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. This announcement is
for information purposes only and does not constitute an invitation or offer to acquire, purchase or
subscribe for the shares of the Company.
(a joint stock company incorporated in the People’s Republic of China with limited liability)
(Stock code: 01893)
DISCLOSEABLE TRANSACTIONS
ACQUISITION OF 100% EQUITY INTEREST IN ANHUI JIEYUAN
AND
DEEMED DISPOSAL OF
EQUITY INTEREST IN SINOMA INTERNATIONAL
THE ASSET RESTRUCTURING
Sinoma International, a subsidiary of the Company, resolved to enter into the Asset Purchase
Agreement with the Vendors, pursuant to which, Sinoma International has agreed to acquire and
the Vendors have agreed to sell 100% equity interest in Anhui Jieyuan on 29 May 2015. The
aggregate consideration for the Asset Restructuring is RMB1,007,470,100, which shall be satisfied
by the issuance of 76,208,025 Consideration Shares by Sinoma International at an issue price of
RMB13.22 per Consideration Share to the Vendors.
ISSUANCE OF THE SUBSCRIPTION SHARES
Sinoma International resolved to issue no more than 64,516,129 Subscription Shares for raising a
maximum raised funds of RMB1,000,000,000 in aggregate by way of non-public offer.
HONG KONG LISTING RULES IMPLICATIONS
The Directors confirm that to the best of their knowledge, information and belief, having made all
reasonable enquiries, the Vendors and the investors to the Subscription Shares as well as their
ultimate beneficial owner(s) are third parties independent of the Company and its connected
persons.
The acquisition of the 100% equity interest in Anhui Jieyuan by Sinoma International pursuant to
the Asset Purchase Agreement constitutes an acquisition under Chapter 14 of the Hong Kong
Listing Rules.
- 1 -
As at the date of this announcement, the Company holds 42.46% equity interest in Sinoma
International. Following the completion of the issuance of the Consideration Shares, the equity
interest of the Company in Sinoma International will be diluted. Such dilution of the Company’s
equity interest in Sinoma International constitutes a deemed disposal of the Company’s equity
interest in Sinoma International under Chapter 14 of the Hong Kong Listing Rules.
Following the completion of the issuance of the Subscription Shares, the equity interest of the
Company in Sinoma International will be diluted. Such dilution of the Company’s equity interest
in Sinoma International constitutes a deemed disposal of the Company’s equity interest in Sinoma
International under Chapter 14 of the Hong Kong Listing Rules.
As the applicable percentage ratios (as defined under Rule 14.07 of the Hong Kong Listing Rules)
exceed 5% but are less than 25%, the acquisition contemplated under Asset Purchase Agreement
and the deemed disposal due to the issuance of the Consideration Shares and the Subscription
Shares (aggregated as required by Rule 14.22 of the Hong Kong Listing Rules) each constitutes a
discloseable transaction for the purposes of, and are subject to the reporting and announcement
requirements under, Chapter 14 of the Hong Kong Listing Rules, but is exempted from the
requirement of shareholders’ approval, pursuant to Chapter 14 of the Hong Kong Listing Rules.
Save as disclosed above, there is no other transactions which would be, together with the
aforesaid transactions, aggregated under Rule 14.22 of the Hong Kong Listing Rules.
As the issuance of the Consideration Shares and the issuance of the Subscription Shares are
subject to the approval of the CSRC, the SASAC and the shareholders’ meeting of Sinoma
International, respectively, and may or may not proceed, Shareholders and potential
investors are reminded to exercise caution in dealing in the securities of the Company.
INTRODUCTION
The Board is pleased to announce that, Sinoma International, a subsidiary of the Company, resolved
to pass the resolution in relation to the following matters:
(i)
the Asset Restructuring, namely entering into the Asset Purchase Agreement with the Vendors
on 29 May 2015, pursuant to which, Sinoma International has agreed to acquire and the
Vendors have agreed to sell 100% equity interest in Anhui Jieyuan, the consideration for which
shall be satisfied by the issuance of 76,208,025 Consideration Shares; and
(ii)
the proposed issuance of no more than 64,516,129 Subscription Shares for raising a maximum
raised funds of RMB1,000,000,000 in aggregate by way of non-public offer.
The successful implementation of the Asset Restructuring is the precondition of the issuance of the
Subscription Shares, whereas whether successful or not, the issuance of Subscription Shares will not
influence the implementation of the Asset Restructuring.
- 2 -
THE ASSET RESTRUCTURING
The Asset Restructuring is contemplated under the Asset Purchase Agreement, the major terms of
which are as follows:
Date:
29 May 2015
Parties:
(i)
Sinoma International
(ii)
The Vendors
Assets to be acquired
Subject to the terms and conditions of the Asset Purchase Agreement, Sinoma International has
agreed to acquire and the Vendors have agreed to sell the 100% of the equity interest in Anhui
Jieyuan free from charges, encumbrances and third party rights.
