration of this transaction. At the same time, the net profit of the company whose performance commitment is adjusted as the target in 2022, 2023 and 2024 shall not be less than 12 million yuan, 18 million yuan
24 million yuan. After negotiation and communication between all parties to the transaction, all parties agreed to adjust the above contents and signed supplementary agreement II of equity transfer agreement.
4、 Performance compensation in 2021
On April 27, 2022, the company held the 38th meeting of the 5th board of directors, deliberated and approved the proposal on signing supplementary agreement II of equity transfer agreement on the acquisition of 55% equity of Guangdong Guanzhen Technology Co., Ltd. on the same day, the company signed supplementary agreement II of equity transfer agreement with Guanzhen technology, Xu Jianjun and Xu Jiangna. The agreement stipulates that the net profit of Guanzhen technology after deducting non recurring profits and losses in 2022, 2023 and 2024 shall not be less than 12 million yuan, 18 million yuan and 24 million yuan respectively, and stipulates that the adjusted performance commitment period shall be calculated from 2022, and the compensation obligor is not required to pay performance compensation to the company for the performance of the subject company in 2021.
To sum up, the counterparties of Longhua chemical and Guanzhen technology are “not required” to compensate the company for the performance of 2021. The company will perform the obligation of information disclosure in a timely manner according to the progress of performance compensation. Please pay attention to investment risks and invest cautiously.
It is hereby announced
Polyrocks Chemical Co.Ltd(688669) board of directors April 29, 2022
