Dufu Liquor Group Limited - Proxy Solicitation & Information Statement 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all of your shares in China Environmental Energy Investment Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

VERY SUBSTANTIAL DISPOSAL AND

NOTICE OF SPECIAL GENERAL MEETING

Capitalised terms used in this cover page shall have the same meaning as those defined in this circular.

A notice convening the SGM to be held on 12 July 2016 at 9:00 a.m. at Falcon Room I, Gloucester Luk Kwok Hong Kong, 72 Gloucester Road, Wanchai, Hong Kong is set out on pages 59 to 60 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Such form of proxy is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.986.com.hk).

Whether or not you are able to attend the SGM, please complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the meeting if they so wish and, in such event, the form of proxy shall be deemed to be revoked.

22 June 2016

For identification purposes only

CONTENT

			Page
Definitions . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	–	Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix II	–	Financial information of the Target Group . . . . . . . . . . . . . . . . . . . . . . . .	33
Appendix III	–	The unaudited pro forma financial information of
		the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Appendix IV	–	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53
Notice of Special		General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	59

– i –

DEFINITIONS

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

‘‘associate(s)’’ has the same meaning ascribed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Day(s)’’

a day (other than a Saturday, Sunday or public holiday in Hong Kong) on which commercial banks are generally open for business in Hong Kong

‘‘Company’’ China Environmental Energy Investment Limited（中國環保能源投資有限公司*）, a company incorporated in Bermuda whose shares are listed on the Stock Exchange
‘‘Completion’’
the completion of the Disposal
‘‘Completion Date’’
the first Business Day after the fulfillment of the conditions precedent under the SPA or such other date as the Company and the Purchaser may agree in writing
‘‘connected person(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘Consideration’’
the total consideration in the sum of HK$150,000,000 payable by the Purchaser to the Company for the Disposal under the SPA
‘‘Director(s)’’ director(s) of the Company
‘‘Deposit’’
the sum of HK$50,000,000 being paid by the Purchaser upon signing of the SPA
‘‘Disposal’’
the disposal of the Sale Shares by the Company to the Purchaser pursuant to the SPA
‘‘Earnest Money’’

the sum of HK$50,000,000 paid by the Purchaser to the Company as earnest money pursuant to the MOU

‘‘Group’’ the Company and its subsidiaries
‘‘Hong Kong’’

the Hong Kong Special Administrative Region of the PRC

‘‘HK$’’

Hong Kong dollar, the lawful currency of Hong Kong

For identification purposes only

– 1 –

DEFINITIONS

‘‘Independent Shareholders’’

Shareholders other than those who have material interest in the SPA and the transactions contemplated thereunder and are required to abstain from voting at the SGM

‘‘Latest Practicable Date’’ 16 June 2016, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘MOU’’ the memorandum of understanding dated 3 February 2016 and entered into by the Company and the Purchaser in respect of the Disposal
‘‘PRC’’ the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, Macau Special Administration Region of the PRC and Taiwan
‘‘Purchaser’’ Dejuxin Technology Co., Limited, a company incorporated in Hong Kong with limited liability
‘‘Remaining Group’’ the Company and its subsidiaries, excluding the Target Group after the Disposal
‘‘RMB’’ Renminbi, the lawful currency of PRC
‘‘Sale Shares’’ 280 issued and fully-paid ordinary shares of US$1.00 each in the share capital of the Target Company, representing approximately 93.33% of the equity interest of the Target Company
‘‘Second Payment’’
the sum of HK$50,000,000 being the second payment to be paid on the Completion Date pursuant to the SPA
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘SGM’’
the special general meeting to be convened by the Company for the Shareholders to consider and, if thought fit, approve the SPA and the transactions contemplated thereunder

– 2 –

DEFINITIONS

‘‘Share(s)’’
‘‘Shareholder(s)’’
‘‘SPA’’
‘‘Stock Exchange’’
‘‘Target Company’’
‘‘Target Group’’
‘‘Target Subsidiaries’’
‘‘US$’’
‘‘Vendor’’
‘‘%’’
ordinary share(s) of HK$0.01 each in the share capital of the Company

holder(s) of Share(s)

the conditional sale and purchase agreement dated 19 May 2016 and entered into by the Company and the Purchaser in respect of the Disposal

The Stock Exchange of Hong Kong Limited

Ideal Market Holdings Limited, a company incorporated under the laws of the British Virgin Islands with limited liability, which is owned as to approximately 93.33% by the Company as at the Latest Practicable Date and a direct subsidiary of the Company

the Target Company and the Target Subsidiaries

collectively, Topbright International Group Holdings Limited, 象山高銘環保科技有限公司 (Xiangshan Gaoming Environmental Protection Technology Limited), 蘇州百納再生資源有限公司 (Suzhou Baina Renewable Resources Company Limited), 蘇州百納再生資源鹽城有限公司 (Suzhou Baina Renewable Resources Yancheng Company Limited) and 淮安百潤再生資源有限公司 (Huaian Bai Run Renewable Resources Company Limited), being indirect subsidiaries of the Company as at the Latest Practicable Date

United States dollars, the lawful currency of the United States of America

the Company

per cent.

For identification purposes only

– 3 –

LETTER FROM THE BOARD

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

Executive Directors: Ms. Chen Tong (Chairman) Mr. Xiang Liang

Independent non-executive Directors: Ms. Zhang Ruisi Mr. Tse Kwong Chan Ms. Zhou Jue

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business: Room 910, 9/F Harbour Centre 25 Harbour Road, Wanchai Hong Kong

22 June 2016

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 19 May 2016 in relation to the Disposal, whereby on 19 May 2016 (after trading hours), the Company, as vendor, entered into the SPA with the Purchaser, pursuant to which the Company has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Shares at the Consideration of HK$150,000,000 payable by the Purchaser in accordance with the terms and conditions of the SPA.

For identification purposes only

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information regarding the resolution to be proposed at the SGM in relation to the SPA and the transactions contemplated thereunder.

THE SPA

Date

19 May 2016 (after trading hours)

Parties

(i) Vendor: the Company; and

(ii) Purchaser: Dejuxin Technology Co., Limited.

As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Purchaser and Mr. Guo Tian De, being the ultimate beneficial owner and the sole director of the Purchaser, who is a PRC citizen and was introduced to the Company by Mr. Xiang Liang, an executive Director of the Company, are independent third parties of the Company and its connected persons.

Assets to be disposed

Pursuant to the SPA, the Company has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the Sale Shares, representing approximately 93.33% of the equity interest of the Target Company.

Consideration

The Consideration is HK$150,000,000 payable in cash and shall be satisfied in the following manner:

(i) HK$50,000,000 being the deposit (the ‘‘Deposit’’) paid upon signing the SPA and settled by the Earnest Money being deemed to have been paid under the SPA as the deposit;
(ii) the second payment of HK$50,000,000 (the ‘‘Second Payment’’) shall be paid on the Completion Date; and
(iii) the balance of Consideration of HK$50,000,000 shall be paid within 30 days from the Completion Date.

– 5 –

LETTER FROM THE BOARD

The Consideration was determined after arm’s length negotiation between the Company and the Purchaser with reference to the goodwill of the Target Group of approximately HK$152.4 million which also represents the residual value of the Group’s investment in the Target Group. Such goodwill arose from acquisitions of the Target Group and was recognized at the dates of acquisitions in the original amount of approximately HK$582 million less accumulated impairment losses of approximately HK$429.6 million, which were resulting in the deterioration of the recycling business being carried out by the Target Group during the past years. During the negotiation process, the Company had stood firm to salvage the residual value of the Group’s investment in the Target Group and sought for the best price for the Company.

In view of the above, the Directors consider that the Consideration is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Events of failure in payment of Consideration by the Purchaser

In the event that the Purchaser fails to pay the balance of Consideration and any sum payable pursuant to the SPA when due, the Purchaser shall pay interest on such sum from and including the due date up to and including the date of actual payment at the rate of 2% per annum over the prime rate as quoted by the Hong Kong and Shanghai Banking Corporation Limited from time to time, computed on the basis of the actual number of days elapsed in a year of 365 days and compounded annually.

In the event that the Purchaser fails to pay the balance of Consideration pursuant to the SPA and that the Completion has taken place, the Company and the Purchaser agree that the Company may purchase and the Purchaser shall sell the Sale Shares at a price equivalent to the outstanding amount owed by the Purchaser to the Company under the SPA and the payment of the said price by the Company to the Purchaser shall be settled by way of cancelling the outstanding amount owed by the Purchaser to the Company under the SPA.

After the transfer of the Sale Shares back to the Company pursuant to the SPA, the obligations and liabilities under the SPA shall set off. The Directors consider that such arrangement will enable the Company to rescind the SPA and recover the Sale Shares without suffering from any material damages. Accordingly, the Directors consider that such term is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

In the event that the Purchaser fails to pay any sum payable under the SPA, or a bankruptcy petition is presented against the Purchaser, or any situation occurs which in the opinion of the Company that the ability of the Purchaser to pay any sum payable under the SPA has been or will be adversely affected, all sums and interests payable under the SPA shall become immediately due, without further demand, notice or other legal formality of any kind from the Company.

– 6 –

LETTER FROM THE BOARD

Escrow

The share certificates and relevant escrow documents in respect of the Sale Shares will be released to the Purchaser (or its nominee(s)) upon the Company’s receipt of full payment of the Consideration.

Conditions precedent

Completion is conditional upon satisfaction of the following conditions precedent:-

(i) the Company having obtained the approval by the Shareholders (or Independent Shareholders, if required) for the SPA and the transactions contemplated thereunder, if required, in compliance with the requirements of the Listing Rules; and
(ii) the Company complying with all applicable laws, regulations and rules in Hong Kong or elsewhere including but not limited to those under the Listing Rules and the requirements, instructions and indications, etc. of the Stock Exchange in relation to the SPA and the transactions contemplated thereunder.

None of the above conditions can be waived. If all the conditions have not been fulfilled on or before 31 July 2016 or any other date as agreed in writing between the Company and the Purchaser, through no fault of the Company or the Purchaser:–

(i) the Deposit shall be refunded to the Purchaser without interest; and
(ii) the SPA shall be terminated forthwith and each party to the SPA shall have no liability to the other party save and except for any antecedent breaches of the terms thereof.

Completion

Completion shall take place on the Completion Date.

The Purchaser shall, at Completion, pay to the Vendor the Second Payment and deliver to the Company, among others, a deed of share charge executed by the Purchaser in favour of the Company in respect of the entire share capital of the Target Company and a deed of share charge executed by the Target Company in favour of the Company in respect of the entire share capital of Topbright International Group Holdings Limited, a wholly-owned subsidiary of the Target Company, as security for the due and punctual payment of the balance of Consideration in accordance with the SPA.

Upon Completion, the Company shall cease to hold any interest in the Target Company and the Target Group will cease to be subsidiaries of the Company.

– 7 –

LETTER FROM THE BOARD

INFORMATION ON THE TARGET GROUP

The Target Company, a direct subsidiary of the Company, is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding.

The Target Company is owned as to approximately 93.33% by the Company. The remaining approximately 6.67% equity interest of the Target Company is held by Heroes International Limited. To the best of the Directors’ knowledge, information and belief, Heroes International Limited and its ultimate beneficial owner(s) are independent third parties of the Company and its connected persons.

