Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
China Environmental Technology Holdings Limited(incorporated in the Cayman Islands with limited liability)
(Stock Code: 646)
Discloseable transaction in relation to
the disposal of a subsidiary of the Company
On 21 February 2012 (after trading hours), Yardway
Development (a wholly owned subsidiary of the Company, as
vendor), the Purchaser and the Guarantor entered into the
Disposal Agreement. Pursuant to the Disposal Agreement, the
Group has agreed to sell (i) the entire issued share capital
in Targetco (a wholly owned subsidiary of the Company held
through Yardway Development Limited), and (ii) the Sale Debts
at the Purchase Price in the total sum of HK$500,000. Under
the same agreement, the Guarantor has agreed to guarantee the
performance of the Purchaser's obligations under the Disposal
Agreement.
Under the Disposal Agreement, it has also been agreed that
Yardway Development will be paid by Targetco the Relevant
Supply Incentive of HK$1,248,000 (subject to downward
adjustment in the event of the final total contract sum for
the Relevant Supply Contract being less than a prescribed
amount), subject to the Relevant Supply Contract for the sale
of certain dredging equipment being entered into between
Targetco and a designated customer. The Relevant Supply
Incentive does not form part of the Purchase Price in
connection with the Disposal.
As the applicable percentage ratios (within the meaning of
the Listing Rules) for the Disposal Agreement (taking into
account the aggregate value of the Purchaser Price and
Relevant Supply Incentive) exceed 5% but are less than 25%,
the Disposal Agreement constitutes a discloseable transaction
for the Company under the Listing Rules.
THE DISPOSAL AGREEMENT
Principal terms of the Disposal Agreement
The principal terms of the Disposal Agreement are summarised
below:
Date: 21 February 2012
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Parties to the Disposal Agreement:
Vendor: Yardway Development, a wholly owned subsidiary of the
Company
Purchaser: the Purchaser, which is owned by the Guarantor and
his family relative
Guarantor: a director and a shareholder of the Purchaser
The Purchaser has been principally engaged in the business of
providing machining, casting, forging, fabrication, import
and export services, and has been a supplier of certain
equipment to the Group. To the best of the Directors'
knowledge and belief, after having made all reasonable
enquiries, except for the Purchaser being a supplier of the
Group, each of the Guarantor, the Purchaser and its ultimate
beneficial owners is an Independent Third Party and not a
connected person of the Company.
Under the Disposal Agreement, the Guarantor has agreed to
guarantee the performance of the
Purchaser's obligations under the Disposal Agreement.
Subject matter to be disposed of under the Disposal
Agreement
Under the Disposal Agreement, the Vendor has agreed to sell
and the Purchaser has agreed to buy (i) the Sale Shares, and
(ii) the Sale Debts, at the Purchase Price in the total sum
of HK$500,000, subject to the terms and conditions as set out
in the Disposal Agreement. Upon completion of the Disposal,
Targetco will cease to be a subsidiary of the Company.
The information regarding Targetco is set out in the
paragraph headed ''Information of the
Group and Reasons for the Disposal'' below.
Payment arrangement
Under the Disposal Agreement, HK$500,000 is payable as a
deposit (''Deposit'') to the
Purchaser within three Business Days from the date of signing
of the Disposal Agreement.
If Completion does not take place as a result of or in
connection with the default on the part of the Purchaser, the
Deposit in its entirety shall be forfeited by the Vendor. On
the other hand, if Completion does not take place as a result
of or in connection with the default on the part of the
Vendor, while there is not any default on the part of the
Purchaser, the Vendor shall return the Deposit to the
Purchaser and indemnify the Purchaser in respect of all fees,
costs and expenses incurred by the Purchaser in connection
with the transaction contemplated under the Disposal
Agreement up to a maximum amount equal to the Deposit.
Basis of determining the Purchase Price
The Purchase Price was determined after arm length's
negotiation between the Vendor and the Purchaser, having
regard to net asset value of Targetco as at 31 December 2011
which is approximately HK$3,250,000, and taking into account
of dividends of HK$3,000,000 to be declared at 31 January
2012 by Targetco to the Vendor.
