*ST Kerry Fashion Preservation: Three Subsidiaries Transfer 0 Yuan, Only To Save Management Fees.

Shell protection should not only be "open source" but also "throttling". *ST Kerry (002072.SZ) has painstaking efforts to streamline the cost and transfer 0 yuan to its 3 subsidiary assets.

On the evening of December 18th, *ST Kerry announced that it would be holding 100% stake in Tianjin de cotton Mining Co., Ltd. (hereinafter referred to as Tianjin cotton), 51% stake in Beijing Sheng Tong Heng Technology Co., Ltd. (hereinafter referred to as Sheng Tong Heng), and 100% equity interest in Shenzhen Bao Yufeng Technology Co., Ltd. (hereinafter referred to as Baoyu Feng), all of which were transferred to Beijing Qian Yuan Hongsheng Business Consulting Co., Ltd. (hereinafter referred to as Qian Yuan Hongsheng) at a price of 0 yuan. After the signing of the equity transfer agreement, *ST Kerry no longer holds the shares or any shareholder's rights of the transferred company.

For the purpose of transfer, *ST Kerry said plainly: "to streamline the company structure, save management costs and throw away the burden".

The above three subsidiaries are in poor condition. The announcement shows that as of December 31, 2018, the total assets of Tianjin de cotton were 13 million 15 thousand yuan, net assets of 7 million 253 thousand and 400 yuan, net profit of 0 yuan, Sheng Tong Heng's total assets of 20 thousand and 200 yuan, net assets of -11.80 million yuan, and net profit of -11.74 million yuan. As of September 30, 2019, Bao Yu peak total assets of 15 million 651 thousand and 800 yuan, net assets -120.58 million, net profit of -0.62 million.

The basis for free transfer is based on the poor management of the three companies. Sheng Tong Heng, Bao Yu Feng currently accounts for 0 yuan, and no actual operation; Tianjin de cotton although the net assets of 7 million 253 thousand and 400 yuan, but in view of its out of control, and the shares are sealed up, no actual operation, so the three companies share transfer pricing basis is 0 yuan.

In addition to the transfer of subsidiaries, *ST Kerry also initiated a performance compensation payment to the acquirer. In November 4, 2015, *ST Kerry acquired Beijing Netcom Network Technology Co., Ltd. (hereinafter referred to as Netcom) and Beijing Wei Yun Creation Technology Co., Ltd. (hereinafter referred to as "Wei Yun creation"), Beijing holds the 100% stake in the company limited by data limited. *ST Kerry paid a total of 237 million yuan, or 95.28% of the total transaction volume, to the other party's equity acquisition.

However, Erie failed to complete its performance promise at the beginning of its acquisition. According to the financial report, the net profit after erect the non recurring gains and losses in 2015 is 18 million 888 thousand and 900 yuan, the net profit after deducting the non recurring gains and losses in 2016 is 23 million 110 thousand and 400 yuan, the net profit after deducting the non recurring gains and losses in 2017 is 14 million 470 thousand and 100 yuan, and has not fulfilled the performance promise.

According to the previous purchase agreement, *ST Kerry still has 18 million 984 thousand and 400 yuan equity interest, and the price has not been paid to Wei Yun creation and Netcom. Due to failure to complete performance commitments, *ST Kerry should receive performance compensation of 42 million 158 thousand and 900 yuan. Wei Yun creative and Netcom should also pay *ST Kerry the difference of 23 million 174 thousand and 500 yuan.