The Target Subsidiaries are wholly-owned subsidiaries of the Target Company and represent the whole principal business segment of the Group in the businesses of waste paper, scrap metal and consumable wastes recycling, and also trading of petrochemical products in the PRC. The Target Subsidiaries include:

(i) Topbright International Group Holdings Limited, a company incorporated in Hong Kong with limited liability, and principally engaged in investment holding. It is directly wholly-owned by the Target Company, and is in turn an indirect subsidiary of the Company;
(ii) 象山高銘環保科技有限公司 (Xiangshan Gaoming Environmental Protection Technology Limited*), a company established in the PRC with limited liability, and principally engaged in investment holding. It is directly wholly-owned by Topbright International Group Holdings Limited, and is in turn an indirect subsidiary of the Company;
(iii) 蘇州百納再生資源有限公司 (Suzhou Baina Renewable Resources Company Limited), a company established in the PRC with limited liability and principally engaged in businesses of waste paper, scrap metal and consumable wastes recycling and trading of petrochemical products in the PRC. It is directly wholly-owned by 象山高銘環保科技有限公司 (Xiangshan Gaoming Environmental Protection Technology Limited), and is in turn an indirect subsidiary of the Company; and
(iv) 蘇州百納再生資源鹽城有限公司 (Suzhou Baina Renewable Resources Yancheng Company Limited) and 淮安百潤再生資源有限公司 (Huaian Bai Run Renewable Resources Company Limited), companies established in the PRC with limited liability, and principally engaged in the businesses of waste paper, scrap metal and consumable wastes recycling in the PRC. They are directly wholly-owned by 蘇州百納再生資源有限公司 (Suzhou Baina Renewable Resources Company Limited*), and are in turn indirect subsidiaries of the Company.
For identification purposes only

– 8 –

LETTER FROM THE BOARD

Set out below is the simplified corporate chart of the Company and the Target Group as at the Latest Practicable Date:

==> picture [235 x 473] intentionally omitted <==

----- Start of picture text -----

The Company
93.33%
The Target Company
100%
Topbright International
Group Holdings Limited
100%
象山高銘環保科技有限公司
(Xiangshan Gaoming
Environmental Protection
Technology Limited)
100%
蘇州百納再生資源有限公司
(Suzhou Baina Renewable
Resources Company Limited)
100%
蘇州百納再生資源鹽城
有限公司淮安百潤再生資源有限公司
(Suzhou Baina Renewable (Huaian Bai Run Renewable
Resources Yancheng Resources Company Limited)
Company Limited)
----- End of picture text -----

For identification purposes only

– 9 –

LETTER FROM THE BOARD

Set out below are financial information of the Target Group as extracted from its unaudited financial statements for the two financial years ended 31 March 2014 and 2015 and the ninemonth period ended 31 December 2015:

				For the
				nine-month
		For the year	ended	period ended
		31 March		31 December
		2014	2015	2015
		approximate	approximate	approximate
		HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(unaudited)
Loss	before taxation	38,267	15,229	1,910
Loss	after taxation	39,106	15,229	1,910

The net liabilities of the Target Group (excluding the non-controlling interests) attributable to the Group as at 31 December 2015 according to its unaudited management accounts was approximately HK$55.4million.

FINANCIAL EFFECT OF THE DISPOSAL AND USE OF PROCEEDS

Given (i) the net liability value of the Target Group (excluding the non-controlling interests) attributable to the Group as at 31 December 2015 was approximately HK$55.4 million and (ii) the goodwill amounted approximately HK$152.4 million; (iii) intangible assets amounted approximately HK$23.7 million; (iv) effect of deferred tax liabilities of approximately HK$7.1 million arising from intangible assets; (v) non-controlling interest amounted approximately HK$2.6 million, it is estimated that the gain attributable to the Disposal is approximately HK$33 million (before tax) after deducting expenses of approximately HK$0.8 million. Shareholders should note that the actual amount of gain or loss (as the case may be) on the Disposal to be recognized in the consolidated financial statements of the Company depends on the net asset or liability value of the Target Group as at the Completion Date and therefore may be different from the amount mentioned above.

For illustration purposes and with reference to the unaudited pro forma financial information of the Remaining Group under Appendix III to this circular, it is estimated that, as if the Disposal has been completed on 30 September 2015, (i) the total assets of the Remaining Group will be decreased by HK$35 million from approximately HK$1,602 million to approximately HK$1,567 million; (ii) the total liabilities of the Remaining Group will be decreased by HK$100 million from approximately HK$257 million to approximately HK$157 million; and (iii) the net assets of the Remaining Group will be increased by approximately HK$65 million from approximately HK$1,345 million to approximately HK$1,410 million as at 30 September 2015. Moreover, it is

– 10 –

LETTER FROM THE BOARD

also estimated that, as if the Disposal has been completed on 1 April 2014, (i) the turnover of the Remaining Group will be decreased by approximately HK$42 million from approximately HK$53 million to approximately HK$11 million; and (ii) the loss after taxation of the Remaining Group will be decreased by approximately HK$124 million from approximately HK$151 million to approximately HK$27 million for the year ended 31 March 2015.

Upon Completion, the Company will cease to hold any equity interest in the Target Company and the results of the Target Group will no longer be consolidated into the consolidated financial statements of the Group.

The Board intends to apply the net proceeds of approximately HK$149.2 million from the Disposal to repay the outstanding promissory notes amounting to approximately HK$132.7 million (including accrued interest) issued by the Company and the remaining as general working capital.

REASONS AND BENEFITS OF THE DISPOSAL

Over the last few years, the Group’s waste paper, scrap metal and consumable wastes recycling business has been affected by intensified competition in the market, such as the increase in operating costs and costs of raw materials, labor and manufacturing overheads. The demand and price of recycling products from waste paper, scrap metal and consumable waste as well as the petrochemical products have also continued to remain low without any sign of improvement. The gross profit of trading of petrochemical products business has been minimal owing to high operating costs. Over the last few years, the loss of such business segment has also increased notwithstanding implementation of cost control measures. As a result, the Target Group has recorded losses (disregarding consolidated position) from such business segment over the past three financial years, ranging from approximately HK$15.2 million to approximately HK$61.3 million for the financial years ended 31 March 2013, 2014 and 2015. The total business operating loss (disregarding consolidated position) over these three financial years was approximately HK$115.6 million.

In view of the unsatisfactory performance of the Target Group, the Group has been considering the possibilities of selling the Target Group if the Disposal would help the Group in realising its investment and generate cash inflow for the Group.

The Directors consider that the Disposal (i) will provide an opportunity to realise the Group’s investment in the Target Group and to take away the uncertainty facing the waste paper, scrap metal and consumable wastes recycling industry and trading of petrochemical products business in the PRC from the Group; (ii) is a good opportunity to generate cash inflow for the Group, thereby strengthening and improving the capital base of the Group; and (iii) will enable the Group to focus on and re-allocate its resources, including but not limited to staffs, management and working capital of the Target Group, in pursuing development opportunities in other existing developing business segments of the Group.

– 11 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company (i) has no intention to dispose, terminate and/or scale down the businesses of the Remaining Group; (ii) has not identified any potential investment or acquisition opportunities of new businesses to the Group; (iii) has no intention to inject any new business to the Group; and (iv) has no intention in changing its shareholding structure.

Having considered the reasons for and benefits of the Disposal as mentioned above, the Directors are of the view that the terms of the SPA are fair and reasonable and the Disposal is in the interest of the Company and the Shareholders as a whole.

INFORMATION ON THE REMAINING GROUP

The Group is principally engaged in the businesses of waste paper, scrap metal and consumable wastes recycling, trading of petrochemical products, online products sales, provision of marketing, web design and maintenance services, trading of gold and diamond industry and money lending.

Upon Completion, the Remaining Group will be principally engaged in the businesses of online products sales, provision of marketing, web design and maintenance services, trading of gold and diamond industry and money lending, with particulars as follows:

Online products sales, provision of marketing, web design and maintenance services

In January 2015, the Company has acquired Platinum Plus International Limited which through its wholly owned subsidiary, Ritz Trading (Shanghai) Limited (‘‘Ritz’’), is principally engaged in the business of online products sales, provision of marketing, web design and maintenance services in the PRC. It is involved in the provision of internet online services relating to product sales and marketing and web maintenance, and has focused on online retailing with a strong bias towards e-Commerce, offline-to-online and digital marketing strategy implementation and execution. The business model of Ritz is to assist its clients in setting up online shops hosted under platforms like Tmall.com and JD.com for different brands and maintaining the clients’ websites, assisting in logistics and administrative work and providing customer services in the PRC. For the services rendered by Ritz, it shall receive from its clients fixed service fees on monthly or quarterly basis plus a sales commission based on the monthly sales generated from the online flagship stores managed and operated by Ritz.

As at the Latest Practicable Date, Ritz (i) has approximately 6 employees, including members from the management who have, among others, over 5 to 20 years in the PRC’s e- Commerce and internet industries; (ii) has branded sportswear and cosmetics clients in the PRC who have made main contribution to its revenue in the past; (iii) does not have any long-term or material supplier since it is mainly a service provider; and (iv) has no fund raising plans for the coming 12 months.

– 12 –

LETTER FROM THE BOARD

The financial information of such business is as follows:

	For the year	ended	ended
	31 December
	2014		2015
	approximate	approximate
	HK$		HK$
	(audited)	(unaudited)
Turnover	1,561,000		3,571,000
Net profit	5,000		1,173,000
			As at
		31	December
			2015
		approximate
			HK$
		(unaudited)
Total assets			2,906,000
Net assets			2,094,000

The unaudited revenue generated from this online products sales segment for the year ended 31 December 2015 was approximately HK$3.6 million, representing an increase of approximately 129% as compared with the year ended 31 December 2014. Such significant increase was mainly driven by the rapid growth in the online shopping market in the PRC in recent years due to, in particular, the large number of internet users, along with a dynamic mobile telecommunications sector. It therefore offers huge potential for online and mobile shopping businesses.

In view of the growth of online retailing sector in the PRC aligned with the global shift towards online channels and away from physical stores, the Group will continue to develop this segment to increase the revenue stream of the Group, and hence the values and benefits to the Company and the Shareholders as a whole.

2. Trading of gold and diamond

In September 2015, the Company has acquired Elite Honest Inc. which through its wholly owned subsidiary, H & S Creation Limited (‘‘H & S’’), is principally engaged in the business of trading of gold and diamond industry of the Group.

– 13 –

LETTER FROM THE BOARD

H & S promotes its products through jewelry exhibitions, advertising and its website and it covers wide range of customers from Hong Kong, Europe, Australia and New Zealand. Upon receipt of orders from its customers, H & S will be responsible to design the jewelry products and purchase major components of the jewelry such as diamond and gold from the suppliers whereas the production will be outsourced to the sub-contractors. The average gross profit margin ranges from 10% to 35%.

As at the Latest Practicable Date, H & S (i) has approximately 4 employees, including the management who has, among others, over 10 years of experience in jewelry design and trading business; (ii) has over 14 existing clients who in aggregate have made main contribution to its revenue in the past; (iii) has approximately 5 existing suppliers whose business relationships with H & S range from one to five year(s); and (iv) has no fund raising plans for the coming 12 months.

The financial information of such business is as follows:

	For the year	ended	ended
	31 December
	2014		2015
	approximate	approximate
	HK$		HK$
	(audited)	(unaudited)
Turnover	13,064,000		15,183,000
Net profit	226,000		1,558,000
			As at
		31	December
			2015
		approximate
			HK$
		(unaudited)
Total assets			2,321,000
Net assets			1,849,000

– 14 –

LETTER FROM THE BOARD

The financial performance of H & S has been improving in the past year and should it sustain its profitability and fulfill the profit guarantee arrangement as disclosed in the announcement of the Company dated 4 September 2015, under which the net profit after tax of H & S for the financial year ended 31 December 2015 and 2016 shall be at least HK$1,400,000 and HK$2,800,000 respectively, this business segment is expected to have positive contribution to the Group’s earnings in the years to come. Leveraging on the platform of online shopping business of the Group, the Company expects the revenue of this segment will have substantive growth in the near future.

