CH GENERAL EDU (02175.HK): Target Company Unlikely to Meet 2026 Net Profit Target; Agreement in Principle to Reduce Acquisition Consideration
NewTimeSpace News: On 21 August 2026, China General Education Group Limited (02175.HK) published an update on its discloseable transaction regarding the acquisition of the target company. According to the announcements dated 6 November 2025 and 19 December 2025, full settlement of the second instalment payment is subject to the satisfaction of several conditions, including the target company achieving net profit attributable to parent shareholders (after deducting non-recurring items) of no less than RMB 26,000,000 for fiscal year 2026 (the year ending 31 August 2026) (the "2026 net profit target"), to be confirmed by the company's auditors in the target company's FY2026 audit report.
Based on a preliminary review of the target company's unaudited management accounts for the period from 1 September 2025 to 31 July 2026 (the latest practicable date), and the latest operating and financial information currently available to the company, the target company is unlikely to achieve the 2026 net profit target. This assessment is preliminary in nature; the target company's actual financial results for FY2026 remain subject to the conclusion of the fiscal year and completion of the audit.
In light of the above, and following the company's further assessment of the target company's financial performance and the valuation assumptions underlying the acquisition, the company and the seller have agreed in principle that it is appropriate to reduce the consideration. The company intends to negotiate with the relevant seller on the amount of the proposed adjustment and the corresponding amendments to the payment arrangements under the equity purchase agreement. As of the announcement date, no binding agreement has been entered into, and the proposed adjustment remains subject to further negotiation among the parties.
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