H&R(SZ:000892) Zheng Quan Zhi Xing·2025-05-21 13:57Core Viewpoint - The independent financial advisor, Chengtong Securities, conducted a verification of the performance commitments made by Huanrui Century United Co., Ltd. regarding the acquisition of Huanrui Century (Dongyang) Film and Television Media Co., Ltd. for the years 2016-2018, revealing that the company failed to meet its profit commitments during this period [1][11]. Basic Situation - Huanrui Century completed the acquisition of 100% equity of Huanrui Film in 2016, with the transaction approved by the China Securities Regulatory Commission [1][2]. - The performance commitments included net profits of at least 241 million RMB, 290 million RMB, and 368 million RMB for the years 2016, 2017, and 2018, respectively [3]. Performance Commitment Situation - The original shareholders of Huanrui Film committed to specific profit levels, with provisions for compensation if these levels were not met [2][3]. - The compensation mechanism involves calculating the number of shares to be compensated based on the shortfall in actual profits compared to the committed profits [3][4]. Performance Completion Situation - The auditing firm Tianjian issued reports for the years 2016-2018, with a qualified opinion for 2018 due to uncertainties regarding accounts receivable from the drama "Tianxia Chang'an" [5][6]. - The company recognized a bad debt provision of 293.61 million RMB to address the issues raised in the audit [6][7]. Compensation Calculation - The total shortfall in performance commitments over the three years amounted to 246.686 million RMB, leading to a required compensation of 11.55662 million shares [10][11]. - The calculated compensation value based on the share price of 7.66 RMB per share exceeds the impairment amount determined for Huanrui Film, resulting in no cash compensation required from the original shareholders [11]. Verification Opinion - Chengtong Securities concluded that Huanrui Film did not fulfill its performance commitments, necessitating compensation as per the agreements [11][12]. - The company is advised to ensure that the performance commitment parties fulfill their obligations in a timely manner to protect the interests of the company and its investors [13].