3. Money lending

In October 2015, the Company, through its wholly-owned subsidiary, has acquired the entire share capital of Great Luck Finance Limited (‘‘Great Luck’’), a company holding a money lender’s license under Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) and is principally engaged in the business of money lending. Great Luck is currently under negotiation with certain potential clients on potential loans and has successfully made loans to clients amounting to a total of approximately HK$78 million in the period from March to May 2016 at the average interest rate of 20% per annum. It is estimated that the overall loan portfolio for the financial year ending 2016 will be not less than HK$150 million and the resulting interest income may amount up to approximately HK$20 million based on an assumption of the interest rates ranging from 10% to 20% per annum.

The Company is of the view that such business will provide stable interest income stream to the Remaining Group and the Company will further expand such business with additional financial resources as and when the opportunities arise to further increase the turnover and profit from this segment.

Besides the principal businesses as aforesaid, the Remaining Group is also involved in the businesses of, among others, (i) securities investment; (ii) provision of financial services; and (iii) exploration and exploitation of natural resources, with particulars as follows:

i. Securities investment

The Company has adopted a diversified investment strategy including investing in quality stocks on the Stock Exchange and other financial products since year 2015 with an initial total investment amounting to approximately HK$383 million with a view to achieve better shareholders’ return. The aggregate amount of fair value of the equity investment on the Stock Exchange of the Group was approximately HK$1,064 million as at 30 September 2015. The Group has recorded a gain on change in fair value of the listed equity securities for the six months ended 30 September 2015 of approximately HK$681 million.

– 15 –

LETTER FROM THE BOARD

Details of the Group’s investment in equity securities listed on the Stock Exchange as at 30 September 2015 are as follows:

Company name Stock code Industry classification No. of shares held China National Culture Group Limited 745 Consumer Services – Media & Entertainment – Advertising & Marketing 326,000,000 China Jicheng Holdings Limited 1027 Consumer Goods – Household Goods & Electronics – Household Goods 317,000,000 Suncorp Technologies Limited 1063 Information Technology – IT Hardware – Telecommunication Equipment 43,000,000 Capital VC Limited 2324 Financials – Other Financials – Investment & Asset Management 71,000,000 WLS Holdings Limited 8021 Properties & Construction – Construction – Building Construction 504,000,000 GreaterChina Professional Services Limited 8193 Financials – Other Financials 44,000,000 L & A International Holdings Limited 8195 Consumer Goods – Textiles, Clothing & Personal Care – Apparel 69,000,000 Total	Book value as at 30 September 2015 (HK$) 30,400,000 35,300,000 44,500,000 21,900,000 97,100,000 23,400,000 130,400,000 383,000,000	Market value as at 30 September 2015 (HK$) 29,990,000 638,900,000 8,470,000 21,300,000 126,000,000 20,700,000 218,560,000
		1,063,920,000

The Company had made approximately 46 times of equity investment on the Stock Exchange since 2015 and the total amount involved was approximately HK$443 million. The Company has appointed an investment consultant who will give advice in respect of the performance and prospect of certain Hong Kong listed securities to the chairman of the Company from time to time. The chairman of the Company has over 21 years of experience

– 16 –

LETTER FROM THE BOARD

in the banking industry and is an economist, and will make the investment decision after discussion with other executive Directors after considering the advice from the said investment consultant.

In view of the volatility of the equity markets, the Company has disposed certain stocks on the Stock Exchange during the past months so as to realize investment gain and obtain additional cash flow to develop the Group’s existing businesses and pursuit other investment opportunities. The aggregate realized investment gain from the said disposal(s) and the resulting cash flow obtained by Company was approximately HK$10 million and HK$119.5 million respectively during the period from June 2015 to January 2016. Confronting the complex and changing environment in the domestic and international economies, the Company will adopt a diversified investment strategy to generate long-term returns for the Shareholders while avoiding concentration risk and maintaining reasonable spread of the Group’s investments by investing in both short and long term Hong Kong listed securities, including initial public offering securities. The targets of the investment portfolio cover a wide range of business sectors, including but not limited to, companies engaged in manufacturing, construction and buildings work, advertising, financial services, money lending, aviation, investment and retailing sectors.

ii. Provision of financial services

In November 2015, the Company has, as guarantor, entered into a sale and purchase agreement with Gold Castle Group Limited, a wholly-owned subsidiary of the Company, as purchaser and STI Financial Group Limited as vendor dated 16 November 2015 in relation to the acquisition of the entire issued share capital of STI Securities & Wealth Management Limited which is a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 9 (asset management) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). The financial information of such business is as follows:

			For the
	For the year		nine-month
	ended	period ended
	31 December	30 September
	2014		2015
	approximate		approximate
	HK$		HK$
	(audited)		(unaudited)
Turnover	5,212,000		6,022,000
Net profit/(loss)	(148,000)		47,000

– 17 –

LETTER FROM THE BOARD

	As at
	30 September
	2015
	approximate
	HK$
	(unaudited)
Total assets	4,824,000
Net assets	3,914,000

The completion of such acquisition is subject to, among others, the approval of the Securities and Futures Commission for Gold Castle Group Limited (and its beneficial owners) to become substantial shareholder(s) of STI Securities & Wealth Management Limited under the Securities and Futures Ordinance. As at the Latest Practicable Date, the Company has obtained such approval from the Securities and Futures Commission on 11 April 2016 and the conditions precedent to such acquisition have been fulfilled. Pursuant to the sale and purchase agreement, Gold Castle Group Limited has applied to the Securities and Futures Commission to nominate certain number of person to act as new responsible officers of STI Securities & Wealth Management Limited and the completion of such acquisition is expected to be by the end of July 2016 upon receipt of such approval. The Company is of the view that following the completion of such acquisition, the Company intends to invest approximately HK$150 million to develop the financial services business, including the provision of securities trading, advising on securities, asset management and margin financing businesses which will help diversifying the businesses of the Group for maximizing returns to the Shareholders. The Company also expects that the margin financing business and the money lending business of the Group will be able to complement each other and realise synergic effect to enhance efficiency and performance to these businesses. The Group will strive to engage new talents in its management team to enhance competitiveness and management expertise with concerted effort in order to seize the opportunities ahead.

iii. Exploration and exploitation of natural resources

In April 2014, the Company has acquired 10% interest in Pure Power Holdings Limited (‘‘Pure Power’’) which wholly owns Bright Sky Energy & Minerals, Inc. (‘‘BSEM’’). In January 2016, the Company has further acquired 39.41% interest in Pure Power and has then been effectively interested in approximately 49.41% of the issued share capital of BSEM through Pure Power. BSEM is incorporated in Nevada of the United States and is principally engaged in the exploration and exploitation of natural resources in the United States. Following the completion of the said acquisition, Pure Power and BSEM have become associates of the Company and are being accounted for ‘‘interest in an associate’’ by using equity method of accounting in the Company’s financial statements.

– 18 –

LETTER FROM THE BOARD

The principal assets of BSEM are the oil & gas rights under the federal oil and gas leases which cover an aggregate area of approximately 4,240.88 acres located in Nye County, Nevada, the United States. According to the analysis of a geological and drilling report produced by Ehni Enterprises Inc., a company specialised in geological consulting, in September 2015 on one of the wells owned and operated by BSEM, the results from the drilling showed presence of oil/condensate and gas anomalies and significant intervals of oil/hydrocarbon bearing sandstone units, which were observed down the well. Despite the drop in oil price in recent years, in view of the limited oil resources and the constant demand in oil in the longterm, the Company believes that oil price will rebound once the global economy recovers. The Company will monitor the oil price closely and consider to make further investment in drilling and oil production when the upward trend of oil price is confirmed.

The Board is of the view that the Remaining Group will carry out a sufficient level of operations and have significant assets, in compliance with Rule 13.24 of the Listing Rules, to maintain its listing status after completion of the Disposal and the Disposal would not diminish the intrinsic value of the Company given that a substantial portion of the net proceeds would be applied to the reduction of indebtedness of the Remaining Group.

In addition, as at the Latest Practicable Date, the Directors (i) are of the opinion that the Group will have sufficient funding and resources for its present requirement that is for at least the next 12 months; and (ii) did not anticipate any future fund raising needs in the short-term based on the assessment of the Group’s existing development plans.

THE LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Disposal are 75% or more, the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements.

GENERAL

– 19 –

LETTER FROM THE BOARD

The SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the SPA and the transactions contemplated thereunder. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder or any of its close associates has any material interest in the SPA and the transactions contemplated thereunder, and no Shareholder is required to abstain from voting on the resolution(s) in respect of the SPA at the SGM.

Completion is conditional upon the satisfaction of the conditions set out in the section headed ‘‘Conditions Precedent’’ under the SPA. Accordingly, the Disposal may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the securities of the Company.

RECOMMENDATION

The Board considers that the transactions contemplated under the SPA are on normal commercial terms and the terms of the SPA are fair and reasonable and are in the interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the SPA and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully By order of the Board

China Environmental Energy Investment Limited Chen Tong

Chairman

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE YEARS’ SUMMARY OF FINANCIAL RESULTS

Financial information of the Group for each of the three years ended 31 March 2013, 2014 and 2015 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (www.986.com.hk) respectively:

annual report of the Company for the year ended 31 March 2013 published on 30 July 2013 (pages 37 to 146);
annual report of the Company for the year ended 31 March 2014 published on 28 July 2014 (pages 39 to 150);
annual report of the Company for the year ended 31 March 2015 published on 30 July 2015 (pages 38 to 154);

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES AS AT 30 APRIL 2016

As at the close of business on 30 April 2016, the Group had outstanding borrowings of approximately HK$173.4 million, comprising (1) unsecured promissory notes of HK$130 million; (2) unsecured unconvertible bonds of HK$20 million; (3) unsecured bank loan of approximately HK$22.2 million (equivalent to RMB18.5 million) guaranteed by a subsidiary of the Group and independent third parties; and (4) secured bills payable of approximately HK$1.2 million (equivalent to RMB1 million).

For the purpose of the above indebtedness statement, foreign currency denominated amounts has been translated into Hong Kong dollar at the rates of exchange prevailing at the close of business on 30 April 2016.

Save as aforesaid and apart from intra-group liabilities and normal trade payables, the Group did not have: (a) any other debt securities issued and outstanding, and authorised or otherwise created but unissued; (b) any other term loans (whether guaranteed, unguaranteed, secured or unsecured); (c) any other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments; (d) any other mortgages or charges; or (e) any other material guarantees or contingent liabilities as at 30 April 2016. The Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 30 April 2016, up to and including the Latest Practicable Date.

– 21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least the next 12 months from the date of publication of this circular in the absence of unforeseen circumstances after taking into account (i) the internal resources of the Group; (ii) the available credit facilities of the Group; and (iii) the Disposal.

4. MATERIAL ADVERSE CHANGE

The Group published a profit warning announcement on 26 November 2015 regarding the expected substantial loss for the six months period ended 30 September 2015. The Board believed that such substantial loss was primarily attributable to the non-cash impairment loss on the available-for-sale investment arisen from the Company’s existing investment in Pure Power Holdings Limited of approximately HK$68.97 million. The above-said loss was non-cash in nature and had no effect on the Group’s business operations where such loss did not constitute a material adverse effect on the business, financial condition of the Group taken as a whole.

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2015, being the date to which the latest published audited consolidated financial statements of the Company were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

The Remaining Group is principally engaged in the businesses of online products sales, provision of marketing, web design and maintenance services, trading of gold and diamond industry and money lending.

