Shenzhen Textile A (000045): Progress Of Compensation Performance Of Subsidiary Companies In 2018

Shenzhen textile (Group) Limited by Share Ltd announcement on progress of 2018 annual performance commitments for subsidiaries

All members of the company and the board of Directors ensure that the contents of the announcement are true, accurate and complete, without false records, misleading statements or major omissions.

I. Basic Situation

In order to improve the operation of Shenzhen Shengbo Photoelectricity Technology Co., Ltd. (hereinafter referred to as Shengbo optoelectronics Co., Ltd.), at the end of 2016, the company introduced Hangzhou Jinjiang Group Co., Ltd. (hereinafter referred to as Jinjiang group) as Shengbo optoelectronic capital and stock expansion company as the strategic investor. The company limited, Shengbo optoelectronics, Jinjiang group and Jinjiang group as the actual controller set up the limited partnership, Hangzhou Jinhang equity investment fund partnership (limited partnership) (hereinafter referred to as "Jinhang investment") jointly signed the "Shengbo Photoelectric Technology Co., Ltd., the capital increase agreement", Jinhang investment as the main body of the capital to subscribe Shengbo photoelectric 40% stake, the capital increase is RMB 1 billion 352 million 640 thousand yuan. See December 28, 2016 Bulletin No. 2016-63, www.cninfo.com.cn.

In order to give full play to the institutional advantages of private enterprises and the resource advantages of state-owned enterprises, the company signed a cooperation agreement with the Jinjiang group and Jinhang investment on the premise of consensus on the future management and development of Sheng Bo optoelectronics. The Jinjiang group made a commitment to Sheng Bo optoelectronics to achieve better results after the introduction of strategic investors. According to the cooperation agreement, the Jinjiang group will give full play to the advantages of Jinjiang group in terms of system, mechanism, industry and management and the successful experience of industry integration through Kam Hang's investment in Sheng Bo optoelectronics. It has made a performance commitment to Sheng Bo optoelectronics. The specific situations are as follows: sales revenue and net profit in 2017, 2018 and 2019 are no less than 1 billion 500 million yuan /5000 yuan, 2 billion yuan /1 billion yuan, and 2 billion 500 million yuan /1.5 billion yuan. In principle, the proportion of sales revenue of polaroid and related optical coatings products in 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. See December 31, 2016 Bulletin No. 2016-67, www.cninfo.com.cn.

In 2018, through the audit of Zhong Qin Wan Xin accounting firm (special general partnership), Sheng Bo photoelectric achieved an annual net profit of -9726.87 million yuan, operating income of 1 billion 125 million yuan, and the sales revenue of polaroid and related optical film products accounted for 74.01% of the total revenue. Although sales of key sales products continued to improve this year, the scale of product sales was not as good as expected. The difference between the three indicators of sales revenue, net profit and sales revenue of polaroid and related optical film products accounted for 875 million 459 thousand yuan, 197 million 268 thousand and 700 yuan and 5.99% respectively. Therefore, Sheng Bo photoelectric 2018 has not fulfilled its performance commitments. According to the agreement on cooperation, the Jinjiang group needs to make up the difference in net profit in cash. Refer to the special statement on the accomplishment of Sheng Bo photoelectric 2018 annual performance pledge in April 27, 2019, and the special audit report on the accomplishment of Sheng Bo photoelectric 2018 annual performance pledge by www.cninfo.com.cn.

Two. Progress

In view of the fact that the Jinjiang group proposed that the performance compensation be properly handled according to the actual situation and the principle of fairness and reasonableness, the Jinjiang group temporarily failed to fulfill the performance commitment compensation obligation under the cooperation agreement before the two sides had reached an agreement. The company sent a letter to the Jinjiang group on 30 April 2019, urging it to perform the 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. The two sides agreed to reach a compensation plan and fulfill the corresponding decision-making process within 2019-23 months from the date of the announcement of the Shenzhen stock exchange's annual report reply (No. 2019-23) in May 29, 2019 within 3 months from the date of the company's disclosure. If the parties fail to reach agreement between the above business hours, the company will resolve the performance commitment compensation through arbitration according to the agreement of the cooperation agreement. During the period, although the two sides have been actively working to solve the performance commitment compensation issue, during rounds of consultations, there have been rounds of consultations on performance commitment compensation and subsequent cooperation matters. The company has also issued a letter of supervision to urge and prompt the Jinjiang group to fulfill the above performance commitments, but the two sides have not yet reached full agreement. The company has commissioned the Beijing City Golden (Shenzhen) law firm to send a lawyer's letter to the Jinjiang group on 26 August 2019, asking the Jinjiang group to pay a total of 197 million 268 thousand and 700 yuan in the 15 working days from the date of receipt of the lawyer's letter, and to make up the difference in performance, and pay the overdue interest according to the interest rate of the people's Bank loan at the same time. If the Jinjiang group fails to pay the difference between performance commitments and overdue interest within the above-mentioned period, the company will entrust lawyers to investigate the legal responsibilities of Jinjiang group through judicial means. The company will take various measures, including, but not limited to, actively consulting with the Jinjiang group on 2018 annual performance compensation and follow-up cooperation programs, or through arbitration to safeguard the legitimate rights and interests of the company and shareholders, and continue to fulfill the obligation of information disclosure according to the progress.

Three, risk warning

In view of the uncertainty of the performance of the Jinjiang group's performance compensation obligations, if the two sides fail to reach an agreement, the company will resolve the performance commitment compensation by arbitration according to the agreement of the cooperation agreement, and investors should pay attention to the risk of investment.

Notice hereby

Board of directors of Shenzhen textile (Group) Limited by Share Ltd

August 30th two 19