Consideration
The aggregate consideration for the Asset Restructuring is RMB1,007,470,100, which shall be
satisfied by the issuance of 76,208,025 Consideration Shares by Sinoma International at an issue price
of RMB13.22 per Consideration Share to the Vendors.
Basis of the Consideration
The consideration was determined by Sinoma International and the Vendors after arm’s length
negotiations by taking into account, among other factors, the appraised value of Anhui Jieyuan’s
entire equity interest of RMB977,470,100 as at the Valuation Date and the capital injection by Anhui
Guoyao Venture Investment Co., Ltd., one of the Vendors, amounted to RMB30,000,000 after the
Valuation Date. The appraisal was prepared by the Independent Valuer based on, among others,
income approach, which involves the calculation of discounted cash flow.
Therefore, such valuation is regarded as a profit forecast of Anhui Jieyuan under Rule 14.61 of the
Hong Kong Listing Rules and the Company has fully complied with Rule 14.60A and Rule 14.62 of
the Hong Kong Listing Rules. The reporting accountants of the Company, SHINEWING (HK) CPA
Limited, have confirmed that they have reviewed the accounting policies and calculations for the
forecast contained in the Valuation Report. The Directors have also confirmed that the profit forecast
has been made after due and careful enquiry. To the best of the Directors’ knowledge, information
and belief, having made all reasonable enquiry, the Independent Valuer is a third party independent of
the Group and its connected persons. The details of the principal assumptions, including commercial
assumptions, upon which the Valuation Report were based and the letters of comfort from
SHINEWING (HK) CPA Limited and the Board respectively in relation to the profit forecast of
Anhui Jieyuan are set out in the Appendix I and the Appendix II, respectively, to this announcement.
- 3 -
Issuance of the Consideration Shares
Pursuant to the Asset Purchase Agreement, Sinoma International shall issue 76,208,025 Consideration
Shares to the Vendors by way of non-public offer to satisfy the consideration thereunder at an issue
price of RMB13.22 per Consideration Share, being not lower than the average trading price per A
share of Sinoma International quoted on the Shanghai Stock Exchange for the past consecutive 120
trading days immediately preceding the benchmark date of 29 May 2015 and being deducted by the
final dividend (RMB0.041 per share) declared or implemented by Sinoma International for the year
2014.
The issue price of each Consideration Share shall be adjusted accordingly in cases of ex-rights or exdividend (excluding the final dividend for the year 2014) with respect to Sinoma International during
the period between the benchmark date of 29 May 2015 and the date on which Consideration Shares
are issued.
The maximum of 76,208,025 Consideration Shares represent approximately 6.97% of the issued share
capital of Sinoma International as at the date of this announcement and approximately 6.52% of the
issued share capital of Sinoma International as enlarged by the issuance of the Consideration Shares.
Pursuant to the Asset Purchase Agreement, (i) the Consideration Shares acquired by Xu Xidong are
subject to a lock-up period of 36 months from the date of registration of the Consideration Shares
under his name, and are transferable only after the fulfillment of his compensation undertaking
pursuant to the Compensation Agreement (excluding the Consideration Shares to be purchased
pursuant to the Compensation Agreement); (ii) the Consideration Shares acquired by Anhui Guoyao
Venture Investment Co., Ltd. are subject to a lock-up period of 36 months from the date of
registration of the Consideration Shares under its name; and (iii) 80% the Consideration Shares
acquired by Xuan Hong, Zhang Ximing, Zhang Ping, Jiang Guirong, Anhui Haihe New Energy
Investment Co., Ltd., and Wuhu Henghai Investment Center (Limited Partnership) are subject to a
lock-up period of 12 months, and the other 20% of the Consideration Shares acquired by them are
subject to a lock-up period of 36 months from the date of registration of the Consideration Shares
under their names and are transferable only after the fulfillment of their compensation undertaking
pursuant to the Compensation Agreement, except for the Consideration Shares to be repurchased
pursuant to the Compensation Agreement. After the expiry of the said lock-up periods, the transfer of
Consideration Shares shall be governed by the relevant regulations of the CSRC and the Shanghai
Stock Exchange.
Compensation undertaking
Sinoma International and the Compensation Covenanters have, through consultations, entered into the
Compensation Agreement on 29 May 2015 and agreed that the accumulated net profit attributable to
the parent company of Anhui Jieyuan for the three years ending 31 December 2017 shall not be less
than RMB300,000,000 (the “Accumulated Forecasted Net Profit”), failing which performance
compensation shall be made by the Compensation Covenanters to Sinoma International.
- 4 -
In the event that the actual net profit attributable to the parent company of Anhui Jieyuan for the
three years ending 31 December 2017 (the “Accumulated Actual Net Profit”) is less than the
Accumulated Forecasted Net Profit, Sinoma International shall notify the Compensation Covenanters
in written form of the fact and claim for compensation by the Compensation Covenanters with shares
as priority and cash as supplement.
