China Energy Storage Technology Development Limited — Capital/Financing Update 2017

Apr 7, 2017

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.

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CHINA HEALTHCARE ENTERPRISE GROUP LIMITED 華 夏 健 康 產 業 集 團 有 限 公 司 (incorporated in the Cayman Islands with limited liability)

(Stock Code: 1143)

CONNECTED TRANSACTION

DISPOSAL OF THE SALE SHARES AND THE SHAREHOLDER’S LOAN

On 7 April 2017 (after trading hours), the Company as vendor entered into the Agreement with the Purchaser, pursuant to which the Company agreed to sell and the Purchaser agreed to purchase the Sale Shares (which represent the entire issued share capital of the Disposal Company) and the Shareholder’s Loan at the Consideration of HK$25 million.

The Purchaser is an investment holding company indirectly wholly-owned by Mr. Yang Zhihui, the controlling shareholder of the Company and thus a connected person of the Company. As such, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios as set out in the Listing Rules in respect of the Disposal is more than 0.1% but all of them are less than 5%, the Disposal is subject to the reporting and announcement requirements but is exempted from Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

THE DISPOSAL

On 7 April 2017 (after trading hours), the Company as vendor entered into the Agreement with the Purchaser, pursuant to which the Company agreed to sell and the Purchaser agreed to purchase the Sale Shares (which represent the entire issued share capital of the Disposal Company) and the Shareholder’s Loan at the Consideration of HK$25 million.

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THE AGREEMENT

Date

7 April 2017 (after trading hours)

Parties

Vendor: China Healthcare Enterprise Group Limited

Purchaser: Golden Record Limited

Assets to be disposed of

Pursuant to the Agreement, the Company agreed to sell and the Purchaser agreed to purchase the Sale Shares (which represent the entire issued share capital of the Disposal Company) and the Shareholder’s Loan.

The Disposal Company is the holding company of a group of four wholly-owned subsidiaries in which one is engaged in factoring business in the PRC while the rest are either engaged in investment holding or not yet commencing businesses. Apart from one subsidiary in the PRC which was purchased at approximately RMB30,000, all the companies of the Disposal Group were established by the Group.

Consideration

The Consideration for the Disposal is HK$25 million, which shall be payable in cash by the Purchaser to the Company upon Completion.

The Consideration was arrived at after arm’s length negotiations between the Company and the Purchaser and with reference to (i) the scale of operation of the Disposal Group; (ii) the reasons for the Disposal as discussed in the section headed ‘‘Reasons for the Disposal’’ below; (iii) the unaudited consolidated net liabilities of the Disposal Group of approximately HK$2,828,000 as at 31 December 2016; and (iv) the amount of the outstanding Shareholder’s Loan.

Conditions precedent

Completion of the Disposal is conditional upon fulfillment or waiver (as the case may be) of the following conditions:

• (1) (if applicable) the obtaining by the Company and the Purchaser of all necessary consents, approvals and permissions from relevant organisations, institutions, government and regulatory authorities (including the Stock Exchange) in respect of the Agreement and the transactions contemplated thereunder;

• (2) all the representations, warranties and undertakings of the Company remaining true and accurate as at Completion, for which the Company shall have performed or complied with at or before Completion (as the case may be); and

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• (3) the Purchaser being reasonably satisfied with the results of the due diligence review of the assets, liabilities, operations and affairs of the Disposal Group.

If the above conditions shall not have been fulfilled or waived by the Purchaser on or before the Long Stop Date, the Agreement shall, subject to certain provisions of the Agreement and the liability of any party to the other in respect of any antecedent breaches of the terms of the Agreement, cease to have effect.

Completion

Completion shall take place on the fifth Business Day after all conditions set out in the Agreement are fulfilled or otherwise waived (or such other date as agreed by the Company and the Purchaser).

Upon Completion, the Company shall no longer have any interest in the Disposal Group.

INFORMATION OF THE DISPOSAL GROUP

The Disposal Company was incorporated in the British Virgin Islands on 26 April 2016 with limited liability and is an investment holding company. As at the date of the Agreement, the Disposal Company is wholly-owned by the Company.

The Disposal Company is the holding company of a group of four wholly-owned subsidiaries in which one is engaged in factoring business in the PRC while the rest are either engaged in investment holding or not yet commencing businesses. Apart from one subsidiary in the PRC which was purchased at approximately RMB30,000, all the companies of the Disposal Group were established by the Group.

Set out below is certain unaudited consolidated financial information of the Disposal Group:

Revenue Net loss before and after tax	For the period from 26 April 2016 (date of incorporation of the Disposal Company) to 31 December 2016 HK$’000 (Unaudited) 183 2,482

As at 31 December 2016, the Disposal Group recorded an unaudited consolidated net liabilities of approximately HK$2,828,000.

