Dufu Liquor Group Limited - Proxy Solicitation & Information Statement 2017

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)

(1) PROPOSED VERY SUBSTANTIAL ACQUISITION – INVESTMENT IN A FUND; (2) PROPOSED VERY SUBSTANTIAL DISPOSAL – TRANSFER OF LISTED SECURITIES; AND

(3) 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 29 May 2017 at 9:30 a.m. at Plaza 4, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong is set out on pages 40 to 41 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.

11 May 2017

For identification purposes only

CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I – Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix II – The unaudited pro forma financial information of the Group. . . . . . .	30
Appendix III – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40

– i –

DEFINITIONS

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

“Administrator”

Millennium Fund Services (Asia) Limited, a company and an independent administrator incorporated in Hong Kong with limited liability

“associate(s)” “Board”

has the same meaning ascribed to it under the Listing Rules

the board of Directors

“Business Day(s)”

a day (other than a Saturday or a Sunday) on which banks in Hong Kong are authorized to open for normal banking business and/or such other day or days as the Directors may determine, either generally or in any particular case, provided that where, as a result of Number 8 Typhoon Signal, Black Rainstorm Warning or similar event, the period during which banks in Hong Kong on any day are reduced, such day shall not be a Business Day

“Class” any class of Participating Shares designated by the directors of the Fund Company pursuant to the memorandum and articles of association of the Fund Company “Class A Share(s)” Participating Share(s) designated as a Class A Share(s) “Class B Share(s)” Participating Share(s) designated as a Class B Share(s) “Company” China Environmental Energy Investment Limited（中國環保能源投資有限公司* ）(stock code: 986), a company incorporated in Bermuda whose shares are listed on the Stock Exchange “connected person(s)” has the meaning ascribed to it under the Listing Rules “Director(s)” director(s) of the Company “Fund” Henghua Global New Opportunity Fund SP II, a segregated portfolio of and established by the Fund Company “Fund Company” Henghua Global Fund SPC, an exempted company incorporated with limited liability and registered as a segregated portfolio company in the Cayman Islands under the Companies Law of the Cayman Islands “Group” the Company and its subsidiaries “HK$” Hong Kong dollar, the lawful currency of Hong Kong

Hong Kong dollar, the lawful currency of Hong Kong

For identification purposes only

– 1 –

DEFINITIONS

“Hong Kong”

the Hong Kong Special Administrative Region of PRC

“Independent Third Party(ies)” a party(ies) independent of and not connected with the Company and its connected persons
“Initial Subscription Price” HK$1,000 per Participating Share (exclusive of any subscription fee)
“Investment Advisor” China Industrial Securities International Asset Management Limited, a company incorporated with limited liability in Hong Kong and is licensed for type 4 (advising on securities), type 5 (advising on futures contracts) and type 9 (asset management) regulated activities under the SFO
“Investment Manager” Henghua Investment Management (Cayman) Co., Ltd., an exempted company incorporated in the Cayman Islands with limited liability
“Listed Securities” various listed securities on the Stock Exchange held by the Subscriber as set out in the section headed “The Listed Securities” in this circular
“Latest Practicable Date” 5 May 2017, 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
“Memorandum” the private placement memorandum in respect of the Fund issued by the Fund Company
“Participating Share(s)”
a participating, redeemable, non-voting share of par value HK$0.01 in the capital of the Fund Company attributable to the Fund and being offered for subscription under the terms of the Memorandum
“PRC” the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, Macau Special Administration Region of PRC and Taiwan
“Proposed Investment” the proposed investment for the Subscription by the Subscriber which will be determined by the aggregate market value of the Listed Securities at the relevant time upon entering into the Subscription Agreement
“Redemption Day”

the first Business Day of each month and such other day or days as the directors of the Fund Company may determine, either generally or in any particular case

– 2 –

DEFINITIONS

“RMB” Renminbi, the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” the special general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving, among other things, the Subscription (including the Transfer of Listed Securities) “Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscriber” Orient Time Investment Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company “Subscription” the proposed subscription of Class B Shares in the Fund at the Proposed Investment by entering into the Subscription Agreement

“Subscription Agreement” the subscription agreement to be entered into between the Subscriber and the Fund Company pursuant to the terms and conditions of the Memorandum
“Transfer of Listed Securities” the transfer of the Listed Securities held by the Subscriber to the Fund Company as payment for the Subscription
“Valuation Day” the Business Day immediately preceding the first Business Day of each month and/or such other day as the directors of the Fund Company may determine
“Valuation Point”

the close of business in the last market relevant to the Fund to close on the relevant Valuation Day, or such other time as the directors of the Fund Company may determine

“%”

per cent.

– 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 Ms. Hong Jingjuan

Registered office Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent non-executive Directors:

Ms. Zhang Ruisi Mr. Tse Kwong Chan Ms. Zhou Jue

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

11 May 2017

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED VERY SUBSTANTIAL ACQUISITION – INVESTMENT IN A FUND; (2) PROPOSED VERY SUBSTANTIAL DISPOSAL – TRANSFER OF LISTED SECURITIES; AND (3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 27 March 2017 in relation to the Subscription. The purpose of this circular is to provide you with information regarding the resolution to be proposed at the SGM in relation to the Subscription Agreement and the transactions contemplated thereunder.

For identification purposes only

– 4 –

LETTER FROM THE BOARD

INVESTMENT IN A FUND AND TRANSFER OF LISTED SECURITIES

The Board wishes to propose the entering of the Subscription Agreement between the Subscriber and the Fund Company, pursuant to which the Subscriber will make the subscription of Class B Shares in the Fund. The Proposed Investment and payment for the Subscription will be determined and settled by the transfer of Listed Securities to the Fund Company upon entering into the Subscription Agreement.