The Directors will continue to enhance the Group’s businesses through review of its existing business portfolio from time to time and also seek suitable investment opportunities in the long run so as to broaden the source of income of the Group and diversify the Group’s business portfolio. For its existing businesses, the Group will allocate more resources to develop those businesses with high growth potential and will consider to divest those businesses with losses or facing intensive competition. In any potential acquisition, the Group will evaluate the management of the target to be acquired as well as the intrinsic value of the acquisition, with an overall goal and strategy to acquire businesses with high intrinsic value at attractive prices. The Company believes that the acquisition of STI Securities & Wealth Management Limited is the prime opportunity for the Company to enter the financial services industry. The Company is of the view that following the completion of such acquisition, the Company intends to strengthen the development of the financial services business, including the provision of securities trading, advising on securities, asset management and margin financing businesses which will help diversifying the businesses, building a stronger business foundation and enlarging the source of income of the Group, thereby creating value for the Shareholders.

– 22 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Company intends to finance the said business plans of the Remaining Group, including but not limited to, the development of an overall loan portfolio for the financial year ending 2016 to be not less than HK$150 million in respect of the money lending business and the investment of approximately HK$150 million to develop the financial services business as mentioned in the section headed ‘‘Letter from the Board’’ to this circular, through its internal resources, including but not limited to realization of its investment in certain listed securities and cash flow generated from its business operation.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Set out below is the management and discussion and analysis on the Remaining Group.

(i) For the six months ended 30 September 2015

Business and Financial Review

The Remaining Group recorded a turnover of approximately HK$1.39 million for the period under review (2014: nil). The increase in turnover was mainly attributable to the contribution from the newly acquired businesses of internet sales and services.

The Remaining Group’s unaudited net loss for the period under review was approximately HK$87.93 million (2014: approximately HK$28.58 million). The increase in unaudited net loss was mainly due to (i) impairment loss on available-forsale investment in respect of the Company’s investment in Pure Power Holdings Limited of approximately HK$68.97 million (2014: Nil); and (ii) goodwill impairment loss of approximately HK$1.78 million recognized for the six months ended 30 September 2015 (2014: Nil). However, the Group recorded an unrealized gain of approximately HK$680.81 million on investments in equity securities listed in Hong Kong at fair value through other comprehensive income in profit or loss for the six months ended 30 September 2015.

Liquidity and Financial Resources

As at 30 September 2015, the Remaining Group had total assets of approximately HK$1,559.4 million and liabilities of approximately HK$151.5 million.

It is the policy of the Company to regularly monitor the current and expected liquidity requirements of the Group’s operations ensuring that the liquidity structure of the Group’s assets, liabilities and commitments can meet its funding requirements at a timely manner. The Group financed its working capital through its internal funding and had no outstanding loans or borrowings from banks or financial institutions.

– 23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash Position

As at 30 September 2015, the Remaining Group’s cash and bank balances were approximately HK$96.6 million.

Gearing ratio

As at 30 September 2015, the Remaining Group’s gearing ratio (calculated as net debt (being total debts including borrowings, trade and bills payables, other payables and accruals less the aggregate of cash deposits held by securities brokers and cash and bank balances) divided by total shareholders’ equity and net debt) was 4%.

Borrowings

As at 30 September 2015, the Remaining Group’s interest-bearing borrowings amounted to approximately HK$117.5 million, which consisted of promissory notes of approximately HK$97.2 million and unconvertible bonds of approximately HK$20.3 million, and were denominated in Hong Kong dollars and had fixed interest rates.

Charge on Assets

As at 30 September 2015, the Remaining Group did not have any charge on assets.

Capital Expenditures

As at 30 September 2015, the Remaining Group did not have any significant capital commitments.

Contingent Liabilities

As at 30 September 2015, the Remaining Group did not have any significant contingent liabilities.

Exchange Risk Exposure

The Remaining Group mainly operates in Hong Kong and the Mainland China, with revenues and expenditures denominated in RMB. During the six months ended 30 September 2015, the Group did not enter into any derivative contracts aimed at minimizing exchange rate risks and no financial instrument has been used for hedging purposes.

The Group’s foreign currency net investments had not been hedged by currency borrowings or any other hedging instruments.

– 24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments and Material Acquisition and Disposals

In order to diversify the business of the Remaining Group for maximizing returns to the shareholders of the Company, the Remaining Group has been actively seeking various investment opportunities, and entered into the following transactions. On 4 September 2015, the Company as purchaser and Mr. Wong Him Shun Philip as vendor entered into a sale and purchase agreement, pursuant to which the vendor has conditionally agreed to sell and the Company has conditionally agreed to acquire the entire equity interest in Elite Honest Inc. (‘‘Elite Honest’’）, at a consideration of HK$30 million by way of issue of promissory note by the Company. Elite Honest was incorporated under the laws of the British Virgin Islands with limited liability and it owns 100% equity interest in H & S Creation Limited (‘‘H & S’’）. H & S is principally engaged in the business of trading of gold and diamond. Upon completion of the acquisition on 18 September 2015, Elite Honest and H & S have become wholly-owned subsidiaries of the Company. Details of which are set out in the announcement of the Company dated 4 September 2015.

Save for the above disclosed, the Remaining Group did not have any material acquisition or disposal of subsidiaries and associated companies during the period.

Staff and Remuneration Policy

As at 30 September 2015, the Remaining Group had approximately 29 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$4.2 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

(ii) For the year ended 31 March 2015

Business and Financial Review

During the financial year ended 31 March 2015, the Remaining Group’s turnover amounted to approximately HK$424,000 (2014: nil). The increase in revenue was mainly attributable to the contribution from the newly acquired businesses of internet sales and services. The Remaining Group recorded a gross profit for the financial year of around HK$418,000.

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group’s result for the financial year ended 31 March 2015 was a consolidated net loss of approximately HK$88.7 million, against a consolidated net loss of approximately HK$1,234 million for the financial year ended 31 March 2014. The improved financial results was primarily attributable to the fact that the non-cash substantial loss of HK$1,202.6 million on change in fair value of financial liabilities designated at fair value through profit or loss caused by the significant increase in the Company’s share price as at the date of conversion of convertible notes as compared to the share price as at 1 April 2013 was recognised for the year ended 31 March 2014 while such loss for the year ended 31 March 2015 was relatively minimal.

Liquidity and Financial Resources

As at 31 March 2015, the Remaining Group had total assets of approximately HK$877 million and liabilities of approximately HK$261.7 million.

It is the policy of the Company to regularly monitor the current and expected liquidity requirements of the Group’s operations ensuring the liquidity structure of the Group’s assets, liabilities and commitments can meet its funding requirements at a timely manner. The Group financed its working capital through its internal funding and placing new shares.

Cash Position

As at 31 March 2015, the Remaining Group’s cash and bank balances were approximately HK$249.2 million.

Gearing ratio

As at 31 March 2015, the Remaining Group’s gearing ratio (calculated as net debt (being total debts including borrowings, trade and bills payables, other payables and accruals less the aggregate of cash deposits held by securities brokers and cash and bank balances) divided by total shareholders’ equity and net debt) was 2%.

Borrowings

As at 31 March 2015, the Remaining Group’s interest-bearing borrowings amounted to approximately HK$224.1 million, which consisted of promissory notes of approximately HK$201.9 million, unconvertible bonds of approximately HK$20.3 million and a convertible note of approximately HK$1.9 million, and were denominated in Hong Kong dollars and had fixed interest rates.

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Charge on Assets

As at 31 March 2015, the Remaining Group did not have any charge on assets.

Capital Expenditures

As at 31 March 2015, the Remaining Group did not have any significant capital commitments.

Contingent Liabilities

As at 31 March 2015, the Remaining Group did not have any significant contingent liabilities.

Exchange Risk Exposure

The Group generates most of the revenue and incurs most of the costs in RMB. The Remaining Group does not foresee significant risk in exchange rate fluctuations and no financial instrument has been used for hedging purposes.

The Group’s foreign currency net investments had not been hedged by currency borrowings or any other hedging instruments.

Significant Investments and Material Acquisition and Disposals

On 12 May 2014, the Company and Main Global Group Limited entered into an agreement pursuant to which Main Global Group Limited has conditionally agreed to sell and the Company has conditionally agreed to acquire shares representing 9.9% equity interest in Starfame Investments Limited which is an investment holding company and indirectly wholly owned 北京吉仁弘暉商貿有限公司 (Beijing Jirenhonghui Trading Company Limited*, the ‘‘Beijing Company’’) which is principally engaged in wholesale and distribution products encompassing various aspects of production and livelihood, for a consideration of HK$30,000,000, which was settled by way of the issue of the promissory note. The acquisition was completed on 20 May 2014. As informed by the management of the Beijing Company, the Beijing’s Company’s audited turnover for the year 2014 was RMB295,999,000 and operating profit after tax was RMB24,301,000.

For identification purposes only

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On 4 June 2014, the Company entered into a sale and purchase agreement with Lucky East International Limited, pursuant to which Lucky East International Limited has agreed to acquire and the Company has agreed to sell shares representing 9.9% of the entire issued share capital of Swift Profit International Limited, at a consideration of HK$66,000,000 which was settled in instalments. The disposal of Swift Profit International Limited which operated electric car battery business of the Remaining Group, was completed on 30 September 2015. On 21 January 2015, the Company and Mr. Lu Qinglu entered into an agreement pursuant to which Mr. Lu Qinglu has conditionally agreed to sell and the Company has conditionally agreed to acquire the entire equity interest in Platinum Plus International Limited which through its wholly owned subsidiary, Ritz Trading (Shanghai) Company Limited, is principally engaged in the business of online products sales, provision of marketing, web design and maintenance services in the PRC, for a consideration of HK$63,750,000, which was settled by way of the issue of the promissory note. The acquisition was completed on 30 January 2015. Following the completion of the said acquisition, Platinum Plus International Limited and Ritz Trading (Shanghai) Company Limited have become wholly owned subsidiaries of the Company. Since the acquisition, the revenue and the operating profit before tax generated from such subsidiaries were HK$0.42 million and HK$0.16 million respectively.

In March 2015, the Remaining Group adopted a diversified investment strategy including investing in quality stock and other financial products with a view to achieve better shareholders’ return. As at 31 March 2015, the Remaining Group held 12,670,000 shares of Jicheng Umbrella Holdings Limited (a company listed on the Stock Exchange; stock code: 1027) at purchase cost of HK$13,938,000 and 63,000,000 shares of WLS Holdings Limited (a company listed on the Growth Enterprise Market of the Stock Exchange; stock code: 8021) at purchase cost of HK$18,900,000 for long term investment. However, the Remaining Group recorded an unrealized gain of approximately HK$80,588,000 on investments in equity securities listed in Hong Kong at fair value though other comprehensive income in profit or loss for the year ended 31 March 2015.

Save for the above disclosed, the Remaining Group did not have any material acquisition or disposals of subsidiaries and associated companies during the year.

Staff and Remuneration Policy

As at 31 March 2015, the Remaining Group had approximately 27 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$8.1 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) For the year ended 31 March 2014

Business and Financial Review

The Remaining Group did not have any material operation for the year ended 31 March 2014.

Operating loss from continuing operations after tax of the Remaining Group was HK$1,234 million which included a loss of HK$1,202.6 million on change in fair value of financial liabilities designated at fair value through profit or loss caused by significant increases in the Company’s share price as at dates of conversion of convertible notes as compared to share price at the beginning of the year; impairment loss of HK$17.3 million on investment in electric car battery business and gain on disposal subsidiaries engaged in laminates business amounting to HK$25.9 million.

Liquidity and Financial Resources

As at 31 March 2014, the Remaining Group had total assets of approximately HK$237.7 million and liabilities of approximately HK$106.9 million.

It is the policy of the Company to regularly monitor the current and expected liquidity requirements of the Group’s operations ensuring that the liquidity structure of the Group’s assets, liabilities and commitments can meet its funding requirements at a timely manner. The working capital was financed from internal funds and loans from financial institution to meet the foreseeable funding needs in the short term and long term.