The calculation method of the aforesaid compensation is as follows:
(a). if the audited Accumulated Actual Net Profit is less than the Accumulated Forecasted Net
Profit, the Compensation Covenanters shall make compensation with shares. The total
compensation share amount is:
Total compensation share amount =
Accumulated Forecasted Net Profit – Accumulated Actual Net Profit
× 76,208,025
(Note 1)
Accumulated Forecasted Net Profit
(b). the respective compensation share amount of each of the Compensation Covenanters is as
follows:
Compensation share amount
=
Total compensation share amount
×
Capital Contribution(Note
2)
RMB60,000,000
(c). Compensation Covenanters (excluding Xu Xidong) shall satisfy the performance compensation
with the shares of Sinoma International they have acquired, within the limit of 20%, while Xu
Xidong shall satisfy the performance compensation with all the shares of Sinoma International
he has acquired. In case that the respective compensation share amount of each Compensation
Covenanter (excluding Xu Xidong) does not suffice, Xu Xidong has agreed to compensate with
shares. If the compensation with shares by Xu Xidong does not suffice, Xu Xidong shall
compensate with cash, which is calculated as follows:
Cash compensation by Xu Xidong
=
(Total Compensation Shares Amount – 43,554,410(Note
3)
)
×
RMB13.22
Notes:
1.
The total number of the Consideration Shares is 76,208,025.
2.
The respective capital contribution in Anhui s attributable to each of the Compensation Covenanters as at
the execution date of the Compensation Agreement, being 29 May 2015.
3.
The Compensation Covenanters have undertaken to make compensation with a maximum of 43,554,410
Consideration Shares in aggregate in respect of the Asset Restructuring.
- 5 -
Conditions precedent
The Asset Purchase Agreement shall become effective upon the satisfaction of the following
conditions:
(a). the approval of all the matters relevant to the Asset Restructuring by the board of directors of
Sinoma International at a board meeting of Sinoma International;
(b). the obtaining of approvals from the SASAC in relation to the Asset Restructuring;
(c). the approval of all the matters relevant to the Asset Restructuring by the shareholders of Sinoma
International at a general meeting of Sinoma International; and
(d). the obtaining of examination and approval from the CSRC in relation to the Asset
Restructuring.
Completion
Pursuant to the Asset Purchase Agreement, Sinoma International and the Vendors agreed to start the
closing procedures in respect of all the equity interest in Anhui Jieyuan held by the Vendors within 7
days and to fully complete the procedures within 60 days upon the CSRC’s approval of the Asset
Restructuring.
Effects on the Shareholding Structure of Sinoma International Arising from the Issuance of
Consideration Shares
The table below sets out the shareholding structure of Sinoma International before and after the
completion of the issuance of the Consideration Shares (assuming that 76,208,025 Consideration
Shares will be fully issued and there is no other change in the issued share capital of Sinoma
International):
Immediately after completion of
the issuance of
the Consideration Shares
Approximate
Number of
% of
Shares
shareholding
Name of shareholders of
Sinoma International
As at the date of
this announcement
Approximate
Number of
% of
Shares
shareholding
The Company
Other shareholders
The Vendors
464,263,219
629,034,041
0
42.46%
57.54%
0%
464,263,219
629,034,041
76,208,025
39.70%
53.79%
6.52%
1,093,297,260
100%
1,169,505,285
100%
Total
- 6 -
ISSUANCE OF THE SUBSCRIPTION SHARES
Issuance of the Subscription Shares
Sinoma International also resolved to issue by way of non-public offer not more than 64,516,129
Subscription Shares to not more than ten designated investors at the issue price of no less than
RMB15.50 per Subscription Share to raise a maximum raised funds of RMB1,000,000,000. The
64,516,129 Subscription Shares represent approximately 5.90% of the issued share capital of Sinoma
International as at the date of this announcement and approximately 5.23% of the issued share capital
of Sinoma International as enlarged by the issuance of the Consideration Shares and Subscription
Shares.
The minimum issue price of each Subscription Share is RMB15.50, being not lower than 90% of the
average trading price per A share quoted on the Shanghai Stock Exchange for the past consecutive 20
trading days immediately preceding the bench mark date of 29 May 2015 and being deducted by the
final dividend (RMB0.041 per share) declared or implemented by Sinoma International for the year
2014. The issue price of each Subscription Share shall be adjusted accordingly in cases of ex-rights or
ex-dividend (excluding the final dividend for the year 2014) with respect to Sinoma International
during the period between the benchmark date of 29 May 2015 and the date on which Subscription
Shares are issued.