As at 31 March 2017, the aggregate market value of the Listed Securities held by the Subscriber was approximately HK$282.18 million (details of which are set out in the section headed “The Listed Securities” of this circular). For illustration purpose, the total number of Class B Shares to be subscribed based on such amount at the Initial Subscription Price will be approximately 282,179. The final number of Class B Shares to be subscribed by the Subscriber will be determined by the aggregate market value of the Listed Securities at the relevant time upon entering into the Subscription Agreement. As at the Latest Practicable Date, no Participating Share has been issued to any investor yet. Assuming that no Participating Share is being issued to other investors up to the completion of the Subscription, the Subscriber will be interested in the entire issued Participating Shares of the Fund.

Pursuant to the Memorandum, payment for the Participating Shares must be made in cash unless otherwise agreed by the directors of the Fund Company, or, Participating Shares may also be issued in exchange for assets or other property (non-cash consideration) at the discretion of and on terms agreed by the directors of the Fund Company.

After having considered that, among others, (i) the Fund will be well-managed by investment professionals which has the same objective of the Group to grow investment return, and will help diversifying the Group’s securities investment risk and further enhance the rate of return of the Group’s securities investment; and (ii) the benefits and reasons as discussed under the section headed “Reasons for the Subscription” below, the Board has determined to settle the Subscription consideration by transferring the Listed Securities (which are currently managed by the Group) to the Fund and is of the view that such arrangement is in the interest of the Company and the Shareholders as a whole.

The Subscription will only be effected if the resolution(s) for approving the Subscription (including the Transfer of Listed Securities) is duly passed by the Shareholders at the SGM.

INFORMATION OF THE FUND AND THE FUND COMPANY

The Fund is an open-ended segregated portfolio of the Fund Company. The Fund Company is an exempted company incorporated with limited liability and registered as a segregated portfolio company in the Cayman Islands under the Companies Law of the Cayman Islands. The Fund Company was incorporated on 12 January 2016.

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Fund Company and its respective associates are Independent Third Parties.

– 5 –

LETTER FROM THE BOARD

Share capital

As at the Latest Practicable Date, the Fund Company has an authorised share capital of HK$380,000 which is made up of 100 non-participating, non-redeemable, voting management shares of HK$0.01 par value each and 37,999,900 participating shares of HK$0.01 par value each which may be issued in respect of different segregated portfolios and in different classes.

It is expected by the directors of the Fund Company that (i) the Fund will be composed of the Class A Shares and Class B Shares at a ratio of approximately 50% to 50%; and (ii) the initial size of the Fund will amount to approximately HK$500 million.

Classes of Participating Shares

The directors of the Fund Company have created and designated two classes of redeemable, non-voting Participating Shares of par value HK$0.01 each in respect of the Fund, being Class A Shares and Class B Shares, which are being offered under the terms of the Memorandum.

Investment objective

The investment objective of the Fund is to seek medium to long term capital appreciation.

Investment strategy

To achieve the investment objective of the Fund, assets of the Fund will be primarily invested in listed equities in Hong Kong. Assets of the Fund may also be invested in derivative instruments which may be exchange-traded or over-the-counter. The Company is given to understand by the Fund Company that the investment of the Fund will be primary focused on, among others, industries which are relatively mature, have stable development and performance, and developing sectors with relatively higher growth potential which are in line with the trend of the market. As advised by the Fund Company, the market capitalization of the targeted listed equity investments will generally exceed HK$2,000 million.

The Investment Manager will employ a top-down and bottom-up investment approach. Global macroeconomic factors and trends as well as local economic and political factors in Hong Kong will be monitored closely to uncover the most compelling investment themes. Individual stocks are then selected based on fundamental company research to fit into the investment themes identified. Companies evaluation will be based on criteria including free cash flow, return on equity and level of debts on the balance sheet, corporate governance, management quality, together with other proprietary qualitative and quantitative inputs.

The Fund Company may engage in margin trading, hedging and other investment strategies. It may also retain amounts in cash or cash equivalents (including money market funds) pending reinvestment, for use as collateral or as otherwise considered appropriate to the investment objective.

– 6 –

LETTER FROM THE BOARD

Investment restrictions

The following investment restrictions will apply in respect of the investment of the assets of the Fund:

(a) not more than 20% of the latest available net asset value of the Fund will be invested in the securities of any one issuer;
(b) the Fund will not hold more than 5% of free float shares of any class of securities of any one issuer;
(c) the maximum exposure to financial futures contracts, options and warrants may not exceed 30% of the latest available net asset value of the Fund;
(d) the Fund may not engage in short selling; and
(e) the assets of the Fund will not be invested directly in real property or physical commodities.

Leverage

When deemed appropriate, the Fund Company may employ leverage in respect of the Fund for working capital and/or as part of the investment strategies. Such leverage may include, without limitation, borrowing cash, securities and other instruments, purchasing futures and entering into derivative transactions and repurchase agreements. The Fund Company may pledge assets of the Fund as security for borrowings. The use of leverage will increase the risk of an investment in the Fund. The total leverage in the Fund will not normally exceed 200% of the latest net asset value of the Fund.

The Fund Company, on behalf of the Fund, may borrow for the purposes of paying redemption proceeds or paying expenses, if required.

Currency hedging and trading

The Investment Manager may seek to hedge the currency exposure of the Fund to currencies other than the Hong Kong dollar. The Investment Manager may also seek to hedge the currency exposure between the currency of any class of Participating Shares and the Hong Kong dollar. The Investment Manager may use spot and forward foreign exchange contracts or other methods of reducing exposure to currency fluctuations.

The Investment Manager may also take speculative positions in currencies for the benefit of the Fund as a whole.

– 7 –

LETTER FROM THE BOARD

Distribution policy

It is not envisaged that any income or gains derived from investments of the Fund will be distributed by way of dividend. However, this does not preclude the directors of the Fund Company from declaring a dividend at any time in the future if they consider it appropriate to do so.

Determination of net asset value

The net asset value of the Fund and the net asset value per Participating Share of each Class will be calculated as at the Valuation Point on each Valuation Day.

