Recently, sapace released a plan to purchase the matter caused people’s attention! The operating cash flow of the acquisition target decreased significantly, and the revenue forecast declined significantly. What’s more, many problems such as the land use right and the house ownership right have not obtained the property right certificate have also been inquired by the regulatory authorities. On September 30, sapace received the inquiry letter on the acquisition of assets from related parties by Zhejiang sapace Pharmaceutical Co., Ltd. issued by Shanghai Stock Exchange, requiring the company to make supplementary disclosure on the synergy effect and integration difficulty between the target company’s business and existing business, and whether the payment arrangement of the transaction consideration has caused capital pressure on the normal production and operation of the company. On September 30, sapace announced that it planned to acquire the equity of Taizhou women’s and children’s Hospital Co., Ltd. (hereinafter referred to as “Taizhou hospital”) jointly held by Shanghai Yuxie Medical Management Co., Ltd. (hereinafter referred to as “Yuxie management”) and Shanghai Xiehe Hospital Investment Management Co., Ltd. (hereinafter referred to as “Xiehe investment”), and the transaction price of the underlying assets was 502 million yuan. Because the management of Chongqing Association is directly controlled by Lin Hongli and Lin Hongyuan, the actual controllers of sapace, Xiehe investment is that Lin Hongli and Lin Hongyuan brothers indirectly control the company through Chongqing Association Management. This transaction constitutes a connected transaction. < p > < p > according to the data, Taizhou Hospital of the target company is a class II class a specialized hospital, with 300 approved beds and 250 actual beds. It has more than 20 medical and technical departments such as Gynecology, obstetrics, pediatrics and infertility department. The Shanghai stock exchange requires supplementary disclosure of the market competition pattern and main competitors of the target company in the subdivided field, and compares and analyzes the industry status and core competitiveness of the target company in combination with the business scale, human resources, business qualification, etc., and explains the synergy effect and integration difficulty between the target company’s business and the existing business, and whether there are other control and management risks And the company’s response measures. < / P > < p > in addition, according to the announcement, the valuation of this transaction is based on the income method evaluation value of the total equity value of the shareholders of the appraised unit, and the transaction price is 502 million yuan. Compared with the book value of 132 million yuan of the parent owner’s equity in the consolidated statements, the value-added rate is 279%, and the difference rate with the asset-based method of 98.0033 million yuan is 412%. According to the appraisal report, the impairment rate of intangible assets is 36%. < p > < p > the Shanghai stock exchange requires supplementary disclosure of the specific calculation process of the income method, as well as the selection and basis of the main prediction parameters, including but not limited to the number of patients, medical expenses, service costs and expenses, discount rate, etc., and explain the differences and reasons with historical data; analyze and explain the main reasons and rationality of the impairment of intangible assets under the asset-based method; and The former capital status indicates whether the payment arrangement of consideration of this transaction involves new financing, and whether it causes capital pressure on the normal production and operation of the company. < / P > < p > let’s take a look at the operation status of Taizhou hospital? According to the audit report and profit forecast report, Taizhou hospital will achieve an operating income of 84.0104 million yuan and a net cash outflow of 11.9386 million yuan from January to July 2020. On a pro rata basis, the annual operating revenue of 2020 will decrease by about 16% compared with that in 2019, and the annual operating revenue predicted by profit will decrease by about 15% year on year, while the predicted net profit will increase by 8%. In addition, the actual decrease of sales and management expenses from January to July in 2020 is far more than that of revenue. The prediction of relevant expenses in the profit forecast basically continues the downward trend. In 2020, the predicted sales and administrative expenses will decrease by 44% and 30% respectively year-on-year. < p > < p > the Shanghai stock exchange requires supplementary disclosure of the main reasons for the decline of operating income and the significant decrease of operating cash flow in the current period; combining with the specific composition of expenses, it explains the main reasons for the sharp decrease of sales and management expenses in the current period, and whether it is sustainable; further analyzes the reasons for the increase of predicted net profit in the case of a year-on-year decline of operating revenue In order to predict the impact of the decrease in costs, and explain the rationality. < / P > < p > according to the announcement, performance compensation clause has been added to the transaction. The management of Chongqing Association, Xiehe investment and its actual controller promise that the net profit of Taizhou hospital in 2020, 2021 and 2022 will not be less than 31.085 million yuan, 37.785 million yuan and 41.13 million