Jiangnan Red Arrow: Announcement on the implementation of the company's major asset restructuring performance commitment compensation

Stock code: 000519 Securities abbreviation: Jiangnan Red Arrow Bulletin No.: 2016-33

Hunan Jiangnan Red Arrow Co., Ltd. Announcement on Implementation of Major Assets Restructuring Performance Commitment Compensation Shares

The company and all members of the board of directors guarantee the truthfulness, accuracy and completeness of the contents of the announcement, and there are no false records, misleading statements or major omissions.
Important content tips:
1. The company's major asset restructuring performance commitments compensation shares use a one-time gift implementation, the total number of shares to be given is 37,588,528 shares.
2. The company's major asset restructuring performance commitment share grant implementation of the equity registration date is May 6, 2016 (Friday). If you register at the China Securities Depository and Clearing Co., Ltd. Shenzhen Branch after the market close on May 6, 2016, please do not cancel the securities account before the date of receipt of the shares (May 10, 2016). Changes and share transfer operations, etc., so as not to affect the arrival of the gift shares.
3. As the shares held by the shareholder are still in the restricted period, the above-mentioned recipient shares must be released before the end of the restricted sale on September 11, 2016. With the consent of Shenzhen Stock Exchange and communication with China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, before the transfer and transfer of the above shares, the company will first handle the process of releasing the restricted shares to ensure the above gifts. The shares may be listed and circulated on the first trading day of the stock arrival date, and the relevant provisions of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch shall prevail. In addition to the above-mentioned gift shares, the remaining shares of the company held by the issuer are still restricted shares.
Hunan Jiangnan Red Arrow Co., Ltd. (hereinafter referred to as “Jiangnan Hongjian” or “Company” held the 2015 Annual General Meeting of Shareholders on April 6, 2016, “The specific method of compensation for the outstanding assets of the company’s major assets restructuring The “Proposal” was not passed. According to the “Agreement on the Issuance of Shares to Purchase Assets” signed by the company and the nine major issuers of the major asset restructuring, the company’s performance guarantee is based on the share-based gift method. The above-mentioned issue object should be after the shareholders' meeting. Gifts will be given to other shareholders of the listed company within a month.
The board of directors of the company has now confirmed the specific matters of the implementation of this major asset restructuring performance commitment to compensate for the grant of shares, the announcement is as follows:

(1) The terms of the performance commitments are based on the Agreement on the Purchase of Shares to Purchase Assets, and the actual net profit of Zhongnan Diamonds (after deducting non-recurring gains and losses) in the two consecutive fiscal years in and after the completion date of the implementation of the assets purchased for the issuance of shares If the net profit of the shareholders of the parent company fails to meet the performance commitment, the listed company has the right to repurchase and cancel the stock of the listed company held by the issuer for the performance compensation at the total price of 1 yuan, and the number of shares to be compensated annually by the issuer is The specific calculation formula for the number of compensation shares is as follows:
The number of shares compensated each year = (as of the end of the period, the cumulative commitment of net profit - the cumulative actual net profit at the end of the current period) / the total amount of committed profits in each year of the compensation period × the total number of shares subscribed by the counterparty - the number of compensated shares during the commitment period, The net profit attributable to shareholders of the parent company after Zhongnan Diamond's commitments in 2013, 2014 and 2015 were 384,695,600 yuan, 420,068,100 yuan and 457,790,200 yuan respectively.
At the expiration of the compensation period, the listed company will conduct asset impairment test on the underlying equity (ie 100% equity of Zhongnan Diamond), and should engage an accounting firm with securities business qualifications to conduct impairment test on the underlying equity and issue special audit opinions. If the target equity at the end of the period > the total amount of the compensated shares within the compensation period, the share price of the purchased assets will be compensated separately. The number of shares that the counterparty needs to compensate separately is: the depreciation at the end of the period/the price at which the shares are purchased - the total number of shares that have been compensated within the compensation period. According to Dahua Certified Public Accountants (Special General Partnership), “Hunan Jiangnan Red Arrow Co., Ltd. Audit Report and Injected Assets Impairment Test Report” (Dahua Nuclear Word [2016] No. 001130), as of July 31, 2012 On the day of the year, the estimated value of 100% shareholders' equity (the underlying assets) of Zhongnan Diamond was RMB 3,970,200,200; as of December 31, 2015, the estimated value of 100% of the shareholders' equity of Zhongnan Diamond was RMB 544,762,800. After deducting the factors such as capital increase of shareholders and profit distribution of the target within the commitment period, the value of shareholders' equity was 4,246,642,400 yuan; no impairment occurred after testing.
The total number of shares to be compensated by the issuer shall not exceed the total number of shares obtained by the issuer of the assets purchased for the issue of shares. During the fiscal year, the number of compensation shares calculated according to the above calculation formula is less than 0, and the value is 0. The compensated shares are not reversed.
If the listed company implements the transfer of share capital or share distribution within the compensation period, the number of compensation shares shall be adjusted accordingly to: the number of compensation shares calculated according to the above formula × (1+ increase or share ratio).
If the listed company implements cash distribution within the compensation period, the cash distribution portion corresponding to the compensation shares shall be returned accordingly. The calculation formula is: refund amount = allocated cash dividend per share × number of compensation shares.
Within 10 working days after the date of issuance of the special audit report of Zhongnan Diamond, the listed company shall convene a board meeting to determine the number of shares to be compensated by the counterparty in the current year in accordance with the agreement of the Assets Purchase Agreement.
If the listed company's compensation for repurchase and cancellation of the above-mentioned shares is not approved due to the approval of the shareholders' meeting or the approval of the relevant creditors, the issuer's commitment shall be as follows within 2 months after the occurrence of the above circumstances. The formula calculates the number of shares and gives the corresponding shares to other shareholders of the listed company ("other shareholders" refers to the shares of other listed companies other than the issuer registered on the stock registration date determined in the implementation announcement of the shares granted by the listed company. Some), the specific calculation formula is as follows: the number of shares that should be given to other shareholders by the issuer = the number of shares to be compensated - (the total number of shares of the listed company held by the issuer - the number of shares to be compensated) / (the total number of shares of the listed company - the number of shares to be compensated) ) × should compensate for the number of shares. Other shareholders of the listed company shall enjoy the shares of the listed company that should be given to other shareholders of the listed company in proportion to the number of shares of the listed company / (the total number of shares of the listed company - the number of shares to be compensated).
(II) Triggering conditions for the share gift According to the “Special Audit Report on the Implementation of the Investment Performance Commitment of Hunan Jiangnan Hongjian Co., Ltd.” issued by Dahua Certified Public Accountants (Special General Partnership) (Dahua Nuclear Word [2016] No. 001129), in 2015, Zhongnan Diamond realized a net profit attributable to the owner of the parent company after deducting non-recurring gains and losses, which was 265,770,300 yuan, which was lower than the committed profit of Zhongnan Diamond in 2015, which was 456,790,200 yuan. Completion of the promised profit for share compensation.
According to the above-mentioned "Provision of Purchase of Assets by Shares", under the compensation method of using share repurchase and cancellation, the number of shares to be compensated by the issuer is 78,205,635 shares; if the listed company is compensated for the repurchase and cancellation of shares, it has not been considered by the shareholders' meeting. If it is impossible to implement through or without the approval of the relevant creditors, the compensation method of the share gift shall be adopted, and the issuer shall give the listed company a total of 37,588,528 shares of the shareholders other than the above-mentioned issue object (according to the principle of rounding off) After the integer is added to the total), please refer to the “Announcement of Hunan Jiangnan Hongjian Co., Ltd. on the repurchase of the major assets of the repurchased company’s unfinished performance commitments corresponding to the shares repurchased on March 25, 2016” (Announcement No.: 2016- 20) and "Hunan Jiangnan Red Arrow Co., Ltd. Announcement on the compensation method for the participating shareholders' shares in the outstanding performance of the assets of the company's major assets restructuring (Announcement No.: 2016-21).
On April 6, 2016, the company held the 2015 Annual General Meeting of Shareholders, in which “the Proposal on the Specific Ways of Compensation for the Uncompleted Performance Commitment of the Assets of the Major Asset Restructuring of the Company” was not passed by the shareholders meeting, according to the Agreement on the Purchase of Shares to Purchase Assets. It is stipulated that the compensation method of the company's performance guarantee will trigger the implementation conditions of the share gift.
(III) Implementation of the relevant procedures for share-based gifting On March 13, 2016, the 19th meeting of the 9th Board of Directors of the Company reviewed and approved the “Proposal on the Completion of the 2015 Annual Performance Commitment of the wholly-owned subsidiary Zhongnan Diamond Co., Ltd.”.
On March 23, 2016, the 20th meeting of the 9th Board of Directors of the Company reviewed and approved the “Proposal on Compensatory Share Compensation and Cash Dividend Repayment for Uncompleted Performance Commitments of Major Assets Restructuring of Repurchasing Companies” and “Reorganization of Major Assets of the Company” The proposal on the specific method of compensation for the outstanding assets of the underlying assets is submitted to the company's 2015 annual general meeting for consideration.
On April 6, 2016, the 2015 Annual General Meeting of Shareholders reviewed and approved the “Proposal on the Work Report of the 2015 Board of Directors”, the “Proposal on the Work Report of the 2015 Supervisory Committee”, and the “Proposal to the General Meeting of Shareholders to authorize the board of directors of the company to handle the repurchase. 15 proposals including the Proposal on Shares and Related Matters. The “Proposal on the Specific Ways of Compensation for the Uncompleted Performance Commitment of the Assets of the Major Asset Restructuring of the Company” was not approved by this general meeting of shareholders. Therefore, the issuer will compensate the performance by giving shares to shareholders other than the issuer.
(IV) The specific number of shares donated By calculation, the total number of shares to be issued by the nine issuers is 37,588,528 shares.
For the calculation method and calculation process, please refer to the announcement of the company “Hunan Jiangnan Red Arrow Co., Ltd. on the repurchase of the major assets of the repurchased company, the outstanding assets of the uncompleted performance commitments of the shares (Announcement No. 2016-20) and “Hunan Jiangnan Red Arrow Co., Ltd.” Announcement on the way in which the company's major assets are restructured and the assets are not completed, and the performance of each shareholder's share compensation method is announced (Announcement No.: 2016-21).
As of the date of this announcement, the number of shares held by the nine issuers and their shareholdings are as follows:

2. The equity registration date and the date of receipt of the account communicate with China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, and determine the equity registration date for the implementation of the share transfer and transfer on May 6, 2016, and the corresponding shares will be issued on May 10, 2016. On the account date, the Shenzhen Stock Exchange and China Securities Depository and Clearing Co., Ltd. Shenzhen Branch agreed that the above-mentioned gift shares will be listed and circulated on the next trading day after the date of receipt of the shares.
3. The object of the share issuance According to the agreement, the shareholders other than the nine issuers registered after the market close on May 6, 2016 are the target of the share gift, and the shareholders share the shares according to the number of shares held by them. On the registration date, after deducting the number of shares held by the nine issuers, the proportion of the company's shares will be entitled to the received shares.
IV. Share gift transfer method The performance guarantee gift share will be directly included in the securities account of the shareholder. If the piecemeal stock is involved, at the same time, the performance of the performance commitment compensation share transfer and the fractional shares involved will be Follow the following principles:
1. On the equity registration date, the total number of Jiangnan Hongjian shares held by the shares donated by the nine other issue targets, such as Yuxi Industrial Group Co., Ltd., is 459,017,313 shares. The target grant of this share gift is: every 10 The shares will be given approximately 0.8189 shares (37,588,528 shares ÷459,017,313 shares × 10). (To ensure the relative accuracy of the calculation results, the calculation of the number of shares that should be given to each of the recipients will be based on the principle of rounding off the whole number and retaining As many decimal places as possible, the specific quantity shall be subject to the examination and approval of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. The specific result of the share is subject to the actual operation results of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch).
2. According to the above step 1, the shares received by each shareholder are first taken as an integer, and the decimal is discarded to determine the number of shares to be awarded.
3. The fractional parts of the shares received by each shareholder calculated in step 1 are arranged in descending order of descending order.
4. Add the shares that have been sorted according to step 3 from large to small, until the difference between the total number of shares to be given, 37,588,528 shares and the total number of shares allocated after taking the integer in step 2 is added.
5. The number of shares determined by adding steps 2 and 4 is the number of shares that each shareholder should ultimately allocate. In the specific implementation, it shall be handled in accordance with the regulations of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch.
V. Share gift transfer fee The transfer fee and stamp duty payable for this share gift transfer will be handled in accordance with the regulations of China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. In order to ensure the smooth implementation of the transfer of the shares, the company has negotiated with the company's controlling shareholder, Yuxi Industrial Group Co., Ltd., and the transfer fee payable by the transferee involved in the performance of the compensation for the transfer of shares is borne by Yuxi Industrial Group Co., Ltd. .
6. It is expected that this performance promises compensation for the share capital structure after the implementation of the share grant

VII. Consultation methods If you have any questions related to the transfer of shares in this performance commitment, please contact the company through the following methods.
Contact: Wang Xinhua, Liu Guang, Tel: 0377-83880276
e-mail:
Special announcement.

Hunan Jiangnan Red Arrow Co., Ltd. Board of Directors
May 5, 2016