The net asset value per Participating Share on any Valuation Day will be calculated by dividing the net asset value of the relevant Class by the number of Participating Shares of such Class in issue.

Management

The Investment Manager

Henghua Investment Management (Cayman) Co., Ltd., an exempted company incorporated in the Cayman Islands with limited liability, has been appointed as the investment manager of the Fund and it will be responsible for, among others, managing the Fund’s investments and related affairs.

Under the Securities Investment Business Law of the Cayman Islands, a person acting as an investment manager is not required to be licensed if it carries on such business exclusively (whether directly or indirectly) for sophisticated persons or high net worth persons. The Investment Manager intends to manage its business in such a way that it is not required to be licensed and accordingly is not subject to regulation by the Cayman Islands Monetary Authority.

The current director of the Investment Manager is Mr. Chen Guochang (“ Mr. Chen ”) whose

biography is as follows:

Mr. Chen is an investment director of Henghua Asset Management Limited, a company incorporated in Shenzhen Qianhai with a registered capital RMB100,000,000 which specialises in providing investment advisory and management services. Mr. Chen has about 5 years’ experience in investment and fund management, and is particularly familiar with fund of funds, private equity funds, infrastructure funds and real estate and real estate property funds. Mr. Chen has also managed various funds which in aggregate amounted to approximately HK$3,400 million in size with an average cumulative investment return of approximately 13.7% since their inception. Mr. Chen graduated from Macao Polytechnic Institute in 2008 and also holds a degree in Bachelor of Business (Finance) from University of South Australia.

The Investment Advisor

China Industrial Securities International Asset Management Limited, a company incorporated in Hong Kong with limited liability, has been appointed as the investment advisor to provide investment advisory services to the Investment Manager in respect of the assets of the Fund.

– 8 –

LETTER FROM THE BOARD

China Industrial Securities International Asset Management Limited is wholly-owned by China Industrial Securities International Financial Group Limited, the shares of which is listed on the Stock Exchange (stock code: 8407). China Industrial Securities International Financial Group Limited together with its subsidiaries are principally engaged in the provision of brokerage services, loans and financing services, investment banking, asset management services and proprietary trading.

The Investment Advisor is licensed for type 4 (advising on securities), type 5 (advising on futures contracts) and type 9 (asset management) regulated activities under the SFO and currently has 3 licensed representatives approved as responsible officer (the “ Responsible Officer ”) under section 126 of the SFO to supervise the provision of investment advisory services to the Fund.

The current director of the Investment Advisor is Mr. Liu Chung Kuang (“ Mr. Liu ”) whose

biography is as follows:

Mr. Liu is the head of the asset management division of China Industrial Securities International Financial Group Limited and its subsidiaries and has over 10 years of experience in Hong Kong in leading financial institutions covering securities, banking, and asset management businesses. Mr. Liu accumulated experience in the financial industry in Hong Kong through employment with, among others, the World Gold Council as director of their Investment Far East division from August 2012 to August 2015, and with Mirae Asset Global Investments (Hong Kong) Limited, as director and head of its ETF Division from July 2011 to June 2012. Mr. Liu obtained his bachelor of administration from the University of Ottawa in May 1992, Canada and a graduate certificate in financial engineering from Stanford University in June 2010.

The Administrator

Millennium Fund Services (Asia) Limited, a company incorporated with limited liability in Hong Kong and an independent administrator incorporated in Hong Kong, has been appointed as the administrator to provide administration services to the Fund Company in respect of the Fund.

The Administrator is responsible for, among other things, (i) accepting subscriptions for and the issuing of Participating Shares; (ii) performing due diligence identification and anti-money laundering procedures in respect of holders or prospective holders of the Participating Shares; (iii) effecting the redemption and transfer of the Participating Shares; (iv) updating and arranging for maintenance of the register of holders of the Participating Shares; (v) computing the net asset value of the Fund and each Participating Share; and (vi) attending to other matters necessary for the proper administration of the Fund as agreed by the Fund Company, on behalf of the Fund, and the Administrator.

To the best of the Directors’ information, knowledge and belief having made all reasonable enquiries, the Investment Manager, the Investment Advisor, the Administrator and their respective associates are Independent Third Parties.

– 9 –

LETTER FROM THE BOARD

Financial information

As the Fund Company and the Fund are newly established in 2016 and 2017 respectively, no financial information nor past performance of the Fund is available.

Pursuant to the Memorandum, holders of the Participating Shares will be provided with (i) a copy of an annual report that will include audited financial statements within six months of the end of each financial year of the Fund Company; and (ii) a monthly report of the net asset value relating to their investment in the Fund. As advised by the Fund Company, it is expected that the above mentioned reports will not contain detailed information of the list of listed equities invested by the Fund, and therefore no such information will be included in the Company’s future financial reports.

MAJOR TERMS OF THE SUBSCRIPTION AGREEMENT

Subscription price

Participating Shares are being initially offered for subscription at the Initial Subscription Price of HK$1,000 per Participating Share (exclusive of any subscription fee) during the period from 20 January 2017 to 17 February 2017, or such other day or time as the directors of the Fund Company may determine. As at the Latest Practicable Date, it is mutually agreed between the directors of the Fund Company and the Company that the initial offer period for the Subscription by the Subscriber will be extended to a date falling on or before 31 May 2017.

Following the close of the above initial offer period, Participating Shares will be available for subscription on the first Business Day of each month and/or such other day(s) as the directors of the Fund Company may determine, at the subscription price which is equal to the net asset value per Participating Share at the Valuation Day.

Subscription fee

A subscriber for the Participating Shares may be required to pay a subscription fee of up to 2% of the subscription amount in the case of Class A Shares and 1% of the subscription amount in the case of Class B Shares. The subscription fee will be paid to the Investment Manager.

As at the Latest Practicable Date, it is mutually agreed between the directors of the Fund Company and the Company that the subscription fee for the Subscription will be waived.

