Explanation on the Impact of the Transaction on Diluted Earnings Per Share and Measures to Compensate for Diluted Returns
Shaoyang Vic Hydraulic Co., Ltd. (hereinafter referred to as "the Company" or "the Listed Company") intends to acquire 100.00% of the shares of Chongqing New Cheng Hang Rui Technology Co., Ltd. (hereinafter referred to as "the Target Company") by issuing shares and paying cash, and to raise supporting funds (hereinafter referred to as "the Transaction").
In accordance with the "Opinions of the General Office of the State Council on Further Strengthening the Protection of the Legal Rights and Interests of Small and Medium Investors in the Capital Market" (Guo Ban Fa [2013] No. 110), the "Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market" (Guo Fa [2014] No. 17), and the "Guiding Opinions on Matters Concerning the Dilution of Earnings Per Share from Initial Public Offerings, Refinancing, and Major Asset Restructurings" (CSRC Announcement [2015] No. 31), and other relevant regulations, to protect the right to information and the interests of small and medium investors, the Company's Board of Directors hereby explains the impact of the Transaction on the dilution of immediate returns and the measures to prevent and compensate for such dilution:
I. Impact of the Transaction on Current Earnings Per Share
According to the Company's financial statements and the "Review Report on Pro Forma Financial Statements of Shaoyang Vic Hydraulic Co., Ltd." (Zhonghuan Review Zi [2026] No. 1100002) issued by Zhonghuan Certified Public Accountants (Special General Partnership) (hereinafter referred to as the "Pro Forma Review Report"), the Company's main financial data before and after the Transaction, excluding the raised supporting funds, is as follows:
| Project | 2025/12/31 / 2025 Annual | 2024/12/31 / 2024 Annual |
|---|---|---|
| Before Transaction | Pro Forma | |
| Basic Earnings Per Share (RMB/share) | 0.05 | 0.25 |
| Diluted Earnings Per Share (RMB/share) | 0.05 | 0.25 |
Upon completion of the Transaction, New Cheng Hang Rui will become a wholly-owned subsidiary of the Listed Company. The Listed Company's total assets, operating income, and net assets attributable to shareholders of the parent company will be significantly increased. Before the Transaction, the Listed Company's basic earnings per share in 2024 and 2025 were RMB 0.06/share and RMB 0.05/share, respectively, which will increase to RMB 0.14/share and RMB 0.25/share after the Transaction.