On May 24, Xinhua Medical issued the “Announcement on Receiving Compensation for Partial Performance Commitmentsâ€. It is understood that the results of Chengdu Yingde Biomedical Equipment Technology Co., Ltd. (hereinafter referred to as Yingde Company) acquired by Xinhua Medical in 2014 did not reach the commitment amount in 2015, and it is necessary to pay a performance compensation of 205.552 million yuan.
It is worth mentioning that Yingde's performance in 2014 did not meet the commitment target. Regarding this matter, the staff of Xinhua Medical Securities Department told reporters that the performance of Yingde Company did not meet the expected target due to the national GMP policy. Since 2016, Yingde’s orders have been restored. However, due to the fact that it has not been more than half in 2016, it is still uncertain whether Yingde's 2016 results will meet the performance commitment target.
Xinhua Medical has determined the development goal of outbound M&A in recent years. The company’s rapid acquisition has also been questioned by the market. Regarding this matter, the staff of Xinhua Medical Securities Department told reporters that the goal of the company's outreach mergers and acquisitions will not change in the future.
Unfulfilled performance commitments for two consecutive years
In FY2014, Xinhua Medical released a report on the issuance of shares to specific targets to purchase assets and raise matching funds.
Xinhua Medical purchased 85% of the equity of Chengdu Yingde Biomedical Equipment Technology Co., Ltd. (hereinafter referred to as “Yingde Companyâ€) through the issuance of shares and payment of cash (including the purchase of shares by way of purchase of 10 natural persons such as Quyong and Deguang Investment Zhongguan Investment holds 51% of Yingde Company's shares, and purchases 10 natural persons such as Quyong, Deguang Investment, Zhongguan Investment and Zhiwang Venture Capital's 34% stake in Yingde Company in cash.
According to the market at that time, Xinhua Medical gave the Yingde company a high premium. According to the announcement issued by Xinhua Medical, the audited net book value of 100% equity of Yingde Company (parent company) on the evaluation base date is 92.035 million yuan, the income method evaluation value is 435.456 million yuan, and the evaluation value added is 334.51 million yuan. The value-added rate is 373.24%. As of December 31, 2013, the equity attributable to the shareholders of the parent company in the consolidated financial statements of Yingde Company was RMB 12,069,300, and the estimated value added based on this calculation was RMB 3,184,046,600, with a value-added rate of 260.87%.
However, Xinhua Medical has full confidence in the future development of Yingde. 9 natural persons such as Quyong have promised that from 2014 to 2017, 100% equity of Yingde Company will realize net profit (net profit after deducting non-recurring gains and losses) of 38 million yuan, 42.8 million yuan, 45.8 million yuan and 46.8 million yuan respectively. .
However, after the completion of the acquisition in the first year after the completion of the 2014 annual report, Yingde’s performance was lower than the performance commitment.
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