Performance fee

The Investment Manager will be entitled to receive a performance fee, if any, payable by the Fund Company, out of the assets of the Fund in respect of Class A Shares calculated on a share by share basis so that each Class A Share is charged a performance fee that is fairly attributable to that Participating Share’s performance.

No performance fee is payable in respect of Class B Shares.

– 10 –

LETTER FROM THE BOARD

Management fee

The Fund Company will pay the Investment Manager a management fee, out of the assets of the Fund, of one-twelfth ([1] /12) of 1.5% per month of the net asset value of the Class A Shares and one-twelfth ([1] /12) of 1.0% per month of the net asset value of the Class B Shares as at the last Valuation Day in each month.

Fees payable to the Investment Advisor

The Investment Manager will be responsible for payment of the Investment Advisor’s fees and expenses. The Investment Advisor will not receive any compensation out of the assets of the Fund.

Fees payable to the Administrator

The Administrator will receive a fee out of the assets of the Fund for providing administration services of up to 0.12% per annum of the net asset value of the Fund, calculated as at each Valuation Day and payable monthly in arrears, subject to a minimum monthly fee of HK$27,300.

Lock-up period

Participating Shares may be redeemed at the option of the holders of Participating Shares thereof after the expiry of the lock-up period of 12 months in respect of the Class A Shares and 24 months in respect of the Class B Shares commencing on the issue of such Participating Share or, in each case, such shorter period as the directors of the Fund Company may determine (the “ Lock-up Period ”).

Redemption

Subject to restrictions set out in the Memorandum, Participating Shares may be redeemed at the option of the shareholder on the Redemption Day after the expiry of the Lock-up Period.

The redemption price of a Participating Share (the “ Redemption Price ”) will be equal to the net asset value per share of the relevant class of the Participating Shares as at the Valuation Day immediately preceding the relevant Redemption Day. A redemption fee of 1% of the Redemption Price will be charged on the redemption of any Participating Share.

Voting rights

Participating Shares do not carry voting rights in the Fund Company.

Transfer of Participating Shares

Participating Shares may not be transferred without prior written consent of the directors of the Fund Company.

– 11 –

LETTER FROM THE BOARD

Summary of the key features of Class A Shares and Class B Shares

Set out below is a summary of the key features of Class A Shares and Class B Shares pursuant to the Memorandum:

	Class A Shares	Class B Shares
Subscription price	During the initial offer period:	During the initial offer period:
	HK$1,000 per share	HK$1,000 per share
	Following close of initial offer period:	Following close of initial offer period:
	net asset value per share	net asset value per share
Subscription fee	2% of the subscription amount	1% of the subscription amount
Performance fee	Equal to 5% of the appreciation in the	Not applicable
	net asset value per Class A Share
	above the relevant high water mark
Management fee to the	One-twelfth (1/12) of 1.5% per month of	One-twelfth (1/12) of 1.0% per month of
Investment Manager	the net asset value of Class A Shares	the net asset value of Class B Shares
Redemption and	May be redeemed at the option of the	May be redeemed at the option of the
lock-up period	holders thereof on the Redemption	holders thereof on the Redemption
	Day after the expiry of the lock-up	Day after the expiry of the lock-up
	period of 12 months	period of 24 months
Redemption Price	equal to the net asset value per share of	equal to the net asset value per share of
per share	Class A Shares	Class B Shares
Redemption fee	1% of the net asset value of Class A	1% of the net asset value of Class B
	Shares to be redeemed	Shares to be redeemed
Voting rights	Do not carry voting rights in the	Do not carry voting rights in the
	Fund Company	Fund Company
Transferability	May not be transferred without prior	May not be transferred without prior
	written consent of the directors of	written consent of the directors of
	the Fund Company	the Fund Company

– 12 –

LETTER FROM THE BOARD

THE LISTED SECURITIES

The aggregate market value of the Listed Securities held by the Subscriber as at 31 March 2017 was approximately HK$282.18 million. Details of which are as follows:

				Market value
	Stock		No. of	as at 31 March
Company name	code	Industry classification	shares held	2017
				(HK$)
SEEC Media Group Ltd.	205	Consumer Services	48,100,000	6,012,500
		– Media & Entertainment
		– Advertising & Marketing
QPL International	243	Information Technology	17,487,000	9,967,590
Holdings Ltd.		– Semiconductors
		– Semiconductors
AMCO United	630	Consumer Goods	18,000,000	11,520,000
Holding Ltd.		– Healthcare
		– Medical Devices
China Properties	736	Properties & Construction	64,500,000	7,546,500
Investment Holdings		– Properties
Ltd.		– Property Investment
China e-Wallet Payment	802	Information Technology	70,000,000	46,900,000
Group Ltd.		– Software & Services
(formerly named as		– Software
RCG Holdings Limited)
Unity Investments	913	Financials	10,000,000	1,310,000
Holdings Ltd.		– Other Financials
		– Investment & Asset Management
Milan Station Holdings	1150	Consumer Goods	19,868,000	7,152,480
Ltd.		– Textiles, Clothing & Personal Care
		– Other Accessories
Lerado Financial Group	1225	Conglomerates	11,784,000	1,366,944
Company Ltd.		– Conglomerates
		– Conglomerates
China Investment and	1226	Financials	15,700,000	3,925,000
Finance Group Ltd.		– Other Financials
		– Investment & Asset Management
Time2U International	1327	Consumer Goods	37,154,000	2,415,010
Holding Ltd.		– Textiles, Clothing & Personal Care
		– Jewellery & Timepieces

