Stock Code: 000553(200553) Stock Abbreviation: ADAMA A(B) Announcement No.2019-16
ADAMA Ltd.
Announcement on the Acquisition of 100% of the Equity Interests in Jiangsu
Anpon Electrochemical Co., Ltd., in a Related-Party Transaction
The Company and all members of the Company’s Board of Directors confirm that all
information disclosed herein is true, accurate and complete, with no false or
misleading statement or material omission.
I. Overview of related-party transaction
ADAMA Ltd. (“Company”) intends to acquire 100% equity interests (“Target
Equities”) in Jiangsu Anpon Electrochemical Co., Ltd. (“Anpon”) from CNAC
International Company Limited (“Seller” or “CNAC International”). On [March 19,
2019], the Company signed the Equity Interest Transfer Agreement with the Seller
and China National Agrochemical Corporation (“Seller Parent” or “CNAC”).
The Seller Parent is the controlling shareholder of the Company. The Seller is a
wholly owned subsidiary of the Seller Parent. Therefore both parties are deemed as
related parties of the Company, and this Transaction is a related-party transaction.
According to the Listing Rules of Shenzhen Stock Exchange and the Articles of
Association of the Company, this Transaction shall be approved by the Board of
Directors of the Company and does not require shareholder’s approval. The 12th
Meeting of the 8th session of the Board of Directors of the Company has approved
this transaction. Among the five directors of the Company, the two related-party
directors (Mr. Yang Xingqiang and Mr. An Liru) refrained from voting, while from
the remaining three directors, there were three affirmative votes, zero negative votes
and zero abstentions.
The Independent Directors have issued their prior written consent and independent
opinions on this Transaction.
This Transaction does not constitute a Material Assets restructuring as stipulated by
the Administrative Measures on Significant Asset Restructuring of Listed Companies.
This Transaction is not subject to the approval of shareholders’ meeting. China
National Chemical Corporation Ltd., as the supervising authority of the state-owned
assets, its working meeting of the general manager has approved this Transaction. It
has also completed the filling procedure of the assets appraisal.
The Company will timely disclose the relevant information according to the progress
of this Transaction.
II. Basic information of the related parties
(I) CNAC International Company Limited
1. Basic information
(1) Company name: CNAC International Company Limited
(2) Nature of enterprise: Private limited company
(3) Registered address: 17/F, SHING LEE COMMERCIAL BUILDING, 6-12
WING KUT STREET, CENTRAL, HK
(4) Main office: 17/F, SHING LEE COMMERCIAL BUILDING, 6-12 WING KUT
STREET, CENTRAL, HK
(5) Director: Chen Hongbo
(6) Registered capital: RMB 7,178,289,345.11
(7) Business registration certificate No.: 53630355-000-01-18-9
(8) Main business: holding and investment
(9) Controlling shareholder: CNAC
2. Key financial figures of the latest financial year (Unaudited):
(1) Revenue: RMB 0
(2) Net profit: RMB -1,576.95 million
(3) Net asset: RMB 3,727.74 million
3. Related-party relationship: The Seller is a wholly owned subsidiary of the Seller
Parent, the controlling shareholder of the Company. The Seller and the Company are
under common control of the Seller Parent, and therefore the Seller is a related party
of the Company.
4. Credit status: After searching on the website of disclosure of enforcement
information of China, the Seller is not a dis-honest party subject to enforcement.
(II) China National Agrochemical Corporation
1. Basic information
(1) Company name: China National Agrochemical Corporation
(2) Nature of enterprise: Limited liability company (sole proprietorship by legal
person)
(3) Registered address: No.62, Beisihuan West Road, Haidian District, Beijing
(4) Main office: No.62, Beisihuan West Road, Haidian District, Beijing
(5) Legal representative: Chen Hongbo
(6) Registered capital: RMB 3,338,219,564.48
(7) Unified social credit code: 91110000100011399Y
(8) Business scope: Agrochemical and chemical products and chemical raw
materials (excluding hazardous chemicals); procurements and sales of
electromechanical equipment, electrical equipment, automatic control system,
instrument, construction materials, industrial salt, natural rubber and products,
computer software and hardware, office automation equipment and textile raw
materials; sales of fertilizer; cargo warehousing; import and export business; technical
consultant, service, development and testing; production of genetically modified crop
seeds (excluding the six central areas of Beijing city); sales of crop seeds, grass seeds
and edible fungus strains. (The company shall lawfully and independently select its
business projects and conduct business activities; the business activities which require
approvals shall be conducted after obtaining such approvals from relevant authorities
in accordance with the approved scopes; and the company is prohibited to involve in
the business activities which is prohibited or restricted by the city’s industry policies.)