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Closing conditions of the Disposal Agreement and
Completion
Under the Disposal Agreement, the Completion shall take place
upon all the following conditions being fulfilled:
(i) the compliance by the Company of (or, as the case may be,
obtaining of waiver from) any requirement under the Listing
Rules (including without limitation the obtaining of the
approval from independent shareholders in general meeting) as
may be applicable in connection with the Disposal Agreement
and the transactions contemplated under the Disposal
Agreement; and
(ii) if required, all approvals, consents, authorisations and
licences (so far as are necessary) in relation to the
transactions contemplated under the Disposal Agreement having
been obtained from the relevant parties.
If any of the above conditions are not fulfilled (or, as the
case may be, waived by the Purchaser (except that the above
condition (i) is not waivable) pursuant to the Disposal
Agreement) at or before 5 : 00 p.m. on 31 March 2012 (or such
later date as the parties to the Disposal Agreement may
agree), the Disposal Agreement shall cease and terminate and
none of the parties to the agreement shall have any
obligations and liabilities thereunder save for any
antecedent breaches.
Other major terms under the Disposal Agreement
Under the Disposal Agreement, it has been agreed between the
Purchaser and the Vendor that the Relevant Supply Incentive
shall be payable to the Vendor by Targetco for its
contribution in procuring the conclusion of the Relevant
Supply Contract. The Relevant Supply Incentive is stated to
be a sum of HK$1,248,000 (which is determined based on
certain prescribed percentage of the gross profit to be
earned by Targetco under the Relevant Supply Contract, and
subject to downward adjustment in the event of the final
total contract sum for the Relevant Supply Contract being
less than a prescribed amount). Payment of such Relevant
Supply Incentive shall be in the following manner: -
(i) a sum of HK$624,000 shall be payable by Targetco to the
Vendor within 10 business days after the Targetco receiving
the down-payment for the first lot of the dredging equipment
agreed to be supplied under the Relevant Supply Contract;
and
(ii) the remaining balance of the Relevant Supply Incentive
shall be payable within 10 business days after the Targetco
receiving the down-payment for the second lot of the dredging
equipments to be supplied under the Relevant Supply
Contract.
Information on the Group and Targetco and reasons for the
Disposal Agreement
The Group's principal businesses include trading of vehicles,
machinery, equipment; environmental protection technology,
equipment system integration, sewage treatment in urban
areas, project technical service and licensing of related
environmental protection technical know-how.
Targetco has been engaged in the business of trading and
manufacturing of dredging equipment, components and provision
for related services. Targetco accounted for about 7.1% of
the Group's turnover for year ended 31 March 2011. The
unaudited net asset value of Targetco as at 31 December 2011
amounted to about HK$3.25 million. The gain expected to
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accrue to the Company on the Disposal is about HK$250,000,
which is equal to the difference between the said unaudited
net asset value and the Purchase Price. The net profits
(losses) of Targetco for the each of the two years ended 31
March 2011 are shown below:
(HK$)
For the year ended
31 March 2011
For the year ended
31 March 2010
(rounded to the nearest thousand) (Audited) (Audited)
Net profit (loss) before taxation and
extraordinary items (376,000) 2,624,000
Net profit (loss) after taxation and extraordinary
items (376,000) 2,283,000
Following the Group's acquisition of Fanhe (Beijing) Water
Investment Co., Ltd. in April
2010 (as disclosed in the Company's announcement dated 12
April 2010), the Group has begun to diversify its business
into environmental protection, sewage treatment and water
purification technology. The business of trading of dredging
equipment remains stagnant and does not provide significant
contribution to the Group's turnover. In addition, a key
management of Targetco retired in December 2011. As it is
difficult for the Group to identify a suitable successor to
him, the Group has decided to wind-down this line of
business. The disposal of Targetco would enable the Group to
exit its non-core business and focus on its emerging core
business. The proceeds arising from the Disposal will be
applied towards the Group's working capital.
In view of the above, the Directors believe the disposal of
Targetco would enable the Group to free up resources (in
particular, management as well as financial resources) and
focus on its emerging business of environmental protection
and sewage treatment. Accordingly, the Directors (including
all the independent non-executive Directors) consider that
the disposal of Targetco is beneficial to the Company and its
shareholders as a whole.
The Directors (including the independent non-executive
Directors) also consider that the terms of the Disposal
Agreement and the Purchase Price are fair and reasonable and
are in the interest of the Company and its shareholders as a
whole.