– 13 –

LETTER FROM THE BOARD

Company name Stock code Industry classification No. of shares held Major Holdings Ltd. 1389 Consumer Goods – Food & Beverages – Alcohols 4,500,000 SHIS Ltd. 1647 Properties & Construction – Construction – Building Construction 1,990,000 Capital VC Ltd. 2324 Financials – Other Financials – Investment & Asset Management 14,200,000 Hao Wen Holdings Ltd. 8019 Industrials – Industrial Engineering – Environmental Engineering 23,880,000 WLS Holdings Ltd. 8021 Properties & Construction – Construction – Building Construction 359,000,000 KPM Holding Ltd. 8027 Consumer Services – Support Services – Support Services 10,560,000 GreaterChina Professional Services Ltd. 8193 Financials – Other Financials – Other Financials 57,945,000 Tai Kam Holdings Ltd. 8321 Properties & Construction – Construction – Heavy Construction & Engineering 3,420,000 Total	Market value as at 31 March 2017 (HK$) 5,805,000 1,791,000 2,840,000 4,537,200 78,621,000 9,504,000 36,505,350 44,460,000
	282,179,574

Company name
Stock
code
Industry classification
No. of
shares held
Major Holdings Ltd.
1389
Consumer Goods
– Food & Beverages
– Alcohols
4,500,000
SHIS Ltd.
1647
Properties & Construction
– Construction
– Building Construction
1,990,000
Capital VC Ltd.
2324
Financials
– Other Financials
– Investment & Asset Management
14,200,000
Hao Wen Holdings Ltd.
8019
Industrials
– Industrial Engineering
– Environmental Engineering
23,880,000
WLS Holdings Ltd.
8021
Properties & Construction
– Construction
– Building Construction
359,000,000
KPM Holding Ltd.
8027
Consumer Services
– Support Services
– Support Services
10,560,000
GreaterChina Professional
Services Ltd.
8193
Financials
– Other Financials
– Other Financials
57,945,000
Tai Kam Holdings Ltd.
8321
Properties & Construction
– Construction
– Heavy Construction & Engineering
3,420,000
Total

Market value
as at 31 March
2017
(HK$)
5,805,000
1,791,000
2,840,000
4,537,200
78,621,000
9,504,000
36,505,350
44,460,000

282,179,574

– 14 –

LETTER FROM THE BOARD

REASONS FOR THE SUBSCRIPTION

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

The Board considers that the Subscription is in line with the Group’s objective to grow its investment return by adopting a proactive but prudent approach in its investments, in particular the Company will adopt a diversified investment strategy while avoiding concentration risk and maintaining reasonable spread of the Group’s investments by investing in Hong Kong listed securities, including initial public offering securities. Considering that the Fund will be wellmanaged by investment professionals who may possess corporate financial statements, research reports and other information that are beyond the reach of general public, the Board expects that the Subscription will diversify the Group’s securities investment risk and further enhance the rate of return of the Group’s securities investment through efficient access to a wider variety of investment information channels via the Fund to which the Group may not have access at present.

In addition, the Board has taken, among others, the followings into consideration:

(i) As highlighted in the sections headed “The Investment Manager” and “The Investment Advisor” of this circular, (i) Mr. Chen, being the director of the Investment Manager, has rich experience in managing similar sizable funds and established reputable investment track record; and (ii) the Investment Advisor currently has 3 Responsible Officers, who are licensed by the SFC and required to meet relevant industry requirements, qualifications and experience in order to qualify as and become a Responsible Officer, to supervise its provision of investment advisory services to the Fund. The Directors have taken the above into account when considering the Subscription;
(ii) By establishing an investment relationship through the Subscription with the Fund Company, the Group will be able to explore further investment opportunities with the Investment Manager and the Investment Advisor, further develop the depth and width of equity investment, and broaden the investment horizon and investment level of the Group, and therefore strengthening the foundation of the Group’s sustainable development;
(iii) Although the Group will not be involved in the management of the Fund, the Board considers that the Subscription would allow the Group to leverage on the expertise, experience and network of the management of the Fund Company, the Investment Manager and the Investment Advisor and resources of the Fund to manage potential securities investments and the Listed Securities. In addition, the Subscription would enable the Group to focus its manpower and resources in pursuing development opportunities on, including but not limited to, the existing and newly developing business segments of the Group. As such, the Board believes that investing in the Fund is a more efficient mean than the Group managing the securities investments, including the Listed Securities, by itself;

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LETTER FROM THE BOARD

(iv) Despite that (a) the liquidity of the Participating Shares are relatively lower than that of the Listed Securities, being liquid assets tradable on the Stock Exchange; and (b) the Class B Shares are subject to a lock-up period of 24 months, the Board considers that the benefits as discussed above and the potential rate of return of the Fund shall offset the said downsides in the long run. Nevertheless, it is the Group’s strategy to maintain a portfolio of securities for a long term purpose. As such, the Board considers that a Lockup Period of 24 months is in line with the original strategy of the Group; and
(v) Despite that it is not envisaged that any income or gains derived from investment of the Fund will be distributed by way of dividend, the Company could realise its investment return from the Fund by redemption of its Participating Shares should the Fund have achieved capital appreciation and growth in its net asset value in future by leveraging on the extensive experience of the Investment Manager and the Investment Advisor.

After having considered the above, the Directors are of the view that the Subscription (including the Transfer of Listed Securities), the Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE SUBSCRIPTION AND THE TRANSFER OF LISTED SECURITIES

The Listed Securities are currently being accounted for available-for-sale investments in the Group’s financial statements for the year ended 31 March 2016 and the Subscription will be accounted for as available-for-sale investments in the Group’s financial statements upon completion. Upon completion of the Subscription and the Transfer of Listed Securities, the associated available-for-sale investments of the Group will remain the same. As such, the Subscription and the Transfer of Listed Securities will not have any material financial effects on the amounts of total assets and liabilities of the Group immediately after completion.

For illustration purpose, having taken into account (i) the aggregate acquisition cost for the Listed Securities with reference to the book and records of the Group of approximately HK$187.04 million; (ii) the aggregate market value of the Listed Securities as at 31 March 2017 of approximately HK$282.18 million; and (iii) the expenses of approximately HK$1.55 million relating to the Subscription and the Transfer of Listed Securities (mainly arising from the related professional fees and stamp duty for the Transfer of Listed Securities), the associated estimated gain amounts to approximately HK$93.59 million.