(9) Controlling shareholder: China National Chemical Corporation
2. Key financial figures of the latest financial year (Unaudited):
(1) Revenue: RMB 31,650.09 million
(2) Net profit: RMB 500.60 million
(3) Net asset: RMB 25,569.92 million
3. Related-party relationship: CNAC is the controlling shareholder of the Company,
which is deemed as a related party of the Company.
4. Credit status: After searching on the website of disclosure of enforcement
information of China, CNAC is not a dis-honest party subject to enforcement.
III. Basic information of the target of the related-party transaction
(I) Overview of the target assets
1. Target assets: 100% equity interests in Anpon owned by the Seller
2. Asset category: equity investment
3. Encumbrance: No mortgage, pledge or any other third-party claim on the
transferred equities. And the transferred equity is not involved in any major disputes,
lawsuits, arbitrations, freeze or other judicial measures.
4. Asset value: Based on the assets appraisal report (Zhong Fa Ping Bao Zi [2018]
No.115) (“Appraisal Report”) issued by DeveChina International Appraisals
(“DeveChina”) (who is qualified to conduct business in relation to securities and
futures) for this Transaction (the benchmark date of which is December 31, 2017), the
appraisal valuation is aligned with the appraisal result of asset-based approach. The
book value of Anpon’s net asset is RMB 384,645,000 and the appraisal value of
Anpon’s net asset is RMB 820,036,300.
The benchmark date of the above-mentioned Appraisal Report is December 31, 2017,
which has already been expired. In the interests of the Company and all its
shareholders, the Company engaged DeveChina to appraise the value of all equity
interests owned by Anpon’s shareholders, and DeveChina issued an assets appraisal
report (Zhong Fa Ping Bao Zi [2019] No.013) (“Updated Appraisal Report”) (the
benchmark date of which is December 31, 2018).
The benchmark date of the Updated Appraisal Report is December 31, 2018, Both the
asset-based approach and income approach were used in the valuation in the Updated
Appraisal Report. The appraisal valuation is aligned with the appraisal result of the
asset-based approach. Based on the Updated Appraisal Report, as of December 31,
2018, Anpon’s book value of net asset is RMB 447,647,400; the appraised value of
the net asset is RMB 879,938,100. Compared with the book value, the appraisal value
of net asset increases by RMB 432,290,700 , an increase of 96.57%.
Based on the appraisal valuation (the benchmark date of which is December 31, 2018),
the appraisal valuation of Anpon does not have any adverse effect on the interests of
the Company and its shareholders. Therefore, the purchase price of this Transaction
which was determined to align with the appraisal valuation (the benchmark date of
which is December 31, 2017) will not harm the interests of the Company and its
shareholders, especially the minority shareholders. The purchase price of this
Transaction is determined as RMB 820,000,000.
5. Main corporate history
(1) Reorganization and establishment
Anpon (the predecessor of which is Qingjiang Pesticide Plant) was reorganized and
established on November 25, 1998. When it was established, the company name of
Anpon was Jiangsu Qingnong Electrochemical Co., Ltd., the enterprise type was
limited liability company and the registered capital was RMB 134,590,000.
(2) Capital decrease
In May 2003, Anpon’s registered capital was reduced from RMB 134,590,000 to
RMB 51,380,000 after obtaining a written resolution of Anpon’s shareholders’
meeting. The reduced registered capital was verified by a capital verification report
issued by Huai’an Xinrui Accounting Firm.
(3) Equity transfer
In March 2006, CNAC acquired 80.9260% equity interests in Anpon (which
corresponded to the registered capital of RMB 41,580,000) from relevant shareholders
after obtaining a written resolution of Anpon’s shareholders’ meeting.
(4) Capital decrease
In May 2013, Anpon’s registered capital was reduced from RMB 51,380,000 to RMB
41,580,000 after obtaining a written resolution of Anpon’s shareholders’ meeting. The
reduced registered capital (i.e. 19.0740% equity interests in Anpon, which
corresponded to the registered capital of RMB 9,800,000) was owned by Anpon’s
employee shareholding association. After this capital decrease, Anpon became a
wholly owned subsidiary of CNAC. The registered capital after this capital decrease
was verified by a capital verification report issued by Huai’an Xinrui Accounting
Firm
(5) Capital increase
In April 2014, in accordance with CNAC’s shareholder resolution, Anpon’s registered
capital was increased from RMB 41,580,000 to 51,380,000, which was conducted by
way of converting capital reserve into paid-up capital.
