*ST Kerry (002072): Reply To Shenzhen Stock Exchange

On December 25th, *ST Kerry responded to the letter of concern from the Shenzhen Stock Exchange by reclaiming 42 million 158 thousand and 900 yuan of performance compensation from a former shareholder of a wholly owned subsidiary.

*ST Carey said that all of the performance compensation paid by Wei Yun, one of the equity transferers, was designed to protect the credibility and image of shareholders and sponsors, thereby avoiding regulatory penalties. The recovery of compensation does not exist at the end of the year, but it only happens at a certain time. The Future Ltd will be included in the consolidated financial statements, which is expected to cause a loss of 200-800 yuan.

In December 20th, the Shenzhen Stock Exchange issued a letter of concern to *ST Kerry for recovering the performance compensation from the original shareholder of the wholly owned subsidiary. Ask *ST Kerry to explain why one of the shares transferor's performance is 42 million 158 thousand and 900 yuan in performance compensation, while the other general rule does not have to pay.

In response to the above questions, *ST Kerry replied, the company failed to recover the performance compensation, and can not be linked to one of the shares transferor one of the network connections, only links to the creation of Wei Yun, Pang Po, Huang Weiyao. At the same time, because the company can not normally run the rights of shareholders, it has been lawsuits against standing.

It is only a matter of time before the settlement is made in the form of performance compensation. At the same time, the supervision and punishment should be avoided to protect the reputation and image of shareholders and guarantor. Wei Yun creative, Pang Po and Huang Weiyao agreed that all the performance compensation should be paid according to the stipulations of the prevailing purchase agreement. In the later stage, the creation of Wei Yun can make the right of recourse to another shareholder net.

Regarding the existence of year-end assault and profit making, *ST Kerry said that the company has been actively recovering 42 million 158 thousand and 900 yuan performance compensation since the end of the gambling agreement in 2018 and was even forced to file a lawsuit in 2019 without any hope of negotiation. After multiple communication, the withdrawal of funds at the end of 2019 was accidental, and there was no case of assault at the end of the year.

In addition, *ST Carrey also said that as of December 19, 2019, the company has withdrawn all the business information from the official seal, certificate, account holder, accounting voucher and so on, and is undertaking the business change work of the legal person, executive director, supervisor and manager. After the completion of the industrial and commercial change, the company will fully restore the 100% control over the standing and incorporate the scope of the consolidated report. After the report is included, the net profit of the company will be 200 to 8 million yuan.