Shareholders should note that (i) the actual amount of such gain or loss (as the case may be) to be recognized in the financial statements of the Company depends on the market value of the Listed Securities upon completion of the Subscription and the Transfer of Listed Securities and therefore may be different from the amount mentioned above; and (ii) such estimated gain of approximately HK$93.59 million mainly represents the revaluation differences of the Listed Securities’ market values against their aggregate acquisition cost. Therefore, regardless of the Subscription and the Transfer of Listed Securities, it is expected that the Company would record a similar level of gain if the Group had disposed the Listed Securities in the market on 31 March 2017.

– 16 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Subscription are more than 100%, the Subscription constitute a very substantial acquisition of the Company under Chapter 14 of the Listing Rules, and is therefore subject to the reporting, announcement and Shareholders’ approval requirements.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Transfer of Listed Securities are more than 75%, the Transfer of Listed Securities constitute 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

The SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the Subscription Agreement 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 Subscription Agreement and the transactions contemplated thereunder, and accordingly no Shareholder is required to abstain from voting on the resolution(s) in respect of the Subscription Agreement at the SGM.

RECOMMENDATION

The Board considers that the transactions contemplated under the Subscription Agreement are on normal commercial terms and the terms of the Subscription Agreement 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 Subscription Agreement and the transactions contemplated thereunder.

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LETTER FROM THE BOARD

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

– 18 –

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 2014, 2015 and 2016 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 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)
annual report of the Company for the year ended 31 March 2016 published on 28 July 2016 (pages 33 to 126)

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 March 2017, the Group had outstanding interest-bearing borrowings of approximately HK$174 million, comprising (1) unsecured promissory notes of HK$143 million; and (2) unsecured unconvertible bonds of HK$31 million.

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 31 March 2017. Save for the repayment by the Group of the promissory notes of HK$64 million in April 2017, the Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 31 March 2017, up to and including the Latest Practicable Date.

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 Subscription (including the Transfer of Listed Securities).

4. MATERIAL ADVERSE CHANGE

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 2016, being the date to which the latest published audited consolidated financial statements of the Company were made up.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

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 C.E. Securities and Asset Management Limited (formerly named as “STI Securities & Wealth Management Limited”) is the prime opportunity to enter the financial services industry. After the completion of such acquisition on 9 August 2016, the Company would 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.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

Set out below is the management and discussion and analysis on the Group (on the basis that the Listed Securities had been fully disposed).

(i) For the six months ended 30 September 2016

Business and Financial Review

The Group recorded a turnover of approximately HK$43.14 million for the period under review (2015: approximately HK$1.39 million). The increase in turnover was mainly attributable to the contribution from the trading of gold and diamond business and the money lending business.

The Group’s unaudited net profit for the period under review was approximately HK$201.24 million (2015: net loss of approximately HK$79.95 million). The Group turned from a loss position to a profit position was mainly due to (i) the gain on disposal of investment in equity securities of approximately HK$169.08 million (2015: Nil); (ii) the gain on disposal of waste recycling and trading of petrochemical products businesses of approximately HK$59.78 million (2015: Nil); and (iii) goodwill impairment loss of approximately HK$9.70 million arising from the online products sales, provision of marketing, web design and maintenance services business (2015: approximately HK$1.78 million arising from the online products sales, provision of marketing, web design and maintenance services business and waste recycling business and HK$68.97 million arising from available-for-sale investment in respect of the Company’s investment in Pure Power Holdings Limited) for the period ended 30 September 2016.

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and Financial Resources

As at 30 September 2016, the Group had total assets of approximately HK$1,043.48 million and liabilities of approximately HK$180.83 million.

Cash Position

As at 30 September 2016, the Group’s cash and bank balances were approximately HK$8.88 million.

Gearing ratio

As at 30 September 2016, the 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 approximately 16.62%.

Borrowings

As at 30 September 2016, the Group’s interest-bearing borrowings amounted to approximately HK$150 million, which consisted of promissory notes of approximately HK$130 million and unconvertible bonds of approximately HK$20 million, and were denominated in Hong Kong dollars and had fixed interest rates.

Charge on Assets

As at 30 September 2016, the Group did not have any charge on assets.

Capital Expenditures

As at 30 September 2016, the Group did not have any significant capital commitments.

Contingent Liabilities

As at 30 September 2016, the Group did not have any significant contingent liabilities.

Exchange Risk Exposure

The Group mainly operates in Hong Kong and the Mainland China, with revenues and expenditures denominated in RMB. During the six months ended 30 September 2016, 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.

– 21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments and Material Acquisition and Disposals

On 19 May 2016, the Company as vendor and Dejuxin Technology Co., Limited, a company incorporated in Hong Kong with limited liability, as purchaser entered into a sale and purchase agreement dated 19 May 2016 in relation to the disposal of 93.33% of the entire issued share capital of Ideal Market Holdings Limited at the consideration of HK$150,000,000. Details of which are set out in the announcement of the Company dated 19 May 2016.

On 20 July 2016, the Company acquired on-market a total of 17,840,000 ordinary shares of Luen Wong Group Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose shares are listed on the Growth Enterprise Market of the Stock Exchange (stock code: 8217), in a series of transactions at the price between HK$6.75 and HK$7.00 per share for an aggregate purchase price of HK$124,465,800 (exclusive of transaction costs).

On 20 July 2016 and 21 July 2016, the Group disposed on-market of a total of 817,030,000 ordinary shares of China Jicheng Holdings Limited, a company incorporated in the Cayman Islands with limited liability whose shares are listed on the Main Board of the Stock Exchange (stock code: 1027), in a series of transactions at the price between HK$0.201 and HK$0.243 per share for an aggregate gross sale proceeds of HK$176,269,580 (excluding transaction costs).