The proceeds to be raised from the issuance of Subscription Shares will be used by Sinoma
International for the repayment of short-term financing bills and the construction of “One Belt and
One Road” project and energy conservation and environmental protection project, etc.
The Subscription Shares are not transferable for a period of 12 months commencing from the
completion date of the issuance. After the expiry of the said lock-up period, the transfer of
Subscription Shares shall be governed by the relevant regulations of the CSRC and the Shanghai
Stock Exchange.
Conditions Precedent
The preconditions of the issuance of the Subscription Shares are as follows:
(a). the approval of all the matters relevant to the issuance of the Subscription Shares by the board
of directors of Sinoma International at a board meeting of Sinoma International;
(b). the obtaining of approvals from the SASAC in relation to the issuance of the Subscription
Shares;
(c). the approval of all the matters relevant to the issuance of the Subscription Shares by the
shareholders of Sinoma International at a general meeting of Sinoma International; and
- 7 -
(d). the obtaining of examination and approval from the CSRC in relation to the issuance of the
Subscription Shares.
Effects on the Shareholding Structure of Sinoma International Arising from the Issuance of
Subscription Shares
The table below sets out the shareholding structure of Sinoma International before and after the
completion of the issuance of the Consideration Shares and the Subscription Shares (assuming that
76,208,025 Consideration Shares and 64,516,129 Subscription Shares will be fully issued and there is
no other change in the issued share capital of Sinoma International):
Name of shareholders of
Sinoma International
The Company
Other shareholders
The Vendors
The investors of
the Subscription Shares
Total
As at the date of
this announcement
Approximate
Number of
% of
Shares
shareholding
Immediately after completion of
the issuance of
the Consideration Shares and
the Subscription Shares
Approximate
Number of
% of
Shares
shareholding
464,263,219
629,034,041
0
42.46%
57.54%
0%
464,263,219
629,034,041
76,208,025
37.62%
50.97%
6.18%
0
0%
64,516,129
5.23%
1,093,297,260
100%
1,234,021,414
100%
HONG KONG LISTING RULES IMPLICATIONS
The Directors confirm that to the best of their knowledge, information and belief, having made all
reasonable enquiries, the Vendors and the investors to the Subscription Shares as well as their
ultimate beneficial owner(s) are third parties independent of the Company and its connected persons.
The acquisition of the 100% equity interest in Anhui Jieyuan by Sinoma International pursuant to the
Asset Purchase Agreement constitutes an acquisition under Chapter 14 of the Hong Kong Listing
Rules.
As at the date of this announcement, the Company holds 42.46% equity interest in Sinoma
International. Following the completion of the issuance of the Consideration Shares, the equity
interest of the Company in Sinoma International will be diluted. Such dilution of the Company’s
equity interest in Sinoma International constitutes a deemed disposal of the Company’s equity interest
in Sinoma International under Chapter 14 of the Hong Kong Listing Rules.
- 8 -
Following the completion of the issuance of the Subscription Shares, the equity interest of the
Company in Sinoma International will be diluted. Such dilution of the Company’s equity interest in
Sinoma International constitutes a deemed disposal of the Company’s equity interest in Sinoma
International under Chapter 14 of the Hong Kong Listing Rules.
As the applicable percentage ratios (as defined under Rule 14.07 of the Hong Kong Listing Rules)
exceed 5% but are less than 25%, the acquisition contemplated under Asset Purchase Agreement and
the deemed disposal due to the issuance of the Consideration Shares and the Subscription Shares
(aggregated as required by Rule 14.22 of the Hong Kong Listing Rules) each constitutes a
discloseable transaction for the purposes of, and are subject to the reporting and announcement
requirements under, Chapter 14 of the Hong Kong Listing Rules, but is exempted from the
requirement of shareholders’ approval, pursuant to Chapter 14 of the Hong Kong Listing Rules. Save
as disclosed above, there is no other transactions which would be, together with the aforesaid
transactions, aggregated under Rule 14.22 of the Hong Kong Listing Rules.
The Consideration Shares represent approximately 6.97% of the existing issued share capital of
Sinoma International and approximately 6.52% of the issued share capital of Sinoma International as
enlarged by the issuance of the Consideration Shares. Sinoma International is currently owned as to
42.46% by the Company. Upon the completion of the issuance of the Consideration Shares (assuming
that 76,208,025 Consideration Shares will be fully issued and there is no other change in the issued
share capital of Sinoma International), Sinoma International will be owned as to 39.70% by the
Company and will continue to be a subsidiary of the Company.
The Subscription Shares represent approximately 5.90% in aggregate of the existing issued share
capital of Sinoma International and approximately 5.23% of the issued share capital of Sinoma
International as enlarged by the issuance of the Consideration Shares and the Subscription Shares.