(6) Equity transfer
In April 2014, in accordance with CNAC’s shareholder resolution, CNAC transferred
100% equity interests in Anpon which was owned by CNAC to the Seller. After this
equity transfer, Anpon became a limited liability company (wholly owned by a legal
person located in Taiwan region, HK and Macao).
(7) Merger of Jiangsu Maidao Agrochemical Co., Ltd.
In September 2015, the Seller conducted a merger of Jiangsu Maidao Agrochemical
Co., Ltd. (“Maidao”) with Anpon. Anpon continued to exist after this merger and
Maidao was dissolved. After this merger, Anpon’s registered capital is RMB
251,380,000.
6. Basic information of Anpon
(1) Shareholding structure: The Seller holds and owns 100% of the equity interests
in Anpon.
(2) Business scope: Producing chemical materials and chemical products (if business
activities involve hazardous chemicals, precursor chemicals or controlled chemicals
which require licenses, such activities are limited to the permitted scope as indicated
in relevant licenses such as Safety Production License); producing chemical products
(formulations); wholesale of hazardous chemicals (limited to the scope as indicated
in Business License of Hazardous Chemicals); exploiting underground rock salt;
exporting self-produced pesticides and chemical products; inspecting welded gas
cylinder; producing steam and generating electricity with waste heat; producing and
selling packaged goods; printing labels of carton; export business of self-produced
products and technology; import business of raw materials, machinery equipment,
components and technology which are needed for production and research; supplying
self-produced hot water (excluding drinking water); pesticide business (excluding
processing and repacking of pesticides and pesticides for sanitary use); (projects
which require regulatory approvals shall be operated after obtaining such approvals
from relevant authorities).
(3) Registered capital: RMB 251,380,000
(4) Date of establishment: November 25, 1998
(5) Registered address: No. 30, Huagong Road, Huai’an
(6) Key financial figures of the last year (RMB):
Key financial figures As of December 31, 2018 / FY 2018 (Audited)
Total assets 1,395,561,859.48
Total liabilities 911,435,602.52
Total receivables 183,349,526.73
Total amount of contingency
(including lawsuits and 0
arbitrations)
Net assets 484,126,256.96
Revenues 1,507,474,169.85
Profits 66,650,788.52
Net profits attributable to
48,014,469.95
shareholders
Net profits attributable to
shareholders after deducting
43,865,570.00
the non-recurring gains and
losses
Net cash flows generated from
297,287,837.58
operating activities
(7) Credit status: After searching on the website of disclosure of enforcement
information of China, Anpon is not a dis-honest party subject to enforcement.
(8) Audit status: Ruihua Certified Public Accountants who is qualified to conduct
business in relation to securities and futures has conducted audit on Anpon’s financial
statements of FY 2017 and 2018 and issued an audit report (Ruihua Shen Zi [2018]
No. 02160124, Ruihua Shen Zi [2019] No. 01580026).
(9) Appraisal status: DeveChina who is qualified to conduct business in relation to
securities and futures has issued an assets appraisal report for this Transaction. The
benchmark date of this Appraisal Report is December 31, 2017. The appraisal
valuation of the Target Equities is RMB 820,036,300, which is concluded by the
appraisal result of asset-based approach. Additionally, based on the Updated Appraisal
Report, as of December 31, 2018, the appraised value of Anpon’s net asset is RMB
879,938,100.
(10) Whether Anpon is providing guarantee or financial support for the related
parties:
1）external guarantee
As of the date of this announcement, Anpon provides guarantee with maximum
amount in favor of Jiangsu Huaihe Chemicals Co., Ltd., a wholly owned subsidiary of
the Seller, for a loan the debt principal of which is no more than RMB 50 million.
Such guarantee will be settled prior to the closing date of this Transaction.
2) loan
As of the date of this announcement, CNAC borrowed RMB 8,529,126.62 from
Anpon. Such loan will be settled prior to the closing date of this Transaction.
Except the above guarantee and loan, Anpon doesn’t provide guarantee or financial
support for the related parties.
(11) The Articles of Association or other documents of Anpon do not contain
provisions restricting the rights of shareholders other than laws and regulations.