Cash Position

As at 31 March 2014, the Remaining Group’s cash and bank balances were approximately HK$8.6 million.

Gearing ratio

As at 31 March 2014, the Remaining Group’s gearing ratio (calculated as net debt (being total debts including borrowings, trade and bills payables, other payables and accruals less the aggregate of cash deposits held by securities brokers and cash and bank balances) divided by total shareholders’ equity and net debt) was 43%.

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Borrowings

As at 31 March 2014, the Remaining Group’s interest-bearing borrowings amounted to approximately HK$93.2 million, which consisted of promissory notes with fixed interest rate of approximately HK$5 million, unconvertible bonds with interest at fixed interest rate of approximately HK$20.2 million and other secured loan with variable interest rate of approximately HK$68 million, and were all denominated in Hong Kong dollars.

Charge on Assets

As at 31 March 2014, the Remaining Group did not have any charge on assets.

Capital Expenditures

As at 31 March 2014, the Remaining Group did not have any significant capital commitments.

Contingent Liabilities

As at 31 March 2014, the Remaining Group did not have any significant contingent liabilities.

Exchange Risk Exposure

The Group’s foreign currency net investments had not been hedged by currency borrowings or any other hedging instruments.

Significant Investments and Material Acquisition and Disposals

On 20 January 2014, the Company entered into a sale and purchase agreement with Fortune Glow Limited pursuant to which the Company has conditionally agreed to acquire and Fortune Glow Limited has conditionally agreed to dispose of shares representing 10% equity interest in Pure Power Holdings Limited which is principally engaged in the exploration and exploitation of natural resources in the United States of America, for the consideration of HK$125,000,000, which was settled as to HK$123,200,000 by way of delivery of promissory notes and as to HK$1,800,000 by way of delivery of convertible bonds. The acquisition was completed on 29 April 2014.

Save for the above disclosed, the Remaining Group did not have any material acquisition or disposal of subsidiaries and associated companies during the year.

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Staff and Remuneration Policy

As at 31 March 2014, the Remaining Group had approximately 21 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$5.7 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

(iv) For the year ended 31 March 2013

Business and Financial Review

The Remaining Group did not have any material operation for the year ended 31 March 2013.

Liquidity and Financial Resources

As at 31 March 2013, the Remaining Group had total assets of approximately HK$428.1 million and liabilities of approximately HK$283.9 million.

Cash Position

As at 31 March 2013, the Remaining Group’s cash and bank balances were approximately HK$2.3 million.

Gearing ratio

As at 31 March 2013, the Remaining Group’s gearing ratio (calculated as net debt (being total debts including borrowings, trade and bills payables, other payables and accruals less the aggregate of cash deposits held by securities brokers and cash and bank balances) divided by total shareholders’ equity and net debt) was 66%.

Borrowings

As at 31 March 2013, the Remaining Group’s (i) interest-bearing borrowings amounted to approximately HK$275.7 million, which consisted of promissory notes of approximately HK$122 million, unconvertible bonds of approximately HK$20 million and convertible bonds of approximately HK$133.7 million, and were all denominated in Hong Kong dollars and had fixed interest rates; and (ii) interest-free borrowings amounted to approximately HK$3.5 million and were unsecured and denominated in Hong Kong dollars.

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Charge on Assets

As at 31 March 2013, the Remaining Group did not have any charge on assets.

Capital Expenditures

As at 31 March 2013, the Remaining Group did not have any significant capital commitments.

Contingent Liabilities

As at 31 March 2013, the Remaining Group did not have any significant contingent liabilities.

Exchange Risk Exposure

The Group’s foreign currency net investments had not been hedged by currency borrowings or any other hedging instruments.

Significant Investments and Material Acquisition and Disposals

On 28 March 2013, the Company has entered into a sale and purchase agreement to dispose of the entire equity interests in Nam Hing (B.V.I.) Limited and its subsidiaries, being the Company’s subsidiaries mainly engaged in trading and manufacturing of printed circuit boards and trading of industrial laminates. The disposal was completed on 10 April 2013.

Save for the above disclosed, the Remaining Group did not have any material acquisition or disposal of subsidiaries and associated companies during the year.

Staff and Remuneration Policy

As at 31 March 2013, the Remaining Group had approximately 19 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Remaining Group was approximately HK$5.5 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

– 32 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below are the unaudited consolidated statements of financial position of Ideal Market Holdings Limited and its subsidiaries (the ‘‘Target Group’’) as at 31 March 2013, 2014, 2015, 30 September 2014 and 2015, and 31 December 2014 and 2015, and the unaudited consolidated statements of profit or loss and other comprehensive income, the unaudited consolidated statements of changes in equity and the unaudited consolidated statements of cash flows of the Target Group for the years ended 31 March 2013, 2014 and 2015, the six months ended 30 September 2014 and 2015, and the nine months ended 31 December 2014 and 2015 and explanatory notes (the ‘‘Financial Information’’).

The Financial Information has been prepared in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules and the basis of preparation as set out in note 2 to the Financial Information and is solely for the purposes of inclusion in this circular in connection with the Disposal pursuant to the SPA.

The reporting accountant of the Target Group, Cheng & Cheng Limited, was engaged to review the Financial Information of the Target Group set out on pages 34 to 39 of this circular in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’). A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountant to obtain assurance that the reporting accountant would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountant does not express an audit opinion.

Based on the review, nothing has come to the reporting accountant’s attention that causes them to believe that the Financial Information of the Target Group for the relevant years is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 to the Financial Information.

– 33 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue Cost of sales Gross profit Investment and other income Other gains and losses Selling and distribution expenses Administrative expenses Finance costs Loss before taxation Taxation Loss for the year/period Other comprehensive income/(expense), net of income tax Items that may be reclassified subsequently to profit or loss Exchange differences arising from translation of foreign operations Exchange differences arising during the year/period Total comprehensive (expense)/income for the year/period	Year 2013 HK$’000 99,655 (98,474) 1,181 5,679 (40,599) (10,771) (15,205) (1,857) (61,572) 295 (61,277) 494 (60,783)	ended 31 March 2014 2015 HK$’000 HK$’000 59,808 41,465 (54,404) (40,614) 5,404 851 1,343 1,803 (31,194) (13,205) (3,738) (674) (8,082) (2,397) (2,000) (1,607) (38,267) (15,229) (839) – (39,106) (15,229) 607 (66) (38,499) (15,295)	Six months ended 30 September 2014 2015 HK$’000 HK$’000 15,047 24,394 (14,147) (23,904) 900 490 1,073 – – – (921) (322) (1,739) (374) (806) (797) (1,493) (1,003) – – (1,493) (1,003) (515) 1,356 (2,008) 353	Nine months ended 31 December 2014 2015 HK$’000 HK$’000 24,201 25,618 (22,373) (25,286) 1,828 332 1,787 85 (1,524) – (558) (416) (1,814) (712) (1,254) (1,199) (1,535) (1,910) – – (1,535) (1,910) 42 2,421 (1,493) 511	Nine months ended 31 December 2014 2015 HK$’000 HK$’000 24,201 25,618 (22,373) (25,286) 1,828 332 1,787 85 (1,524) – (558) (416) (1,814) (712) (1,254) (1,199) (1,535) (1,910) – – (1,535) (1,910) 42 2,421 (1,493) 511
					332 85 – (416) (712) (1,199)
					(1,910) –
					(1,910) 2,421
					511

– 34 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 23,941 8,883 6,633 657 372 494 2,214 3,944 4,719 – – – 57,416 22,397 14,516 – 11,767 5,877 1,325 2,040 1,696 61,612 40,520 27,302 4,113 22,887 1,008 25,650 33,842 36,835 13,169 – – 993 3,395 6,165 22,500 7,861 23,759 21,205 21,994 22,039 87,630 89,979 89,806 (26,018) (49,459) (62,504) (2,077) (40,576) (55,871) 2 2 2 (2,079) (40,578) (55,873) (2,077) (40,576) (55,871)	As at 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 23,941 8,883 6,633 657 372 494 2,214 3,944 4,719 – – – 57,416 22,397 14,516 – 11,767 5,877 1,325 2,040 1,696 61,612 40,520 27,302 4,113 22,887 1,008 25,650 33,842 36,835 13,169 – – 993 3,395 6,165 22,500 7,861 23,759 21,205 21,994 22,039 87,630 89,979 89,806 (26,018) (49,459) (62,504) (2,077) (40,576) (55,871) 2 2 2 (2,079) (40,578) (55,873) (2,077) (40,576) (55,871)	As at 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 23,941 8,883 6,633 657 372 494 2,214 3,944 4,719 – – – 57,416 22,397 14,516 – 11,767 5,877 1,325 2,040 1,696 61,612 40,520 27,302 4,113 22,887 1,008 25,650 33,842 36,835 13,169 – – 993 3,395 6,165 22,500 7,861 23,759 21,205 21,994 22,039 87,630 89,979 89,806 (26,018) (49,459) (62,504) (2,077) (40,576) (55,871) 2 2 2 (2,079) (40,578) (55,873) (2,077) (40,576) (55,871)	As at 30 September 2014 2015 HK$’000 HK$’000 8,294 6,462 440 388 3,442 5,615 – – 31,799 31,221 5,059 – 1,063 4,639 41,803 41,863 6,282 4,537 36,652 43,527 – – 3,428 11,158 24,029 23,148 22,290 21,473 92,681 103,843 (50,878) (61,980) (42,584) (55,518) (2) 2 42,586 (55,520) 42,584 (55,518)	As at 30 September 2014 2015 HK$’000 HK$’000 8,294 6,462 440 388 3,442 5,615 – – 31,799 31,221 5,059 – 1,063 4,639 41,803 41,863 6,282 4,537 36,652 43,527 – – 3,428 11,158 24,029 23,148 22,290 21,473 92,681 103,843 (50,878) (61,980) (42,584) (55,518) (2) 2 42,586 (55,520) 42,584 (55,518)	As at 31 2014 HK$’000 6,627	December 2015 HK$’000 6,331
657 2,214 – 57,416 – 1,325	372 3,944 – 22,397 11,767 2,040	494 4,719 – 14,516 5,877 1,696	440 3,442 – 31,799 5,059 1,063	388 5,615 – 31,221 – 4,639	1,010 3,643 – 24,237 2,499 1,431	49 3,248 12,989 20,588 2,387 504
61,612	40,520	27,302	41,803	41,863	32,820	39,765
4,113 25,650 13,169 993 22,500 21,205	22,887 33,842 – 3,395 7,861 21,994	1,008 36,835 – 6,165 23,759 22,039	6,282 36,652 – 3,428 24,029 22,290	4,537 43,527 – 11,158 23,148 21,473	2,955 29,452 – 3,437 23,737 22,019	2,538 55,799 – – 22,082 21,037
87,630	89,979	89,806	92,681	103,843	81,600	101,456
(26,018)	(49,459)	(62,504)	(50,878)	(61,980)	(48,780)	(61,691)
(2,077)	(40,576)	(55,871)	(42,584)	(55,518)	(42,153)	(55,360)
2 (2,079)	2 (40,578)	2 (55,873)			2 (42,155)	2 (55,362)
(2,077)	(40,576)	(55,871)	42,584	(55,518)	(42,153)	(55,360)