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FINANCIAL IMPACT OF THE DISPOSAL

Following Completion, each member of the Disposal Group will cease to be a subsidiary of the Company, and its assets and liabilities and its profits and losses will no longer be consolidated into the consolidated financial statements of the Company. The Consideration will be reserved by the Group as general working capital. Upon Completion and subject to audit, the Group is expected to record a gain of approximately HK$2.8 million, based on the amounts of the Consideration, the consolidated net liabilities of the Disposal Group as at 31 December 2016 and the Shareholder’s Loan.

REASONS FOR THE DISPOSAL

The Group is principally engaged in the (i) electronic manufacturing services; (ii) marketing and distribution of communications products; and (iii) securities and other assets investment.

It is the Company’s business strategy to shift its business focus on the medical and healthcare industry. After the Disposal, the Company will focus on exploring and identifying suitable targets in the medical and healthcare industry and capture opportunities in the healthcare industry.

After taking into account of the performance of the Disposal Group and the burden of diverging further resources from other businesses of the Group, the Directors consider that the Disposal is in the interests of the Group and will enable the management to focus on existing business operations of the Group and to explore future investment opportunities to realise gains for the Shareholders.

Accordingly, the Directors (including the independent non-executive Directors) consider that the terms of the Disposal are fair and reasonable and the Disposal is on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

None of the Directors has any material interest in the Disposal and have abstained from voting on the resolution passed by the Board in respect of the Disposal.

IMPLICATIONS UNDER THE LISTING RULES

The Purchaser is an investment holding company indirectly wholly-owned by Mr. Yang Zhihui, the controlling shareholder of the Company and thus a connected person of the Company. As such, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios as set out in the Listing Rules in respect of the Disposal is more than 0.1% but all of them are less than 5%, the Disposal is subject to the reporting and announcement requirements but is exempted from Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following respective meanings:

• ‘‘Agreement’’ the sale and purchase agreement dated 7 April 2017 (after trading hours) between the Purchaser and the Company in relation to the Disposal

• ‘‘Board’’ the board of Directors

• ‘‘Business Day’’ a day (other than a Saturday, Sunday or public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• ‘‘Company’’ China Healthcare Enterprise Group Limited, a company incorporated in the Cayman Islands with limited liability and the securities of which are listed on the Main Board of the Stock Exchange

• ‘‘Completion’’ the completion of the Disposal

• ‘‘connected person’’ has the meaning given to it under the Listing Rules

• ‘‘Consideration’’ HK$25 million, being the consideration for the Disposal

• ‘‘Directors’’ directors of the Company

• ‘‘Disposal’’ the disposal of the Sale Shares (which represent the entire issued share capital of the Disposal Company) and the Shareholder’s Loan in accordance with the Agreement

• ‘‘Disposal Company’’ Pacific Time Holdings Limited, a company incorporated in the British Virgin Islands with limited liability

• ‘‘Disposal Group’’ the Disposal Company and its wholly-owned subsidiaries ‘‘Group’’ the Company and its subsidiaries

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

‘‘Long Stop Date’’ 30 June 2017 or such other date as the Company and the Purchaser may agree

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‘‘PRC’’	the People’s Republic of China, which for the purposes of
	this announcement shall exclude Hong Kong, the Macau
	Special Administrative Region of the PRC and Taiwan
‘‘Purchaser’’	Golden Record Limited, a company incorporated in the
	British Virgin Island with limited liability and indirectly
	wholly-owned by Mr. Yang Zhihui
‘‘RMB’’	Renminbi, the lawful currency of the PRC
‘‘Sale Shares’’	100 ordinary shares of US$1.00 each in the share capital of
	the Disposal Company, representing the entire issued share
	capital of the Disposal Company
‘‘Shareholder’s Loan’’	a shareholder’s loan of approximately HK$25 million owing
	by the Disposal Company to the Company as at the date of
	the Agreement
‘‘Shareholders’’	holders of the Shares
‘‘Shares’’	ordinary shares of HK$0.001 each in the share capital of the
	Company
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘US$’’	United States dollars, the lawful currency of the United
	States of America

By order of the Board of China Healthcare Enterprise Group Limited Gong Shaoxiang Chairman and Executive Director

Hong Kong, 7 April 2017

As at the date of this announcement, the Board comprises Mr. Gong Shaoxiang (Chairman) and Mr. Lee Chi Hwa Joshua as executive Directors, Mr. Cao Yuyun and Mr. Chan Kin Sang as non-executive Directors and Mr. Bao Jinqiao, Mr. Wong Chun Hung and Mr. Leung Pok Man as independent non-executive Directors.

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