IV. Pricing basis of the related-party transaction
Based on the Appraisal Report issued by DeveChina, the benchmark date is
December 31, 2017, and DeveChina has adopted two appraisal methods: asset-based
approach and income approach. The appraisal result is based on the appraisal
valuation of asset-based approach. According to such appraisal valuation, the book
value of Anpon’s net asset is RMB 384,645,000 and the appraisal value of Anpon’s
net asset is RMB 820,036,300. The appraisal value of net asset increases by RMB
435,391,300 compared to the book value, an increase of 113.19%. Based on the
appraisal result, the consideration of this Transaction is determined as RMB
820,000,000.
The appraisal result of Anpon’s assets and liabilities is as follow:
RMB (ten thousand yuan)
Book value Appraisal value Amount of increase or decrease Value-added ratio
Items
A B C=B-A D=C/A×100
1 Current assets 69,736.79 70,803.56 1,066.77 1.53
2 Non-current assets 87,137.64 127,226.59 40,088.95 46.01
3 Financial assets available for sale - - - -
Held-to-maturity
4 - - - -
investment
5 Long-term receivables - - - -
Long-term equity
6 1,000.00 15,910.71 14,910.71 1,491.07
investment
7 Real property investment - - - -
8 Fixed assets 75,788.40 91,768.34 15,979.94 21.08
9 Constructions in progress 3,767.86 3,767.86 - -
10 Engineer materials - - - -
11 Disposal of fixed assets - - - -
12 Productive biological assets - - - -
13 Oil and gas assets - - - -
14 Intangible assets 5,300.00 15,112.91 9,812.91 185.15
15 Development expenditure - - - -
16 Goodwill - - - -
Long-term amortization
17 814.61 200.00 -614.61 -75.45
costs
18 Deferred income tax assets 466.77 466.77 - -
19 Other non-current assets - - - -
20 Total assets 156,874.43 198,030.15 41,155.72 26.23
21 Current liabilities 110,783.61 110,783.61 - -
22 Non-current liabilities 7,626.32 5,242.91 -2,383.41 -31.25
23 Total liabilities 118,409.93 116,026.52 -2,383.41 -2.01
24 Net assets (ownership interests) 38,464.50 82,003.63 43,539.13 113.19
Based on the Appraisal Report, the result of asset-based approach is different from
that of income approach. The difference is RMB 115,091,100 and the difference ratio
is 14.03%. The asset-based approach considers the approach of repurchasing of assets
and reflects the replacement value of company’s current assets. The income approach
considers the company’s profitability in the future and reflects the company’s overall
profitability of all assets. The approaches of these two methods are different and
therefore the appraisal results are different. The future earnings forecast is based on
the judgement and estimation of future macro-economics and economic markets. Due
to the uncertainty of current economic and market environment, there are many
uncertain factors which will affect the company’s future income. It is difficult to
accurately forecast the future income. Therefore the appraisal result is based on the
asset-based approach.
The benchmark date of the above-mentioned Appraisal Report is December 31, 2017,
which has already expired. In the interests of the Company and all its shareholders,
the Company engaged DeveChina to appraise the value of all Anpon equity interests
owned by Anpon’s shareholders, and DeveChina issued the Updated Appraisal Report
(the benchmark date of which is December 31, 2018).
The benchmark date of the Updated Appraisal Report is December 31, 2018. Both the
asset-based approach and income approach were used in the valuation in the Updated
Appraisal Report. The appraisal valuation is aligned with the appraisal result of the
asset-based approach. Based on the Updated Appraisal Report, as of December 31,
2018, Anpon’s book value of net assets is RMB 447,647,400; the appraised value of
the net assets is RMB 879,938,100. Compared with the book value, the appraisal
value of net asset increased by RMB 432,290,700, an increase of 96.57%.
V. Key terms of the agreement of related-party transaction
1. Consideration: RMB 820,000,000
2. Payment: Cash payment
3. Payment Schedule: The consideration of this Transaction includes the Closing
Payment and the Conditional Payment. The Closing Payment is RMB 415,000,000
and shall be paid by the Company on April 15, 2019 or at such other place or at such
other time or on such other date as the Seller and the Purchaser may mutually agree
upon in writing. . The Conditional Payment is RMB 405,000,000 and shall be paid by
the Company on the tenth (10) Business Day following the later of (x) delivery by the
Purchaser of a Relocation Completion Notice to the Seller and (y) expiration of the
fifth (5th) anniversary of the Closing Date, which is subject to the below conditions
and terms:
(1) If the Net Relocation Costs of Anpon are less than RMB 405,000,000, the amount
of the Conditional Payment payable by the Purchaser to the Seller shall be reduced to
the difference between the Net Relocation Costs and RMB 405,000,000 and the
relevant interest shall also be paid by the Purchaser.