Save for the above disclosed, the 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 2016, the Group had approximately 33 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Group was approximately HK$5.89 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

(ii) For the year ended 31 March 2016

Business and Financial Review

During the financial year ended 31 March 2016, the Group’s turnover amounted to approximately HK$12.26 million (2015: approximately HK$0.42 million). The increase in revenue was mainly attributable to the contribution from the newly acquired businesses of trading of gold and diamond business.

The Group’s result for the financial year ended 31 March 2016 was a consolidated net loss of approximately HK$64.73 million (2015: net loss of approximately HK$85.13 million). The improved financial results was primarily attributable to fair value gains and realized gains on disposal of investment in securities of approximately HK$51.55 million.

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and Financial Resources

As at 31 March 2016, the Group had total assets of approximately HK$764.57 million and liabilities of approximately HK$208.82 million.

Cash Position

As at 31 March 2016, the Group’s cash and bank balances were approximately HK$22.77 million.

Gearing ratio

As at 31 March 2016, the 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 approximately 25.08%.

Borrowings

As at 31 March 2016, the Group’s interest-bearing borrowings amounted to approximately HK$150 million, which consisted of promissory notes of approximately HK$130 million and unconvertible bonds of approximately HK$20 million, and were denominated in Hong Kong dollars and had fixed interest rates.

Charge on Assets

As at 31 March 2016, the Group did not have any charge on assets.

Capital Expenditures

As at 31 March 2016, the Group did not have any significant capital commitments.

Contingent Liabilities

As at 31 March 2016, the 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 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.

– 23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Significant Investments and Material Acquisition and Disposals

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.

On 16 November 2015, Gold Castle Group Limited, a wholly owned subsidiary of the Company (as purchaser) and STI Financial Group Limited (as vendor) entered into a sale and purchase agreement (as supplemented on 29 April 2016) 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 (subject to adjustment). Details of which are set out in the announcement of the Company dated 16 November 2015 and 29 April 2016.

On 20 November 2015, the Company as purchaser and Soar Power Limited, Loyal Charm Limited, and Hover Max Limited as vendors entered into a sale and purchase agreement 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. Details of which are set out in the announcement of the Company dated 20 November 2015.

On 27 November 2015, the Company as vendor, and Ms. Chow Yan Ping as purchaser entered into a sale and purchase agreement in relation to the disposal of the entire issued share capital of Asian Champion Limited at the consideration of HK$58,000,000. Details of which are set out in the announcement of the Company dated 27 November 2015.

Save for the above disclosed, the 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 2016, the Group had approximately 26 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Group was approximately HK$11.82 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

– 24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) For the year ended 31 March 2015

Business and Financial Review

During the financial year ended 31 March 2015, the Group’s turnover amounted to approximately HK$0.42 million (2014: Nil). The increase in revenue was mainly attributable to the contribution from the newly acquired businesses of internet sales and services. The Group recorded a gross profit for the financial year of around HK$0.42 million.

The Group’s result for the financial year ended 31 March 2015 was a consolidated net loss of approximately HK$85.13 million (2014: net loss of approximately HK$1,233.98 million). The improved financial results was primarily attributable to the fact that the non-cash substantial loss of HK$1,202.60 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 Group had total assets of approximately HK$785.62 million and liabilities of approximately HK$261.74 million.

Cash Position

As at 31 March 2015, the Group’s cash and bank balances were approximately HK$249.20 million.

Gearing ratio

As at 31 March 2015, the 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 approximately 2.34%.

Borrowings

As at 31 March 2015, the Group’s interest-bearing borrowings amounted to approximately HK$213.85 million, which consisted of promissory notes of approximately HK$191.95 million, unconvertible bonds of approximately HK$20.00 million and a convertible note of approximately HK$1.90 million, and were denominated in Hong Kong dollars and had fixed interest rates.

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Charge on Assets

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

Capital Expenditures

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

Contingent Liabilities

As at 31 March 2015, the 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 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.

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 Group, was completed on 30 September 2015.

For identification purposes only

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 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 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 for long term investment. However, the Group recorded an unrealized gain of approximately HK$22.30 million 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 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 Group had approximately 27 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Group was approximately HK$8.11 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

(iv) For the year ended 31 March 2014

Business and Financial Review

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

Operating loss from continuing operations after tax of the Group was HK$1,233.98 million which included a loss of HK$1,202.60 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$17.26 million on investment in electric car battery business and gain on disposal subsidiaries engaged in laminates business amounting to HK$25.95 million.

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Liquidity and Financial Resources

As at 31 March 2014, the Group had total assets of approximately HK$237.73 million and liabilities of approximately HK$106.90 million.

Cash Position

As at 31 March 2014, the Group’s cash and bank balances were approximately HK$8.56 million.

Gearing ratio

As at 31 March 2014, the 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 approximately 42.91%.

Borrowings

As at 31 March 2014, the Group’s interest-bearing borrowings amounted to approximately HK$93 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 million and other secured loan with variable interest rate of approximately HK$68 million, and were denominated in Hong Kong dollars.

Charge on Assets

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

Capital Expenditures

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

Contingent Liabilities

As at 31 March 2014, the 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.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 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 2014, the Group had approximately 21 employees in Hong Kong and in the PRC. The staff cost (including directors’ remunerations) of the Group was approximately HK$5.65 million. Remunerations are commensurate with the nature of job, staff experience and market conditions.

– 29 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

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 28 February 2017, and related notes as set out on pages 33 to 35 of the circular dated 11 May 2017 (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 page 33 of the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the disposal of various listed securities on the Stock Exchange held by Orient Time Investment Limited, a wholly-owned subsidiary of the Company (the “Listed Securities”) and the transfer of Listed Securities as investment in a fund on the Group’s consolidated financial position as at 28 February 2017 as if the Listed Securities disposed of and the investment in a fund as at 28 February 2017. 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 2016, on which an interim 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”).

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 behavior.

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.

– 30 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

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 at 28 February 2017.

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.

