The Subsidiary'S Performance Compensation Scheme Has Not Reached An Agreement With Shenzhen Textile A: Negotiations Are Under Way.

On the evening of May 21st, Shenzhen textile A (000045, SZ) received an annual inquiry letter.

The Shenzhen Stock Exchange inquired the 8 issues of Shenzhen textile A's net non profits in 2018, a year-on-year decrease of 2182%, and a subsidiary's unfulfilled performance pledge.

Reporters noted that, due to the outstanding performance of Shenzhen textile A subsidiary Shengbo photoelectric 2018, Hangzhou Jinjiang Group Co., Ltd. (hereinafter referred to as Jinjiang group) needs performance compensation, but the two sides have not yet reached an agreement.

In this regard, Shenzhen textile A secretaries staff told the "daily economic news" reporter, "is currently in business negotiations with the Jinjiang group, if progress will be announced."

Subsidiaries fail to fulfill their performance commitments

It is understood that the Shenzhen textile A at the end of 2016 through the subsidiary Shenzhen Shengbo Photoelectric Technology Co., Ltd. (hereinafter referred to Shengbo photoelectric) level of capital increase and expansion of the introduction of Jinjiang group as a strategic investor, and signed a cooperation agreement, the Jinjiang group Shengbo photoelectric achievements.

According to relevant performance commitments, the sales revenue of Sheng Bo photoelectric in 2017, 2018 and 2019 should be no less than 1 billion 500 million yuan, 2 billion yuan and 2 billion 500 million yuan respectively, with net profit of not less than 50 million yuan, 100 million yuan, and 150 million yuan respectively.

In principle, the proportion of sales revenue of polaroid and related optical film products to total revenue is not less than 70% in 2017, and not less than 80% after 2018.

If the above performance is not realized, the Jinjiang group shall make up cash in the net profit portion within 10 days from the date of the completion of the annual sales revenue and annual net profit.

Financial data show that in 2018, Sheng Bo optoelectronic business income of 1 billion 125 million yuan, net profit loss of 97 million 268 thousand and 700 yuan, polarizing film and related optical film products sales revenue accounted for 74.01% of the total revenue.

The reporter noted that the difference between the sales revenue, net profit and the proportion of sales income of polaroid and related optical film products to total income were 875 million yuan, 197 million yuan and 5.99 percentage points respectively, which were three yuan from the sales commitments.

Because Sheng Bo photoelectric has not fulfilled its performance promise.

Shenzhen textile A announced in May 9th that "according to the agreement, the Jinjiang group needs to make up the difference in net profit in cash."

However, for the above performance compensation, Shenzhen textile A and Jinjiang group did not reach an agreement.

Deep textile A pointed out in the notice that "in view of the fact that the Jinjiang group proposed to handle the performance compensation problem properly according to the actual situation and the principle of fairness and reasonableness, and before the two sides had reached an agreement, the Jinjiang group temporarily failed to fulfill the performance commitments and compensation obligations under the" cooperation agreement ". The company sent a letter to the Jinjiang group on 30 April 2019, urging it to fulfill its compensation obligation in accordance with the agreement of cooperation. At the same time, the company set up a special working group to conduct substantive consultations with Jinjiang group on matters related to undertaking performance commitments, compensation and follow-up cooperation.

In this regard, the Shenzhen stock exchange requires that the quantitative analysis of deep textile A lead to the unfinished factors of the Sheng Bo photoelectric performance pledge, and the reasons for the inconsistency between the company's situation and the trend of change in the same industry need to be explained.

In addition, deep textile A also needs to explain the specific targets and measures to improve Sheng Bo photoelectric main business in 2019, and analyze its rationality and feasibility.

Deep textile A has previously disclosed that the main reasons for the unfulfilled performance of Sheng Bo optical and electrical products are: in 2018, the sales price of the TV products declined with the decline of the display terminal sales and the decline of the price of the polarizer. The two is the TFT-LCD two phase 6 line project is still in the climbing stage, resulting in the higher fixed cost of the product unit; three, the occupation rate of the medium and small size of the original profit in the relocation of the factory production line in Longhua is lower than that of the original product line; three, the recovery of production will affect the business performance while striving for customers; four is affected by the low RMB exchange rate, the cost of purchasing and purchasing raw materials increases and the exchange losses increase in 2018, and five is due to the increase in the sale price of the inventory due to the decline in the price of the products.

Regarding the performance compensation, the Shenzhen Stock Exchange requested the Shenzhen textile A to explain whether the Jinjiang group had any objection to the performance achievement and the amount of compensation. If so, the main reasons for the dispute and the plan and schedule for settling the performance commitment should be listed, including, but not limited to, the company's follow-up measures to be taken, if not, to explain the specific compensation scheme.

"Daily economic news" reporter noted that Sheng Bo photoelectric in 2017 also failed to complete performance commitments.

In 2017, Sheng Bo optoelectronics achieved an annual net profit of 53 million 250 thousand and 500 yuan, achieving the established target, but the remaining two indicators were not up to standard.

However, Sheng Bo optoelectronics did not complete its performance commitments in 2017, but according to the terms of the cooperation agreement, the Jinjiang group only needed to make cash supplement to the difference in net profit, so the Jinjiang group did not need to pay cash compensation in that year.

Related party pactions involving Jinjiang group

Apart from performance compensation, the Shenzhen Stock Exchange also inquired about the issue of connected pactions.

The enquiry letter pointed out that in 2018, the amount of related pactions related to day-to-day operation of the Shenzhen textile A in connection with the daily operation of the Mstar Technology Ltd of Kunshan, the affiliated party of Kunshan, was 136 million yuan. The content of the related pactions was to purchase "optical film products and related materials" and "sell optical film products and related materials" to the related party respectively, and the sales amount was greater than that of the procurement.

"Daily economic news" reporter learned that in August 2018 when the two sides signed the purchase and sale agreement, Kunshan Chi Mei was the 40% stake of the company's holding subsidiary Shengbo optoelectronics, a shareholder in Jinjiang group.

In addition, Sheng Bo optoelectronics and Kunshan Chi Mei are in the same industry, and there is a relationship of cooperation and competition between the two sides.

Earlier announcement pointed out that Sheng Bo photoelectric and Kunshan Chi Mei to carry out the purchase and sale cooperation purposes, mainly for further integration of resources, give play to the scale advantages of joint capacity, explore the unified sales platform cooperation mode.

In response, the Shenzhen Stock Exchange called for deep textile A to explain the necessity of the related paction and the fairness of the related paction price, as well as the commercial nature of the same products purchased and sold at the same time, and to explain whether the related related pactions existed in the sale of products produced by Sheng Bo optoelectronics directly to customers in Kunshan.

In this regard, on the morning of May 22nd, the reporter telephoned the Shenzhen textile A secretaries.

Secretaries general staff said, "the relevant situation will be announced in reply to the inquiry letter."