– 35 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 April 2012 Loss for the year Exchange differences arising on translation of foreign operations At 31 March 2013 and 1 April 2013 Loss for the year Exchange differences arising on translation of foreign operations At 31 March 2014 and 1 April 2014 Loss for the year Exchange differences arising on translation of foreign operations At 31 March 2015 For the six months ended 30 September 2015 At 1 April 2015 Loss for the year Exchange difference arising on translation of foreign operations At 30 September 2015 For nine months ended 31 December 2015 At 1 April 2015 Loss for the period Exchange differences arising on translation of foreign operations At 31 December 2015	Share capital HK$’000 2 – – 2 – – 2 – – 2 2 – – 2 2 – – 2	Exchange reserve HK$’000 220 – 494 714 – 607 1,321 – (66) 1,255 1,255 – 1,356 2,611 1,255 – 2,421 3,676	Retained earnings/ (Accumulated losses) HK$’000 58,484 (61,277) – (2,793) (39,106) – (41,899) (15,229) – (57,128) (57,128) (1,003) – (58,131) (57,128) (1,910) – (59,038)	Total HK$’000 58,706 (61,277) 494
				(2,077) (39,106) 607
				(40,576) (15,229) (66)
				(55,871)
				(55,871) (1,003) 1,356
				(55,518)
				(55,871) (1,910) 2,421
				(55,360)

– 36 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities
Loss for the year/period
Adjustments for:
Income tax (credit)/expenses
recognised in profit or loss
Finance costs
Depreciation of property,
plant and equipment
Loss on disposal of property,
plant and equipment
Gain on disposal of a subsidiary
Impairment loss recognised
in respect of:
– property, plant and equipment
– trade receivables
– other receivables
Bank interest income
Reversal of impairment loss
on other receivables
Gain on derecognition of other payables
Written down of inventories
Operating cash flows before movements
in working capital
Decrease/(increase) in inventories
Decrease/(increase) in trade and
bills receivables
(Increase)/decrease in other receivables,
prepayments and deposits paid
(Increase) in amount due
from holding company
Decrease in amount due
from a minority shareholder
Increase/(decrease) in amount
due to holding company
(Decrease)/increase in trade and
bills payables
(Decrease)/increase in other
payables and accruals
Decrease in amount due to
a substantial shareholder

Year ended 31 March
Six months ended
30 September
Nine months ended
31 December
2013
2014
2015
2014
2015
2014
2015
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
(61,277)
(39,106)
(15,229)
(1,493)
(1,003)
(1,535)
(1,910)
(295)
839
–
–
–
–
–
1,857
2,000
1,607
806
797
1,254
1,199
5,452
5,420
750
702
–
751
–
67
8,362
1,521
–
–
1,524
–
–
(14)
–
–
–
–
–
–
1,474
–
–
–
–
–
5,754
200
–
–
–
–
–
35,555
46,058
11,705
–
–
–
–
(555)
(42)
(167)
(89)
–
(147)
(84)
–
(11,439)
(21)
–
–
(21)
–
–
(13,464)
–
–
–
–
–
5,937
–
–
–
–
–
–
(7,505)
288
166
(74)
(206)
1,826
(795)
5,324
285
(121)
(63)
95
(639)
436
38,991
(1,961)
(767)
551
(1,035)
307
1,295
(33,002)
862
(3,748)
(9,017)
(17,295)
(1,800)
(6,942)
–
–
–
–
–
–
(12,989)
29,127
–
–
–
–
–
–
641
2,442
2,765
33
5,058
38
(6,068)
(75,358)
19,084
(21,947)
(16,762)
3,618
(20,038)
1,624
(1,538)
21,849
2,966
2,331
7,775
(4,449)
20,697
(11)
(13,357)
–
–
–
–
–

– 37 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504	Year ended 31 March Six months ended 30 September Nine months ended 31 December 2013 2014 2015 2014 2015 2014 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (43,331) 29,492 (20,686) (23,001) (1,990) (24,755) (2,742) (901) – – (1) – – – (44,232) 29,492 (20,686) (23,002) (1,990) (24,755) (2,742) 555 42 167 89 – 147 84 22,568 (11,956) 5,890 6,805 5,828 9,319 3,323 23,123 (11,914) 6,057 6,894 5,828 9,466 3,407 – – 15,881 15,918 – 15,929 – 3,720 (14,835) – – – – (615) (1,857) (2,000) (1,607) (806) (797) (1,254) (1,199) 1,863 (16,835) 14,274 15,112 (797) 14,675 (1,814) (19,246) 743 (355) (996) 3,041 (614) (1,149) 20,544 1,325 2,040 2,040 1,696 2,040 1,696 27 (28) 11 19 (98) 5 (43) 1,325 2,040 1,696 1,063 4,639 1,431 504
(44,232)	29,492	(20,686)	(23,002)	(1,990)	(24,755)	(2,742)
555 22,568	42 (11,956)	167 5,890	89 6,805	– 5,828	147 9,319	84 3,323
23,123	(11,914)	6,057	6,894	5,828	9,466	3,407
– 3,720 (1,857)			15,918 – (806)	– – (797)	15,929 – (1,254)	– (615) (1,199)
1,863	(16,835)	14,274	15,112	(797)	14,675	(1,814)
					(614) (1,149) 2,040 1,696 5 (43)
1,325	2,040	1,696	1,063	4,639	1,431	504

– 38 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

1. General

On 19 May 2016, the immediate holding company of Ideal Market Holdings Ltd (the ‘‘Target Company’’) and its subsidiaries (collectively referred to as the ‘‘Target Group’’), China Environmental Energy Investment Limited (the ‘‘Company’’), have entered into an agreement with Dejuxin Technology Co., Limited (the ‘‘Purchaser’’), pursuant to which the Company conditionally agreed to sell and the Purchaser has conditionally agreed to acquire 93.33% equity interests in the Target Company at the consideration of HK$150,000,000 payable by the Purchaser in accordance with the terms and conditions of the SPA.

2. Basis of preparation of the unaudited consolidated financial information

The financial information of the Target Group for the years ended 31 March 2013, 2014 and 2015, the six months ended 30 September 2014 and 2015, and the nine months ended 31 December 2014 and 2015 (the ‘‘Financial Information’’) has been prepared in accordance with Rule 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and solely for the purpose of inclusion in the circular issued by the Company in connection with the Disposal.

The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ or a set of condensed financial statements as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

The amounts included in the Financial Information has been recognised and measured in accordance with the relevant accounting policies of the Company and its subsidiaries adopted in the preparation of its consolidated financial statements for the years ended 31 March 2013, 2014 and 2015 which conform with Hong Kong Financial Reporting Standards issued by the HKICPA.

3. Amounts due from/(to) holding company

Amounts due from/(to) holding company that in non-trade in nature are unsecured, interestfree and repayable on demand. The amounts are expected to be settled within 12 months from the end of the reporting periods and thus they are current in nature.

– 39 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of China Environmental Energy Investment Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China Environmental Energy Investment Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of financial position as at 30 September 2015, the unaudited pro forma statement of profit or loss and other comprehensive income for the year ended 31 March 2015, the unaudited pro forma statement of cash flows for the year ended 31 March 2015 and related notes as set out on pages 44 to 52 of the circular dated 22 June 2016 (the ‘‘Circular’’) issued by the Company (the ‘‘Unaudited Pro Forma Financial Information’’). The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described on pages 43 of the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the disposal of 93.33% equity interests in Ideal Market Holdings Limited (the ‘‘Target Company’’) and its subsidiaries (collectively referred to as the ‘‘Target Group’’) on the Group’s consolidated financial position as at 30 September 2015 and its financial performance and cash flows for the year ended 31 March 2015 as if the Disposal had taken place at 30 September 2015 and 1 April 2014 respectively. As part of this process, information about the Group’s consolidated financial position has been extracted by the Directors for the Group’s consolidated financial statements for the six months ended 30 September 2015, on which an interim report has been published. Information about the Group’s consolidated financial performance and cash flows has been extracted by the Directors from the Group’s consolidated financial statements for the year ended 31 March 2015, on which an annual report has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

– 40 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the ‘‘Code of Ethics for Professional Accountants’’ issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Our firm applies Hong Kong Standard on Quality Control 1 ‘‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’’ issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant plans and performs procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 September 2015 or 1 April 2014 would have been as presented.

– 41 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related pro forma adjustments give appropriate effect to those criteria; and
The Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of the Group, the event or transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Cheng & Cheng Limited

Certified Public Accountants

Hong Kong

22 June 2016

– 42 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

INTRODUCTION

Basis of Preparation of the Unaudited Pro Forma Financial Information of the Remaining Group

The following is the unaudited pro forma consolidated statement of financial position, unaudited pro forma consolidated statement of profit or loss and other comprehensive income and unaudited pro forma consolidated statement of cash flows of China Environmental Energy Investment Limited and its subsidiaries (the ‘‘Group’’) excluding Ideal Market Holdings Limited and its subsidiaries (the ‘‘Target Group’’) (hereinafter referred to as the ‘‘Remaining Group’’) (the ‘‘Unaudited Pro Forma Financial Information’’) as if the disposal of 93.33% equity interests in the Target Group (the ‘‘Disposal’’) had completed on 30 September 2015 for the unaudited pro forma consolidated statement of financial position, and on 1 April 2014 for the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows.

The Unaudited Pro Forma Financial Information of the Remaining Group should be read in conjunction with the unaudited condensed consolidated financial statements of the Group for the six months ended 30 September 2015 as disclosed in the interim report of the Company for the six months ended 30 September 2015 (the ‘‘2015 Interim Report’’), the audited consolidated financial statement of the Group for the year ended 31 March 2015 as disclosed in the annual report of the Company (the ‘‘2015 Annual Report’’), and other financial information included elsewhere in the Circular.

The unaudited pro forma consolidated statement of profit or loss and other comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group are prepared based on the audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 March 2015 as extracted from the 2015 Annual Report after making pro forma adjustments as set out below.

The unaudited pro forma consolidated statement of financial position of the Remaining Group is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2015 as extracted from the 2015 Interim Report after making pro forma adjustments as set out below.

The Unaudited Pro Forma Financial Information of the Group has been prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules to illustrate the possible outcomes relating to the Disposal. It is prepared for illustrative purposes only and because of its hypothetical nature, it may not give a picture of the financial position of the group upon completion of the Disposal as at 30 September 2015 or any future period, or the financial performance and cash flows of the Group upon the completion of the Disposal for the year ended 31 March 2015 or any future period.