Sinoma International is currently owned as to 42.46% by the Company. Upon the completion of the
issuance of the Consideration Shares and the Subscription Shares (assuming that 76,208,025
Consideration Shares and 64,516,129 Subscription Shares will be fully issued and there is no other
change in the issued share capital of Sinoma International), Sinoma International will be owned as to
37.62% by the Company and will continue to be a subsidiary of the Company.
EXPERTS AND CONSENTS
The qualifications of the experts who have given their opinions and advices included in this
announcement are as follows:
Name
Qualification
ZhongHe Appraisal Co., Ltd.
Independent professional valuer
SHINEWING (HK) CPA Limited
Certified Public Accountants
- 9 -
As at the date of this announcement, neither ZhongHe Appraisal Co., Ltd. nor SHINEWING (HK)
CPA Limited has any shareholding, directly or indirectly, in any member of the Group or any right
(whether legally enforceable or not) to subscribe for or to nominate person(s) to subscribe for the
securities in any member of the Group.
Each of ZhongHe Appraisal Co., Ltd. and SHINEWING (HK) CPA Limited has given and has not
withdrawn its consent to the publication of this announcement with inclusion of its letter or report and
all references to its name in the form and context in which it is included.
REASONS FOR AND BENEFIT OF THE ASSET RESTRUCTURING AND THE ISSUANCE
OF SUBSCRIPTION SHARES
The Asset Restructuring
The Company believes that the Asset Restructuring will be able to (i) further exert the effect of
synergy and accelerate the strategic deployment of the Group by exploring the business network in
energy conservation and environmental protection market in order to create business opportunities
and enhance the Group’s market share in such segments; and (ii) accelerate the Group’s reform as
state-owned enterprise, promote the adjustment, transformation and upgrading of industrial structure
of the Group so as to implement the Group’s development strategy.
The Directors (including the independent non-executive Directors) consider that the terms of the
Asset Restructuring are fair and reasonable, on normal commercial terms, and in the interest of
Company and its Shareholders as a whole.
The Issuance of Subscription Shares
The Company believes that the issuance of Subscription Shares will be able to further improve the
capital structure and cash flow position of Sinoma International so as to enhance its virtuous cycle in
capital market, to sooth its capital pressure and to improve the overall profitability and boost
shareholder value of the Group by way of future expansion and implementation of projects.
The Directors (including the independent non-executive Directors) consider that the terms of the
issuance of the Subscription Shares are fair and reasonable, on normal commercial terms, and in the
interest of Company and its Shareholders as a whole.
GENERAL INFORMATION
The Group
The Group is a leading provider of cement equipment and engineering services in the world. The
Group is also a leading producer of non-metal materials in the PRC with significant market share for
glass fibre and high-tech materials as well as for cement in selected regional markets.
- 10 -
Sinoma International
Sinoma International, a subsidiary of the Company, is a joint stock limited company incorporated
under the laws of the PRC, the shares of which are listed on the Shanghai Stock Exchange. Sinoma
International is principally engaged in technology equipment and engineering service of cement,
including engineering design of cement production lines, construction and installation of projects, as
well as manufacture, sale and supervision of mechanical equipment, etc.
The audited total asset of Sinoma International as at 31 December 2014 is RMB25,101,725,970.46.
The following table sets out the audited net profit (before and after taxation and extraordinary items)
of Sinoma International for the two financial years ended 31 December 2013 and 2014, respectively,
according to PRC accounting standards:
Net profits before taxation and extraordinary items
Net profits after taxation and extraordinary items
Year ended
31 December
2013
(RMB)
Year ended
31 December
2014
(RMB)
313,677,014.99
72,265,351.37
233,570,135.15
55,756,363.13
Anhui Jieyuan
Anhui Jieyuan is a limited liability company incorporated under the laws of the PRC, and is
principally engaged in the implementation of energy management project, implementation of
environmental protection project, research and development and promotion of environmental
protection equipment and technology.
The audited total asset of Anhui Jieyuan as at 31 December 2014 is RMB162,465,040.69.
The following table sets out the audited net profit (before and after taxation and extraordinary items)
of Anhui Jieyuan for the two financial years ended 31 December 2013 and 2014, respectively,
according to PRC accounting standards:
Net profits before taxation and extraordinary items
Net profits after taxation and extraordinary items
- 11 -
Year ended
31 December
2013
(RMB)
Year ended
31 December
2014
(RMB)
2,954,372.61
2,725,604.95
19,740,288.89
18,850,727.14
The Vendors
Xu Xidong, Xuan Hong, Zhang Ximing, Zhang Ping, Jiang Guirong, Anhui Haihe New Energy
Investment Co., Ltd., Wuhu Henghai Investment Center (Limited Partnership), and Anhui Guoyao
Venture Investment Co., Ltd., the shareholders of Anhui Jieyuan prior to the completion of the Asset
Purchase Agreement, and each holds 47.69%, 7.41%, 11.02%, 1.9%, 7.98%, 9.5%, 9.5 and 5% of the
equity interest in Anhui Jieyuan, respectively. The Vendors as well as their ultimate beneficial
owner(s) are third parties independent of the Company and its connected persons.