yuan, and the accumulated net profit will not be less than 110 million yuan. Based on this calculation, if we want to complete the performance commitment in the next three years, we need to achieve a profit growth rate of 10% – 20% per year; if the performance commitment is not completed, the company will face a large amount of goodwill impairment risk. < p > < p > the Shanghai stock exchange requires to clarify whether the above net profit is deducted from the non recurring profit and loss, and explain the reasons and rationality; in combination with the payment method, performance commitment and compensation of this transaction, it is necessary to explain whether the relevant arrangements are conducive to safeguarding the interests of listed companies. According to the public data, sapace is a comprehensive pharmaceutical enterprise specializing in drug R & D, production and operation, which was successfully listed on the A-share main board of Shanghai Stock Exchange on July 2, 2014. The main product, sapace eye drops, once enjoyed great popularity. < / P > < p > < p > however, when things are at their best, they will decline? At the end of 2017, Dr. clove set off public opinion with an article entitled “crazy sales of 750 million brain washing drugs a year, please let go of the elderly in China”. The article pointed out that there were some problems in sapace, such as exaggerating the curative effect, mistaking that cataract can be cured without surgery, and misleading consumers to use super indications with symptoms instead of diseases. < p > < p > it is understood that the indication of sapace eye drops is “early senile cataract”, but it blurs the word “early” in advertising, which can prevent and treat cataract. It also lists the symptoms of cataract, and there is the phenomenon of replacing diseases with symptoms. Since then, the State Food and Drug Administration issued a notice requiring the reassessment of sapace eye drops, and Zhejiang food and drug administration also required the self-examination of the advertisements of sapace eye drops. Sapace’s utility model patent of “disposable single dose medical low density polyethylene eye drops bottle” was declared invalid. < / P > < p > since the “Shenyao” storm in 2017, the company’s performance began to decline significantly. As the pillar of the company’s revenue, the sales of eye drops were hindered. In 2018, the sales volume of eye drops decreased by 51.51% year-on-year, and the operating income brought about by the company also decreased by 52.58% to 325 million yuan. During the reporting period, the revenue of eye drops business decreased to 53.5%. Although the company turns losses into profits in 2019, the net profit after deducting non-profit is still nearly 40 million yuan. In the first half of this year, the company’s net profit receivable was even lower. Compared with the same period, accounts receivable nearly cut back, net profit fell 156%. On the evening of February 26 this year, the controlling shareholder and actual controller Chen Dekang signed the share transfer agreement with Shanghai Yanghe Medical Management Co., Ltd. (hereinafter referred to as “Yihe medical”) which is a wholly-owned subsidiary of Shanghai Yanghe Investment Management Co., Ltd. (hereinafter referred to as “Yihe medical”), Chen Dekang plans to transfer 23365577 shares of the company, accounting for 7.24% of the total share capital of the company, to Yihe medical. At the same time, Chen Dekang signed the letter of commitment to relinquish voting rights, promising to irrevocably relinquish his voting rights over the remaining 7009667100 shares of the company (accounting for 21.73% of the total share capital of the company). Meanwhile, according to the share transfer agreement, Chen Dekang will transfer 17524167 shares of the company (5.43% of the total share capital of the company) to Yihe medical or its designated transferee in 2021. < / P > < p > finally, it is worth mentioning that the phase II project of Taizhou Hospital of the subject company has not been constructed yet, and the real estate ownership certificate shall be handled after the completion. Therefore, the land use right and house ownership of Taizhou hospital currently owned by Taizhou hospital have not obtained the property right certificate, and the transaction party and its actual controller promise to bear the compensation liability for the losses caused. According to the audit and evaluation report, the book value of intangible assets of Taizhou hospital at the end of the period is 129 million yuan, accounting for 68% of the total assets. All of them are land use rights, with a total of 28900 square meters, including 17500 square meters of undeveloped land. The Shanghai stock exchange requires to state the estimated time for the relevant land and real estate to obtain the title certificate, whether there are substantial obstacles, whether the future production and operation of the target company are affected, and how to define the scope of compensation for relevant losses. < / P > < p > Disclaimer: the purpose of this article reprinted by china.com finance and economics is to convey more information and does not represent the views and positions of the website. The content of this paper is for reference only and does not constitute investment advice. Investors operate accordingly and bear their own risks. < p > < p > Chinanet is a national key news website under the leadership of the Information Office of the State Council and managed by China foreign language publishing and Distribution Bureau. 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