– 43 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2015

Non-current assets Property, plant and equipment Goodwill Intangible assets Available-for-sale investments Total non-current assets Current assets Inventories Trade and bills receivables Other receivables, prepayments and deposits paid Cash deposits held by security brokers Bank balances and cash Total current assets Current liabilities Trade and bills payables Other payables and accruals Promissory notes payable Bank and other borrowings Income tax payable Amount due to holding company Total current liabilities Net current (liabilities)/assets Total assets less current liabilities	The Group as at 30 September 2015 (Unaudited) Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (a) Note (b) Note (c) Note (d) 19,497 (6,462) (44) 270,235 (122,122) 25,199 (25,199) 1,137,846 1,452,777 388 (388) 13,130 (5,615) 31,862 (31,221) 11,158 55,217 48,529 (4,639) 149,200 149,126 7,925 (4,537) 49,381 (43,527) 97,245 23,148 (23,148) 22,273 (21,473) – (11,158) 11,158 199,972 (50,846) 1,401,931	The Remaining Group as at 30 September 2015 HK$’000 12,991 148,113 – 1,137,846
		1,298,950
		– 7,515 11,799 55,217 193,090
		267,621
		3,388 5,854 97,245 – 800 –
		107,287
		160,334
		1,459,284

– 44 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Capital and reserves Share capital Share premium and reserves Equity attributable to owners of the Company Non-controlling interests Total equity Non-current liabilities Unconvertible bonds Deferred tax liabilities Total non-current liabilities	The Group as at 30 September 2015 (Unaudited) Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (a) Note (b) Note (c) Note (d) 37,423 1,314,675 57,147 1,352,098 (7,008) 7,332 1,345,090 20,297 36,544 (7,126) 56,841 1,401,931	The Remaining Group as at 30 September 2015 HK$’000 37,423 1,371,822
		1,409,245 324
		1,409,569
		20,297 29,418
		49,715
		1,459,284

– 45 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2015

Continuing operations Revenue Cost of sales Gross profit Investment and other income Other gains and losses Selling and distribution expenses Administrative expenses Finance costs Loss before taxation Taxation Loss for the year Other comprehensive income/(expenses), net of income tax Exchange differences arising during the year Increase in fair value of available-for-sale investments Total comprehensive (expense)/income for the year Loss for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive (expenses)/income attributable to: Owners of the Company Non-controlling interests	The Group for the year ended 31 March 2015 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (e) Note (f) Note (g) Note (d) 52,710 (41,465) (46,327) 40,614 6,383 1,813 (1,803) (79,704) 13,205 52,473 57,147 (836) 674 (30,421) 2,397 42 (48,795) 1,607 (151,560) 392 (962) (151,168) (348) 66 80,588 (70,928) (147,882) 12,183 50,886 57,147 (3,286) 3,046 667 (151,168) (67,637) 12,236 50,886 57,147 (3,291) 3,059 667 (70,928)	The Remaining Group for the year ended 31 March 2015 HK$’000 11,245 (5,713)
		5,532 10 43,121 (162) (27,982) (47,188)
		(26,669) (570)
		(27,239) (282) 80,588
		53,067
		(27,666) 427
		(27,239)
		52,632 435
		53,067

– 46 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2015

Cash flows from operating activities Loss for the year Adjustments for: Income tax credit recognised in profit or loss Finance costs Interest on financial liabilities designated at fair value through profit or loss Depreciation of property, plant and equipment Amortisation of intangible assets Loss on disposal of property, plant and equipment Loss on change in fair value of financial liabilities designated at fair value through profit or loss Impairment loss recognised in respect of: – goodwill – available-for-sale investments – other receivables Bank interest income Reversal of impairments loss on other receivables Gain on early repayment of promissory notes payable Gain on disposal of a subsidiary Net foreign exchange gain Operating cash flows before movements in working capital	The Group for the year ended 31 March 2015 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (e) Note (f) Note (h) Note (i) (151,168) 15,229 108,700 (392) – 962 48,795 (1,607) 133 – 4,047 (750) (42) 4,257 – (4,257) 1,592 (1,521) 133 – 48,216 – (48,216) 11,208 – 11,705 (11,705) (170) 167 (21) 21 (3,093) – (57,147) (1,609) (26,367)	The Remaining Group for the year ended 31 March 2015 HK$’000 (27,239) 570 47,188 133 3,255 – 71 133 – 11,208 – (3) – (3,093) (57,147) (1,609)
		(26,533)

– 47 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Operating cash flows before movements in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and bills receivables (Increase)/decrease in other receivables, prepayments and deposits paid (Increase)/decrease in amount due from holding company (Decrease)/increase in trade and bills payables Increase/(decrease) in other payables and accruals Net cash used in operating activities Cash flows from investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of subsidiaries Acquisition of available-for-sale investments Deposits received on disposal of subsidiaries assets classified as held for sale Bank interest received Decrease/(increase) in restricted bank deposits Net cash flow from the disposal Transaction costs for the disposal Net cash (used in)/generated from investing activities	The Group for the year ended 31 March 2015 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (e) Note (f) Note (h) Note (i) (26,367) (121) 121 (11,684) 767 (3,851) 3,748 – (2,765) 2,765 (16,234) 21,947 2,968 (2,966) (2,765) (55,289) (5,356) 8 209 (34,310) 20,600 170 (167) 5,890 (5,890) – 147,960 – (800) (12,789)	The Remaining Group for the year ended 31 March 2015 HK$’000 (26,533) – (10,917) (103) – 5,713 (2,763)
		(34,603) (5,356) 8 209 (34,310) 20,600 3 – 147,960 (800)
		128,314

– 48 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Cash flows from financing activities Proceeds from issue of new shares Share issue expenses Proceeds from bank and other borrowings Repayments of bank and other borrowings Repayments of promissory notes payables Interest paid Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of exchange rate changes Cash and cash equivalents at end of the year	The Group for the year ended 31 March 2015 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (e) Note (f) Note (h) Note (i) 502,129 (5,681) 15,881 (15,881) (68,000) (88,000) (47,794) 1,607 308,535 240,457 10,603 (2,040) (156) (11) 250,904	The Remaining Group for the year ended 31 March 2015 HK$’000 502,129 (5,681) – (68,000) (88,000) (46,187)
		294,261 387,972 8,563 (167)
		396,368

– 49 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(a) The unaudited condensed consolidated statement of financial position of the Group as at 30 September 2015 are extracted from the 2015 Interim Report.
(b) The adjustment reflects the deconsolidation of assets and liabilities of the Target Group as at 30 September 2015 as if the Disposal had completed on 30 September 2015. The financial information of the Target Group is extracted from its unaudited consolidated financial information for the years ended 31 March 2013, 2014 and 2015, the six months ended 30 September 2014 and 2015 and the nine months ended 31 December 2014 and 2015 (‘‘Unaudited Consolidated Financial Information’’) as set out in Appendix II to the Circular.
(c) In order to conform with the presentation and classification adopted in the Group’s unaudited condensed consolidated financial statements for the six months ended 30 September 2015, reclassification adjustment is made in respect of the amount due from holding company of the Target Group of HK$11,158,000 to other receivables, prepayments and deposits paid.
(d) The adjustment represents the pro forma gain arising from the Disposal as if the Disposal was completed and the Group’s control over Target Group were lost on 30 September 2015:

Consideration received or to be received
Less:
Goodwill recognised on acquisition of Target Group,
net of impairment
Intangible assets recognised on acquisition of
Target Group less accumulated amortisation (note i)
Undepreciated fair value increase on property, plant and
equipment relating to Target Group on consolidation
Estimated transaction costs
Non-controlling interest derecognised on Completion (note iii)
Add:
Net liabilities of Target Group derecognized
Deferred tax liabilities relating to intangible assets recognised
on acquisition of less accumulated amortisation and undepreciated
fair value increase on property, plant and equipment (note ii)
Pro forma gain on the Disposal as at 30 September 2015

HK$’000
150,000
(122,122)
(25,199)
(44)
(800)
(7,332)
55,518
7,126
57,147

– 50 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Notes:-

(i) Intangible asset recognised on acquisition less accumulated amortisation relating to Target Group on consolidation is derived based on the valuation on intangible assets amounting to HK$40,582,000 less accumulated amortisation of HK$15,383,000 as at 30 September 2015.
(ii) The deferred tax liabilities was determined based on the intangible assets recognised on acquisition less accumulated amortisation amounting to HK$25,199,000 and undepreciated fair value increase on property, plant and equipment amounting to HK$44,000 and the effective tax rate of Target Group are subject to PRC enterprise income tax at 25%.
(iii) The non-controlling interest derecognised on Completion was derived based on the adjusted net assets of Target Group of HK$37,401,000 which includes intangible assets recognised on acquisition less accumulated amortisation relating to Target Group on consolidation as set out in note (i) above and undepreciated fair value increase on property, plant and equipment of amounting to HK$44,000 after adjusting the corresponding deferred tax liabilities as set out in note (ii) above.
(e) The audited consolidated statement of profit or loss and other comprehensive income and the audited consolidated statement of cash flows for the year ended 31 March 2015 are extracted from the 2015 Annual Report.
(f) The adjustment reflects the deconsolidation of (i) financial performance of the Target Group for the year ended 31 March 2015; and (ii) cash flows of the Target Group for the year ended 31 March 2015 as if the Disposal had completed on 1 April 2014. The financial information of the Target Group is extracted from the Unaudited Consolidated Financial Information as set out in Appendix II to this circular.
(g) Intangible assets relating to Target Group on consolidation is an amount of HK$42,570,000 attributable to customer relationship between the Target Group and its customers: The customer relationship was determined to have a finite of 10 years. Fair value increase on property, plant and equipment relating to Target Group is an amount of HK$208,000. It was determinated useful life of related property, plant and equipment of 5 years.

The corresponding annual amortisation for intangible assets of HK$4,257,000 and the corresponding annual depreciation for fair value increase in property, plant and equipment of HK$42,000 together with the estimate income tax effect, being the PRC enterprise income tax rate of 25%, of HK$962,000 recognised on consolidation was adjusted for the purpose of unaudited pro forma consolidated statement of profit or loss and other comprehensive income.

Impairment loss of goodwill of HK$48,216,000 recognised on consolidation in other gains and losses was adjusted for the purpose of unaudited pro forma consolidated statement of profit or loss and other comprehensive income.

– 51 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(h) In order to conform with the presentation and classification adopted in the Group’s audited consolidated statement of cash flows for the year ended 31 March 2015, cash flows relating to amounts due from holding company of HK$2,765,000 have been reclassified to cash flows relating to other payables and accruals.
(i) The net cash inflow from the Disposal is derived as follows:

Cash consideration received or to be received Less: Bank balances and cash of Target Group at 1 April 2014	HK$’000 150,000 (2,040) 147,960

For alignment with the unaudited pro forma consolidated statement of profit or loss and other comprehensive income, the gain on the disposal amounting to HK$57,147,000 as set out in note (d) and amortisation for intangible assets amounting to HK$4,257,000, depreciation for fair value increase in property, plant and equipment amounting to HK$42,000 and impairment loss of goodwill amounting to HK$48,216,000 as set out in note (g) are added back to the profit before tax in unaudited pro forma consolidated statement of cash flows.

(j) No other adjustments have been made to reflect any trading result or other transactions of the Group and the Target Group entered into subsequent to 30 September 2015.

– 52 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at the Latest Practicable Date, none of the directors or chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporation (within the meaning of Part XV of the SFO which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she was deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Stock Exchange.

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service agreement with any member of the Group which will not expire or is not determinable within one year without payment of compensation other than statutory compensation.

4. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 March 2015 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

None of the Directors was materially interested in any contract or arrangement, subsisting at the Latest Practicable Date, which is significant to the business of the Group.

– 53 –

GENERAL INFORMATION

APPENDIX IV

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective close associates (as defined under the Listing Rules) had any interest in the businesses, other than being a Director, which compete or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

6. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has provided its advice for inclusion in this circular:

Name Qualification Cheng & Cheng Limited Certified Public Accountants

Cheng & Cheng Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letters and references to its name in the form and context in which they appear herein.