As the issuance of the Consideration Shares and the issuance of the Subscription Shares are
subject to the approval of the CSRC, the SASAC and the shareholders’ meeting of Sinoma
International and may or may not proceed, Shareholders and potential investors are reminded
to exercise caution in dealing in the securities of the Company.
FINANCIAL EFFECT OF THE ASSET RESTRUCTURING AND THE ISSUANCE OF THE
SUBSCRIPTION SHARES
The Consideration Shares and the Subscription Shares represent approximately 12.87% in aggregate
of the existing issued share capital of Sinoma International and approximately 11.41% of the issued
share capital of Sinoma International as enlarged by the issuance of the Consideration Shares and the
Subscription Shares. Sinoma International is currently owned as to 42.46% by the Company. Upon
the completion of the issuance of the aforesaid shares (assuming that 76,208,025 Consideration
Shares and 64,516,129 Subscription Shares will be fully issued and there is no other change in the
issued share capital of Sinoma International), Sinoma International will be owned as to 37.62% by the
Company and will continue to be a subsidiary of the Company.
Based on the existing information available to the Company, the Directors estimate that the financial
impact of the deemed disposal of the Company’s interests in Sinoma International due to the issuance
of the Consideration Shares and the Subscription Shares on the Group should be insignificant.
Because the equity interest in Sinoma International of the Company will decrease by 4.84% due to
the issuance of the Consideration Shares and the Subscription Shares. According to the audited net
profit of Sinoma International attributable to the owners of the parent company for the two financial
years ended 31 December 2013 and 2014 on the basis of PRC accounting standards, being
RMB90,187,698.16 and RMB148,336,235.13, respectively, the net profit attributable to the owners of
the parent company of the Group will decrease by approximately RMB4,365,084.59 and
RMB7,179,473.78.
It should be noted that the aforementioned estimation is for illustrative purpose only and does not
purport to represent how the financial position of the Group will be after the issuance of the
Consideration Shares and the Subscription Shares.
- 12 -
DEFINITIONS
In this announcement, unless the context otherwise requires, the following words and expression shall
have the meanings ascribed to them below:
“Anhui Jieyuan”
Anhui Jieyuan Environmental Protection Technology Co., Ltd. (安
徽節源環保科技有限公司), a limited liability company established
under the laws of the PRC
“Asset Purchase Agreement”
the Sinoma International Engineering Co., Ltd. Agreement on Asset
Purchase by Issuance of Shares dated 29 May 2015 entered into
between Sinoma International and the Vendors
“Asset Restructuring”
the acquisition by Sinoma International of the 100% equity interest
in Anhui Jieyuan by way of issuance of the Consideration Shares
by it to the Vendors pursuant to the Asset Purchase Agreement
“Board”
the board of directors of the Company
“Company”
China National Materials Company Limited (中國中材股份有限公
司), a joint stock limited company incorporated under the laws of
the PRC on 31 July 2007, the H shares of which are listed on the
Hong Kong Stock Exchange
“Compensation Agreement”
the Performance Compensation Agreement regarding Anhui Jieyuan
Environmental Protection Technology Co., Ltd. dated 29 May 2015
entered into between Sinoma International and the Compensation
Covenanters
“Compensation Covenanters”
Xu Xidong, Xuan Hong, Zhang Ximing, Zhang Ping, Jiang
Guirong, Anhui Haihe New Energy Investment Co., Ltd., and
Wuhu Henghai Investment Center (Limited Partnership), who have
made compensation undertaking pursuant to the Compensation
Agreement
“Consideration Share(s)”
the 76,208,025 new A shares of par value of RMB1.00 each in the
share capital of Sinoma International to be issued to the Vendors to
satisfy the consideration payable by Sinoma International to the
Vendors under the Asset Purchase Agreement
- 13 -
“CSRC”
China Securities Regulatory Commission
“Director(s)”
the director(s) of the Company
“Group”
the Company and its subsidiaries
“Hong Kong Listing Rules”
the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
“Hong Kong Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Independent Valuer”
ZhongHe Appraisal Co., Ltd.