(2) If the Net Relocation Costs of Anpon equals to or exceeds RMB 405,000,000, the
obligation of the Purchaser to pay the Conditional Payment shall be deemed to have
been discharged in full and the Purchaser shall have no obligation to make any such
payment to the Seller.
(3) If there is no Net Relocation Costs, the Purchaser shall pay to the Seller the full
Conditional Payment (RMB 405,000,000) together with the relevant interest.
4. Closing date: The closing of the Transaction shall no later than March 31, 2019.
5. This Agreement shall come into effect upon the following conditions:
(1) this Agreement has been duly signed by all Parties’ legal representatives or
authorized representatives and affixed with company chop;
(2) the Company’s board meeting and shareholders’ meeting (if needed) have
approved this Transaction.
6. Attribution of economic benefits: The Parties agree that, (i) any economic benefits,
profits and interests generated by Anpon and its subsidiaries during the period starting
from January 1, 2018 to December 31, 2018 shall be attributed to the Seller; and (ii)
any economic benefits, profits and interests generated by Anpon and its subsidiaries
during the period starting from January 1, 2019 to the Closing Date (“Transition
Period”) shall be attributed to the Company.
7. Source of the Payment: The Company will use the raised funds RMB
400.08million for the Closing Payment. For details, please refer to the Announcement
on the Change of Certain Designated Projects disclosed by the Company on March 21,
2019. For the rest payment, the Company intends to use its own capital.
VI. Purpose of the related-party transaction and the effects on the Company
1. This Transaction will help the controlling shareholder perform its commitments
with respect to avoiding and eliminating horizontal competition
The acquisition of Anpon serves to eliminate horizontal competition between the
Company and its controlling shareholder. This is the performance of the commitments
made by the controlling shareholder of the Company in the Major Assets
Restructuring Report in 2017. The controlling shareholder committed: “The
company’s subsidiaries Jiangsu Anpon Electrochemical Co., Ltd., Jiangsu Huaihe
Chemical Co., Ltd., Jiangsu Maidao Agrochemical Co., Ltd., Anhui Petrochemical
Group Co., Ltd. and Jiamusi Heilong Pesticide Co., Ltd. and its subsidiaries are the
same or similar to those of the main business of the Company. In view of the domestic
competition in the same industry, the company promises that in the next four years, in
accordance with the requirements of securities laws and regulations and industry
policies, appropriate methods shall be adopted to gradually solve the horizontal
competition."
In 2017 and 2018, the amount of related-party transaction on the purchase of raw
materials between the Company and Anpon is RMB 136 million and RMB 242
million. After the completion of the acquisition, such transactions between the
Company and Anpon will no longer be related-party transactions which serves to
solve the horizontal competition and protect the interests of the Company and public
investors.
2. Anpon’s main business is synergistic with that of the Company.
Anpon's main business has a high degree of synergy with the Company's main
business. Significant synergies are generated by selling Anpon's AgChem products
through Adama's China domestic distribution channels as well as Adama's broad
global network. In addition, the Company has almost completed the Huai'an Pesticide
Formulation Center project which is expected to be fully operational in 2019. The
Formulation Center and Anpon are in the same city Huai'an, which will form a supply
chain synergy, realize the integration of upstream and downstream business of the
Company from raw materials to products, and further promote the realization of the
Company’s core strategy which regards China as a significant global business supply
base.
This Transaction is in line with the Company's business development strategy, which
is conducive to the Company's further development of the domestic market, and
further enhances its core competitiveness. This Transaction is also in line with the
interests of the Company and shareholders.
3. The Transaction is a merger under the same control. The Company will confirm the
initial investment cost according to the book value of net assets adjusted by the
accounting policy of listed companies. The Company will adjust the company's
capital reserve based on the difference between the book value of net assets obtained
and the consideration paid The Company's current profits and losses will not be
affected.
VII. Status of all kinds of related-party transactions occurred with such related
parties from the beginning of FY 2019
From the beginning of FY 2019 to the date of this announcement, the related-party
transactions between the Company and the related parties are the transactions in the
ordinary business course. The shareholders meeting on March 11, 2019 has approved
the expected related-party transactions in the ordinary course of business in 2019
which total amount shall not exceed 1,914.43million.