As at the Latest Practicable Date, Cheng & Cheng Limited did not have any shareholding in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and it did not have any direct or indirect interest in any assets which have been since 31 March 2015 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to by any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

7. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts (not being contracts in the ordinary course of business of the Company) have been entered into by members of the Group within two years immediately preceding the Latest Practicable Date which are or may be material:

(i) the SPA;
(ii) a loan agreement entered into between Great Luck Finance Limited, an indirect wholly-owned subsidiary of the Company, as lender and an Independent Third Party as borrower, dated 16 May 2016 pursuant to which Great Luck Finance Limited has agreed to lend to the borrower a term loan in the principal amount of HK$15,000,000 at the interest rate of 20% per annum repayable under the terms and conditions of the agreement;

– 54 –

GENERAL INFORMATION

APPENDIX IV

(iii) a supplemental sale and purchase agreement entered into between Gold Castle Group Limited, as purchaser, the Company as guarantor and STI Financial Group Limited as vendor dated 29 April 2016, pursuant to which, among others, the long stop date specified in the sale and purchase agreement signed between the same parties dated 16 November 2015 was changed from 30 April 2016 to 30 September 2016;
(iv) a loan agreement entered into between Great Luck Finance Limited, an indirect wholly-owned subsidiary of the Company, as lender and an Independent Third Party as borrower, dated 6 April 2016 pursuant to which Great Luck Finance Limited has agreed to lend to the borrower a term loan in the principal amount of HK$19,000,000 at the interest rate of 20% per annum repayable under the terms and conditions of the agreement;
(v) a loan agreement entered into between Great Luck Finance Limited, an indirect wholly-owned subsidiary of the Company, as lender and an Independent Third Party as borrower, dated 15 March 2016 pursuant to which Great Luck Finance Limited has agreed to lend to the borrower a term loan in the principal amount of HK$24,000,000 at the interest rate of 20% per annum repayable under the terms and conditions of the agreement;
(vi) a loan agreement entered into between Great Luck Finance Limited, an indirect wholly-owned subsidiary of the Company, as lender and an Independent Third Party as borrower, dated 8 March 2016 pursuant to which Great Luck Finance Limited has agreed to lend to the borrower a term loan in the principal amount of HK$20,000,000 at the interest rate of 20% per annum repayable under the terms and conditions of the agreement;
(vii) a placing agreement entered into between the Company as issuer and an Independent Third Party as placing agent dated 17 December 2015 in relation to the placing of unconvertible bonds in the maximum principal amount of HK$100,000,000 at a coupon rate of 8% per annum;
(viii) a sale and purchase agreement entered into between the Company as vendor, and Ms. Chow Yan Ping as purchaser dated 27 November 2015 in relation to the disposal of the entire issued share capital of Asian Champion Limited at the consideration of HK$58,000,000;
(ix) a sale and purchase agreement entered into between the Company as purchaser, and Soar Power Limited, Loyal Charm Limited and Hover Max Limited as vendors dated 20 November 2015 in relation to the acquisition of 39.41% of the entire issued share capital of Pure Power Holdings Limited at the consideration of HK$163,000,000;

– 55 –

GENERAL INFORMATION

APPENDIX IV

(x) a deed of termination entered into between the Company, Mighty Smart Limited, Soar Power Limited, Loyal Charm Limited, Hover Max Limited and Fortune Glow Limited on 20 November 2015 in relation to the sale and purchase agreement dated 13 November 2015;
(xi) a sale and purchase agreement entered into between Gold Castle Group Limited, as purchaser, the Company as guarantor and STI Financial Group Limited as vendor dated 16 November 2015 in relation to the acquisition of the entire issued share capital of STI Securities & Wealth Management Limited at the consideration of HK$16,914,035;
(xii) a sale and purchase agreement entered into between the Company as purchaser and Mighty Smart Limited, Soar Power Limited, Loyal Charm Limited, Hover Max Limited and Fortune Glow Limited as vendors dated 13 November 2015 in relation to the acquisition of 48.38% of the entire issued share capital of Pure Power Holdings Limited at the consideration of HK$200,000,000;
(xiii) a sale and purchase agreement entered into between Pacific Wise Investments Limited as purchaser and Mr. Wan Tak Choi as vendor dated 16 October 2015 in relation to the acquisition of the entire issued share capital of Great Luck Finance Limited at the consideration of HK$1,000,000;
(xiv) a sale and purchase agreement entered into between the Company as purchaser and Mr. Wong Him Shun Philip as vendor dated 4 September 2015 in relation to the acquisition of the entire issued share capital of Elite Honest Inc. at the consideration of HK$30,000,000;
(xv) a placing agreement entered into between the Company as issuer and Southwest Securities (HK) Brokerage Limited as placing agent dated 19 August 2015 in relation to the placing of up to 620,000,000 new shares of the Company at the placing price of HK$0.134 per placing share;
(xvi) a placing agreement entered into between the Company as issuer and Southwest Securities (HK) Brokerage Limited as placing agent dated 20 April 2015 in relation to the placing of up to 520,000,000 new shares of the Company at the placing price of HK$0.245 per placing share;
(xvii) a placing letter entered into between Orient Time Investment Limited as subscriber and Tanrich Securities Company Limited as placing agent dated 18 March 2015 in relation to the subscription for shares in WLS Holdings Limited for an aggregate consideration of HK$18,900,000 at the subscription price of HK$0.3 per subscribed share;

– 56 –

GENERAL INFORMATION

APPENDIX IV

(xviii) a sale and purchase agreement entered into between the Company as purchaser and Mr. Lu Qinglu as vendor dated 21 January 2015 in relation to the acquisition of the entire issued share capital of Platinum Plus International Limited at the consideration of RMB51,000,000;
(xix) a supplemental placing agreement entered into between the Company as issuer and Wing Fung Securities Limited as placing agent dated 27 November 2014, pursuant to which the placing price specified in the placing agreement entered into between the parties dated 12 November 2014 and amended by supplemental agreement dated 19 November 2014 was changed from HK$0.97 per placing share to HK$0.66 per placing share;
(xx) a supplemental placing agreement entered into between the Company as issuer and Wing Fung Securities Limited as placing agent dated 19 November 2014, pursuant to which, among others, the placing price specified in the placing agreement entered into between the parties dated 12 November 2014 was changed from HK$0.96 per placing share to HK$0.97 per placing share;
(xxi) a share placing agreement entered into between the Company as issuer and Wing Fung Securities Limited as placing agent dated 12 November 2014 in relation to the placing new shares of the Company at the placing price of HK$0.96 per placing share;
(xxii) an underwriting agreement entered into between the Company as issuer and Wing Fung Securities Limited as underwriter dated 12 November 2014 in relation to rights issue on the basis of eight ordinary shares of HK$0.01 in the capital of the Company to be issued and allotted for every one existing ordinary share in issue and held on 29 December 2014 at HK$0.195 per rights share; and
(xxiii) a sale and purchase agreement entered into between the Company as purchaser and Ms. Chow Yan Ping as vendor dated 18 September 2014 in relation to the acquisition of the entire share capital of Asian Champion Limited at the consideration of HK$58 million.

8. LITIGATIONS

So far as the Directors are aware, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or arbitration of material importance was pending or threatened against the Company or any of its subsidiaries as at the Latest Practicable Date.

– 57 –

GENERAL INFORMATION

APPENDIX IV

9. GENERAL

The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

The head office and principal place of business of the Company in Hong Kong is situated at Room 910, 9/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong.

The Company’s branch share registrar in Hong Kong is Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

The secretary of the Company is Ms. Cheng Suk Kuen, who is a member of the Hong Kong Institute of Certified Public Accountants and the CPA Australia.

The English text of this circular shall prevail over the Chinese text, in the event of inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Room 910, 9/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong from the date of this circular up to and including the date of the SGM:

a. the memorandum of association and bye-laws of the Company;
b. the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;
c. the financial information of the Target Group as set out in Appendix II of this circular;
d. the unaudited pro forma financial information of the Remaining Group as set out in Appendix III to this circular;
e. the written consent referred to in the paragraph headed ‘‘Qualification and Consent of Expert’’ in this appendix;
f. the annual reports of the Company for the years ended 31 March 2014 and 2015 respectively; and
g. this circular.

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NOTICE OF SPECIAL GENERAL MEETING

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of China Environmental Energy Investment Limited (the ‘‘Company’’) will be held on 12 July 2016 at 9:00 a.m. at Falcon Room I, Gloucester Luk Kwok Hong Kong, 72 Gloucester Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing the following resolution:

ORDINARY RESOLUTION

‘‘THAT

(a) the sale and purchase agreement dated 19 May 2016 (the ‘‘SPA’’) entered into between the Company and Dejuxin Technology Co., Limited (the ‘‘Purchaser’’) in relation to the disposal by the Company of 93.33% of the equity interest of Ideal Market Holdings Limited to the Purchaser (a copy of the SPA is marked ‘‘A’’ and produced to this meeting and signed by the chairman of the meeting for identification purposes) and the transactions contemplated thereunder be and are hereby ratified, confirmed and approved; and
(b) any one or more of the directors of the Company (the ‘‘Directors’’) be and is/are hereby authorised to execute all documents, under hand or under the common seal of the Company (or otherwise as a deed) as appropriate, singly on behalf of the Company, and to do all such acts as he/she may in his/her discretion consider necessary, desirable or expedient and appropriate to effect and implement the SPA and transactions contemplated thereunder or incidental thereto.’’

Yours faithfully By order of the Board

China Environmental Energy Investment Limited Chen Tong

Chairman

Hong Kong, 22 June 2016

For identification purposes only

– 59 –

NOTICE OF SPECIAL GENERAL MEETING

As at the date of this notice, the board of Directors of the Company comprises two executive Directors, namely Ms. Chen Tong (Chairman) and Mr. Xiang Liang; and three independent non-executive Directors, namely Ms. Zhang Ruisi, Mr. Tse Kwong Chan and Ms. Zhou Jue.

In the case of inconsistency, the English text of this notice shall prevail over the Chinese text.

Notes:

A form of proxy for use at the SGM is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer or attorney duly authorised.
Any shareholder of the Company entitled to attend and vote at the SGM convened by the above notice shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company. A shareholder of the Company who is the holder of two or more shares of the Company may appoint more than one proxy to represent him/her/it to attend and vote on his/her/its behalf. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.
In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power of attorney or authority, must be deposited at the Hong Kong branch share registrar of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding of the above SGM or any adjournment thereof at which the person named in the form of proxy proposes to vote or, in the case of a poll taken subsequently to the date of the SGM or any adjournment thereof, not less than 24 hours before the time appointed for the taking of the poll and in default the form of proxy shall not be treated as valid.
Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the SGM convened or at any adjourned meeting (as the case may be) and in such event, the form of proxy will be deemed to be revoked.
Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto, but if more than one of such joint holders are present at the SGM, whether in person or by proxy, priority shall be determined by the order in which the names stand on the register of members of the Company in respect of the joint holding.

– 60 –

AI assistant

Dufu Liquor Group Limited — Proxy Solicitation & Information Statement 2016

49605_rns_2016-06-21_7ca66a80-c502-445d-9f55-383944740260.pdf

China Environmental Energy Investment Limited

VERY SUBSTANTIAL DISPOSAL AND

NOTICE OF SPECIAL GENERAL MEETING

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

China Environmental Energy Investment Limited

(Stock Code: 986)

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

THE SPA

Date

Parties

Assets to be disposed

Consideration

LETTER FROM THE BOARD

Events of failure in payment of Consideration by the Purchaser

LETTER FROM THE BOARD

Escrow

Conditions precedent

Completion

LETTER FROM THE BOARD

INFORMATION ON THE TARGET GROUP

LETTER FROM THE BOARD

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL AND USE OF PROCEEDS

LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE DISPOSAL

LETTER FROM THE BOARD

INFORMATION ON THE REMAINING GROUP

LETTER FROM THE BOARD

2. Trading of gold and diamond

LETTER FROM THE BOARD

LETTER FROM THE BOARD

3. Money lending

i. Securities investment

LETTER FROM THE BOARD

LETTER FROM THE BOARD

ii. Provision of financial services

LETTER FROM THE BOARD

iii. Exploration and exploitation of natural resources

LETTER FROM THE BOARD

THE LISTING RULES IMPLICATIONS

GENERAL

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

1. THREE YEARS’ SUMMARY OF FINANCIAL RESULTS

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES AS AT 30 APRIL 2016

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS OF THE REMAINING GROUP

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(i) For the six months ended 30 September 2015

Business and Financial Review

Liquidity and Financial Resources

Cash Position

Gearing ratio

Borrowings

Charge on Assets

Capital Expenditures

Contingent Liabilities

Exchange Risk Exposure

Significant Investments and Material Acquisition and Disposals

Staff and Remuneration Policy

(ii) For the year ended 31 March 2015

Business and Financial Review

Liquidity and Financial Resources

Cash Position

Gearing ratio

Borrowings

Charge on Assets

Capital Expenditures

Contingent Liabilities

Dufu Liquor Group Limited Proxy Solicitation & Information Statement 2016