“PRC”
the People’s Republic of China, and for the purpose of this
announcement, excludes Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
“RMB”
Renminbi, the lawful currency of the PRC
“SASAC”
State-owned Assets Supervision and Administration Commission of
the State Council of the PRC
“Shareholder(s)”
holder(s) of shares of the Company
“Sinoma International”
Sinoma International Engineering Co., Ltd. (中國中材國際工程股
份有限公司), a joint stock limited company incorporated under the
laws of the PRC, the shares of which are listed on the Shanghai
Stock Exchange (stock code: 600970)
“Subscription Share(s)”
no more than 64,516,129 new A shares of par value of RMB1.00
each in the share capital of Sinoma International to be issued to no
more than ten designated investors to satisfy the operation need of
Sinoma International
“Valuation Date”
31 December 2014, being the reference date of valuation adopted
by the Independent Valuer in the Valuation Report
“Valuation Report”
the valuation report prepared by the Independent Valuer in relation
to the value of the entire equity interest in Anhui Jieyuan as at the
Valuation Date
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“Vendor(s)”
Xu Xidong, Xuan Hong, Zhang Ximing, Zhang Ping, Jiang
Guirong, Anhui Haihe New Energy Investment Co., Ltd., Wuhu
Henghai Investment Center (Limited Partnership), and Anhui
Guoyao Venture Investment Co., Ltd., the shareholders of Anhui
Jieyuan prior to the completion of the Asset Purchase Agreement
“%”
per cent
By order of the Board
CHINA NATIONAL MATERIALS COMPANY LIMITED
Liu Zhijiang
Chairman of the Board
Beijing, China
29 May 2015
As at the date of this announcement, the executive directors of the Company are Mr. Liu Zhijiang and
Mr. Peng Jianxin, the non-executive directors of the Company are Mr. Yu Shiliang, Mr. Li Xinhua,
Mr. Li Jianlun, Mr. Yu Guobo and Mr. Tang Baoqi, and the independent non-executive directors of
the Company are Mr. Leung Chong Shun, Mr. Lu Zhengfei, Mr. Wang Shimin and Mr. Zhou Zude.
Please also refer to the published version of this announcement on the Company’s website.
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APPENDIX I — PRINCIPAL ASSUMPTIONS OF VALUATION
Given that the Valuation Report was prepared based on, among others, income approach, which
involves the calculation of discounted cash flow, it is regarded as a profit forecast under Rule 14.61
of the Hong Kong Listing Rules.
The valuation contained in the Valuation Report has been prepared on the following principal bases
and assumptions:
I.
II.
General Assumptions:
1.
there will be no significant changes in the existing laws, regulations, institutional of the
state and local authorities, as well as in the socio-political and economic policies as
compared with the current situation;
2.
Anhui Jieyuan will remain to operate, and will maintain its current business pattern;
3.
there will be no significant changes in current national tax bases, as well as the tax
policies, bank credit interest rates and other policy charges in relation to the
implementation of contract energy management projects of the Anhui Jieyuan; and
4.
there will be no significant adverse effects caused other irresistible or unforeseeable
factors.
Special Assumptions:
1.
the senior management of Anhui Jieyuan will remain relatively stable, and there will be no
major loss of key professional personnel;
2.
the existing and future operators of each of the business entity of Anhui Jieyuan are
responsible, and the management of the company will be able to steadily promote the
company’s development plans so as to maintain a sound status of operation;
3.
the future management of Anhui Jieyuan will abide by relevant state laws and regulations,
and there will be no significant irregularities that could affect the development and
profitability of Anhui Jieyuan;
4.
the accounting policies that Anhui Jieyuan adopted in the financial information they
provide will be mainly consistent with the accounting policies and the accounting
assessment methods adopted for the profit forecast in important aspects; and
5.
Anhui Jieyuan has obtained the high-tech enterprise certificate in 2013, assuming that
Anhui Jieyuan will be able to renew such high-tech enterprise certificate after its
expiration.
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APPENDIX II — LETTERS OF COMFORT IN RELATION TO THE PROFIT FORECAST
OF ANHUI JIEYUAN
A.
Letter from the Reporting Accountants
DISCLOSEABLE TRANSACTION OF CHINA NATIONAL MATERIALS COMPANY
LIMITED (THE “COMPANY”)
ACQUISITION OF 100% EQUITY INTEREST IN ANHUI JIEYUAN
29 May 2015
The Directors
China National Materials Company Limited
11 Beishuncheng Street
Xizhimennei
Xicheng District
Beijing 100035
The PRC
Dear Sirs,
INDEPENDENT ASSURANCE REPORT
We have examined the accounting policies adopted and calculations of the underlying profit forecast
(the “Underlying Forecast”) underlying the valuation report dated 7 May 2015 prepared by ZhongHe
Appraisal Co., Ltd. (the “Valuer”) in respect of the valuation on Anhui Jieyuan Environmental
Protection Technology Co., Ltd. (安徽節源環保科技有限公司) (the “Target Company”) in
connection with the proposed acquisition of the entire equity interests in the Target Company by
Sinoma International Engineering Co., Ltd. (“Sinoma International”), a non-wholly owned
subsidiary of China National Materials Company Limited (the “Company”) as set out in the
announcement of the Company dated 29 May 2015 (the “Announcement”).