Upon completion, Targetco will cease to be a subsidiary of
the Company. Its financial results will not be consolidated
into the Group's financial statements after the
Completion.
LISTING RULES IMPLICATIONS
As the applicable percentage ratios (within the meaning of
the Listing Rules) for the Disposal Agreement (taking into
account the aggregate value of the Purchaser Price and the
Relevant Supply Incentive) exceed 5% but are less than 25%,
the Disposal Agreement constitutes a discloseable transaction
for the Company under the Listing Rules.
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DEFINITIONS
In this announcement, the following terms shall have the
meanings set out below, unless the context requires
otherwise:
''associate(s)'' has the meaning ascribed to it under the
Listing Rules
''Board'' the board of Directors of the Company
''Business Day'' a day (other than a Saturday) on which banks
are open for business in
Hong Kong
''Company'' China Environmental Technology Holdings Limited,
a company incorporated in the Cayman Islands with limited
liability and the issued Shares of which are listed on the
main board of the Stock Exchange
''Completion'' completion of the Disposal
''connected
person(s)''
has the meaning ascribed to it under the Listing Rules
''Directors'' the directors of the Company
''Disposal'' the disposal of the Sale Shares and Sale Debts
by the Vendor to the
Purchaser
''Disposal
Agreement''
the sale and purchase agreement dated 21 February 2012 and
entered into between Yardway Development (as vendor), the
Purchaser (as purchaser) and the Guarantor (as guarantor of
the Purchaser) in relation to the Disposal
''Group'' collectively, the Company and its subsidiaries
''Guarantor'' an individual person who is a shareholder and a
director of the Purchaser and is also the guarantor under the
Disposal Agreement, and who is an Independent Third Party
''HK$'' Hong Kong Dollar, the lawful currency of Hong
Kong
''Hong Kong'' Hong Kong Special Administrative Region of the
PRC
''Independent Third
Party''
a person who, to the best of the Directors' knowledge and
belief, information and belief having made all reasonable
enquiries, is not a connected person of the Company and is a
third party independent of and not connected with the Company
and its subsidiaries and its connected persons
''Listing Rules'' the Rules Governing the Listing of
Securities on the Stock Exchange
''PRC'' or ''China'' the People's Republic of China
''Purchase Price'' HK$500,000, being the aggregate purchase
price of the Disposal
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''Purchaser'' a private company incorporated in Hong Kong
with limited liability (which is owned by the Guarantor and
his family relative), being the purchaser under the Disposal
Agreement and an Independent Third Party (other than being a
supplier of certain equipment to the Group)
''Relevant Supply
Contract''
a contract dated 20 February 2012 and made between Targetco
and a designated customer in connection with the supply of
certain dredging equipment by Targetco to such customer
''Relevant Supply
Incentive''
an amount of not more than HK$1,248,000, which is
conditionally payable by Targetco to the Vendor in respect of
the Relevant Supply Contract
''Sale Debts'' the outstanding loan (if any) payable by
Targetco to its shareholder (i.e. the Vendor) at Completion,
except for those arising under the Relevant Supply Contract
or any dividend declared by Targetco to the Vendor but not
yet paid
''Sale Shares'' the entire issued share capital of Targetco,
being 10,000 ordinary shares in Targetco
''Targetco'' Yardway Dredging Equipment Limited, a company
incorporated in Hong Kong with limited liability and a wholly
owned subsidiary of the Company held indirectly through
Yardway Development, being the vendor under the Disposal
Agreement
''Vendor'' or
''Yardway
Development''
Yardway Development Limited, a company incorporated in the
British Virgin Islands with limited liability and a wholly
owned subsidiary of the Company
By order of the Board
China Environmental Technology Holdings Limited
XU Zhong Ping
Chairman
Hong Kong, 21 February 2012
As at the date of this announcement, the executive Directors
are Mr. Xu Zhong Ping, Mr. Zhang Fang Hong, Ms. Song Xuan and
Mr. Xu Xiao Yang; the non-executive Directors are Mr. Ge Ze
Min, Mr. Fong Sai Mo and Mr. Xin Luo Lin; and the independent
non-executive Directors are Mr. Wong Kam Wah, Dr. Zhu Nan Wen
and Professor Zuo Jiane.
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