VIII Potential Risks and Counter Measures
1、Risks of the Market and Industry Competition
Anpon's main business is the production and sales of active ingredients and chemical
intermediates, and the Company has a full range of high quality and efficient
herbicides, pesticides and fungicides. The acquisition will help the Company expand
its products range and improve the distribution of agrochemical products domestically
and abroad. However, in the fragmented global off-patent agrochemical product
market, Anpon and the Company also faces fierce competition and risks relating to
competitors' product launch and market environment changes. The Company will
promote the sharing of market and customer channels between the Company and
Anpon according to the advantages of Anpon's products, the products differentiation,
and the Company's management so as to improve and protect the overall competitive
advantage and profitability of related businesses and products.
2. Risks of Registration Policy
Since the testing, production and sales of agrochemical products are subject to strict
supervision, including the requirement to obtain and hold the production licenses
required for various products and the registration certificates required for the sale, and
considering the environmental protection authority has tended to apply more stringent
surveillance in recent years, therefore the applicable regulatory requirements and
regulatory environment may change from time to time which may result in the risks
that affect the production and sales of the products. The Company has built a
comprehensive product registration team around the world, continuously assessing the
regulatory compliance of the countries in which the products are sold, and continually
modifying the applicable registration content to avoid product sales that do not
comply with regulatory requirements. The company will continue to strive to meet
environmental regulatory requirements by building, operating and transforming its
production and environmental protection facilities.
3. Risks of Business Integration
After the completion of the transaction, the Company will hold 100% of the equity of
Anpon. Whether the company can successfully integrate Anpon business remains
subject to certain uncertainties. The Company will reduce these risks by managing the
combined China business based on global management and the Chinese team, and
constantly improving the operations, governance and internal control of Anpon.
4. Risks of Financial Integration
After the completion of this Transaction, the Company and Anpon need to align in the
aspects of financial system, investment, financing methods, fund management, profit
management, which will entail risks. In order to reduce such risks, the Company will
work with Anpon to actively define the financial authority, financial positions and
functions, fund management policy and information disclosure policy, and provide the
role of the Chairman of the Board, general manager and financial controller, as well
as the scope of the core issues of Anpon.
5. Risks of Assets Appraisal
Section III of this announcement elaborates the appraisal situation of Anpon assets.
Although the Appraiser’s assumptions on the valuation of assets followed the
principle of prudence, there is still a risk that the assets valuation may be
unreasonably higher than the net assets value of the book.
IX. Prior consent and independent opinions of independent directors
1. The Independent Directors have given prior consent to this Transaction: this
Transaction is allowed to be submitted to the board meeting for deliberation and
approval.
2. The Independent Directors have issued independent opinions on this Transaction:
related-party directors have abstained from voting when deliberating and approving
this Transaction and the voting procedures have complied with relevant laws and
regulations. This Transaction is aligned with the Company’s strategies of business
operation and development and is in the interests of the Company and its shareholders.
This Transaction’s consideration is based on the appraisal result provided in the
Appraisal Report, which is issued by a qualified appraiser and has been filed with
competent state-owned regulatory authority. The consideration therefore is fair and
does not damage the interests of the Company and its shareholders.
X. Independent financial advisor’s opinions
After verification, the independent financial advisor issued the following opinions:
This Transaction is helpful to eliminate the competition between Anpon and the
Company. This Transaction conforms to the Company's business development
strategy and the interests of the Company and its shareholders. The consideration is
based on the evaluation report issued by the appraisal agency with the qualification of
securities and futures practitioners, and follows the principle of fairness and
reasonableness. It does not harm the interests of the Company and its small and
medium-sized shareholders, and does not affect the independence of the Company.
This Transaction is approved by the 12th meeting of the 8th Board of Directors and the
8th meeting of the Supervisory Board of the Company. The related directors avoided
voting. The independent directors have expressed their consent. The review
procedures conform to the relevant provisions of the Company Law and the Articles
of Association of the Company. The independent financial adviser has no objection to
this Transaction.
XI. Filing documents
1. Resolution of the 12th meeting of the 8th session of the Board of Directors of the
Company
2. Consent of the Independent Directors
2. Prior consent of the Independent Directors
4. Equity Interest Transfer Agreement
5. Audit Report (Ruihua Shen Zi [2018] No. 02160124, Ruihua Shen Zi [2019] No.
01580026)
6. Appraisal Report(Zhong Fa Ping Bao Zi [2018] No.115), Updated Appraisal
Report(Zhong Fa Ping Bao Zi [2019] No.013)
7. Guotai’s opinion
It is hereby announced.
Board of Directors of the Company
March 21, 2019