Responsibilities
The directors of Sinoma International and the Target Company (the “Directors”) are solely
responsible for the preparation of the Underlying Forecast including the reasonableness and validity
of assumptions, for the purpose of business valuation of the Target Company based on discounted
cash flow method. The Underlying Forecast has been prepared using a set of assumptions (the
“Assumptions”) that include hypothetical assumptions about future events and management’s actions
#
The English translation of the Chinese name is for information purpose only and should not be regarded
as the official English translation of such Chinese name.
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that are not necessarily expected to occur. Even if the events anticipated occur, actual results are still
likely to be different from the Underlying Forecast and the variation may be material. The Directors
are responsible for the reasonableness and validity of the Assumptions.
It is our responsibility to form an opinion, based on our work on the Underlying Forecast and to
report our opinion solely to you, as a body, solely for the purpose of reporting under Rule 14.62 of
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and for no
other purpose. We have not reviewed, considered or conducted any work on the reasonableness and
the validity of the Assumptions and express no opinion on the reasonableness and validity of the
Assumptions on which the Underlying Forecast is based. We accept no responsibility to any other
person in respect of, arising out of or in connection with our work.
Summary of our work
We conducted our work in accordance with the Hong Kong Standard on Assurance Engagements
3000 “Assurance Engagements Other Than Audits or Review of Historical Financial Information”
issued by the Hong Kong Institute of Certified Public Accountants and with reference to the
procedures specified in the Hong Kong Standard on Investment Circular Reporting Engagements 500
“Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of
Indebtedness”. We examined the consistency of accounting policies adopted and the arithmetical
accuracy of the Underlying Forecast. Our work has been undertaken solely to assist the Directors in
evaluating whether the Underlying Forecast, so far as the accounting policies and calculations are
concerned, has been properly compiled in accordance with the Assumptions made by the Directors.
Our work does not constitute any valuation of the Target Company.
Opinion
In our opinion, so far as the accounting policies and calculations are concerned, the Underlying
Forecast has been properly compiled in accordance with the Assumptions made by the Directors as
set out in the Announcement and is presented on a basis consistent in all material aspects with the
accounting policies currently adopted by the Company.
Yours faithfully,
SHINEWING (HK) CPA Limited
Certified Public Accountants
Wong Chuen Fai
Practising Certificate Number: P05589
Hong Kong
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B.
Letter from the Board
(a joint stock company incorporated in the People’s Republic of China with limited liability)
(Stock code: 01893)
29 May 2015
The Stock Exchange of Hong Kong Limited
11/F., One International Finance Centre,
1 Harbour View Street,
Central,
Hong Kong
Dear Sirs and Madams,
DISCLOSEABLE TRANSACTION OF CHINA NATIONAL MATERIALS COMPANY
LIMITED (THE “COMPANY”)
ACQUISITION OF 100% EQUITY INTEREST IN ANHUI JIEYUAN
We refer to the announcement of the Company dated 29 May 2015 (the “Announcement”).
Capitalised terms used herein shall have the same meanings as those defined in the Announcement
unless the context otherwise requires.
We, the Board of the Company, note that SHINEWING (HK) CPA Limited, certified public
accountants and the Company’s reporting accountants (“SHINEWING”), have examined the
consistency of accounting policies adopted and the arithmetical accuracy of the calculation of the
discounted cash flow forecast in the asset valuation report dated 11 May 2015 prepared ZhongHe
Appraisal Co., Ltd. (the “Independent Valuer”) in relation to the valuation (the “Valuation”) of
entire equity interest in Anhui Jieyuan. The Valuation is prepared based on discounted cash flows
method and it is regarded as a profit forecast under Rule 14.61 of the Hong Kong Listing Rules (the
“Underlying Forecast”).
We have discussed with the Independent Valuer the bases and assumptions in the Valuation upon
which the Underlying Forecast has been made and have reviewed the Valuation. We have also
considered the report dated 29 May 2015 issued by SHINEWING to the Board that SHINEWING had
examined the consistency of accounting policies adopted and the arithmetical accuracy of the
calculations of the Valuation for assisting the directors of Sinoma International Engineering Co., Ltd.
and Anhui Jieyuan Environmental Protection Technology Co., Ltd. in evaluating whether, so far as
the accounting policies and calculations are concerned, the discounted cash flow has been properly
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compiled in accordance with the assumptions in the Valuation and is presented on a basis consistent
in all material aspects with the accounting policies currently adopted by the Company and for no
other purpose.
On the basis of the foregoing, we confirm that the Valuation, including the Underlying Forecast, has
been made after due and careful enquiry.
The purpose of this letter is solely for the strict compliance with Rule 14.62 of the Hong Kong
Listing Rules. We, however, express no opinion in this letter on the actual results of the Underlying
Forecast as the Underlying Forecast is based on certain hypothesis on future events.
Yours faithfully,
For and on behalf of the Board
CHINA NATIONAL MATERIALS COMPANY LIMITED
Liu Zhijiang
Chairman of the Board
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