– 31 –

APPENDIX II

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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 11 May 2017

– 32 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

INTRODUCTION

Basis of Preparation of the Unaudited Pro Forma Financial Information of the Adjusted Position

The following is the unaudited pro forma consolidated statement of financial position of China Environmental Energy Investment Limited and its subsidiaries (the “Group”) excluding the Listed Securities by transfer of Listed Securities as investment in a fund (hereinafter referred to as the “Adjusted Position”) (the “Unaudited Pro Forma Financial Information”) as if the disposal of Listed Securities (the “Disposal”) and transfer of Listed Securities as investment in a fund (the “Acquisition”) had completed on 28 February 2017 for the unaudited pro forma consolidated statement of financial position.

The Unaudited Pro Forma Financial Information of the Adjusted Position should be read in conjunction with the unaudited condensed consolidated financial statements of the Group for the six months ended 30 September 2016 as disclosed in the interim report of the Company for the six months ended 30 September 2016 (the “2016 Interim Report”), and other financial information included elsewhere in the Circular.

The unaudited pro forma consolidated statement of financial position of the Adjusted Position is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2016 as extracted from the 2016 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 and the Acquisition. 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 and Acquisition as at 28 February 2017 or future period.

As at 30 September 2016 Note (a) HK$’000 HK$’000 Non-current assets Property, plant and equipment 10,151 Goodwill 94,793 Interest in an associate 202,636 Available-for-sale investments 772,725 33,608 1,080,305	Adjusted position before the Disposal and Acquisition Pro forma adjustments Note (b) Note (c) Note (d) HK$’000 HK$’000 HK$’000 HK$’000 10,151 94,793 202,636 806,333 (283,254) 283,254 1,113,913	Adjusted Position after the Disposal and Acquisition as at 28 February 2017 HK$’000 10,151 94,793 202,636 806,333
		1,113,913

– 33 –

APPENDIX II

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Current assets Trade and bills receivables 4,517 Loan and interest receivables 130,142 Other receivables, prepayments and deposits paid 69,548 Cash deposits held by securities brokers 458 427 Bank balances and cash 8,425 52 213,090 Current liabilities Trade and bills payables 253 Other payables and accruals 21,122 59,075 Promissory notes payable 137,884 Unconvertible bonds 20,508 Income tax payable 1,062 180,829 Net current asset/(liabilities) 32,261 Total assets 1,112,566 Capital and reserves Share capital 37,423 Share premium 2,601,203 Contributed surplus 2,031 Capital redemption reserve 464 Exchange reserve 8,665 Accumulated loss b/f (2,067,351) Profit/(loss) for the period 187,254 (119,966) Investment revaluation reserve 342,877 94,978 Total equity 1,112,566 As at 30 September 2016 Note (a) HK$’000 HK$’000	4,517 130,142 69,548 885 8,477 283,254 (283,254) 213,569 253 80,197 1,550 137,884 20,508 1,062 239,904 (26,335) 1,087,578 37,423 2,601,203 2,031 464 8,665 (2,067,351) 67,288 (1,550) 95,781 437,855 (95,781) 1,087,578 Adjusted position before the Disposal and Acquisition Pro forma adjustments Note (b) Note (c) Note (d) HK$’000 HK$’000 HK$’000 HK$’000	4,517 130,142 69,548 885 8,477 Adjusted Position after the Disposal and Acquisition as at 28 February 2017 HK$’000
		213,569
		253 81,747 137,884 20,508 1,062
		241,454
		(27,885)
		1,086,028

		37,423 2,601,203 2,031 464 8,665 (2,067,351) 161,519 342,074
		1,086,028

– 34 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(a) Being the reconciliation of financial effect of Orient Time Investment Limited, a whollyowned subsidiary of the Company for the period from 1/10/2016 to 28/2/2017.
(b) Being the expenses of approximately HK$1.55 million relating to the subscription and the transfer of the Listed Securities (mainly arising from the related professional fees and stamp duty for the transfer of the Listed Securities).
(c) Being the recognition of Disposal as at 28/2/2017.
(d) Being the recognition of Acquisition as at 28/2/2017.

– 35 –

GENERAL INFORMATION

APPENDIX III

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 2016 (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.

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.

– 36 –

GENERAL INFORMATION

APPENDIX III

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 2016 (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) a sale and purchase agreement dated 19 May 2016 entered into between the Company as vendor and Dejuxin Technology Co., Limited as purchaser in relation to the disposal of 93.33% of the entire issued share capital of Ideal Market Holdings Limited at the consideration of HK$150,000,000;
(ii) 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;
(iii) 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;
(iv) 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;

– 37 –

GENERAL INFORMATION

APPENDIX III

(v) 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;
(vi) 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;
(vii) 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;
(viii) 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;
(ix) a sale and purchase agreement entered into between Pacific Wise Investments Limited as purchaser and an Independent Third Party 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;
(x) 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; and
(xi) 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.

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.

– 38 –

GENERAL INFORMATION

APPENDIX III

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:

(i) the memorandum of association and bye-laws of the Company;
(ii) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;
(iii) the unaudited pro forma financial information of the Group as set out in Appendix II to this circular;
(iv) the written consent referred to in the paragraph headed “Qualification and Consent of Expert” in this appendix;
(v) the annual reports of the Company for the years ended 31 March 2015 and 2016; and
(vi) this circular.

– 39 –

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 29 May 2017 at 9:30 a.m. at Plaza 4, Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing the following resolution:

ORDINARY RESOLUTION

“ THAT

(a) the subscription agreement to be entered into between Orient Time Investment Limited (a wholly-owned subsidiary of the Company, “ Orient Time ”) as subscriber and Henghua Global Fund SPC (the “ Fund Company ”) as issuer (the “ Subscription Agreement ”), a copy of which is produced to the SGM and marked “A” and initiated by the chairman of the SGM for identification purpose, pursuant to which Orient Time agrees to subscribe for participating, redeemable, non-voting shares of par value HK$0.01 in the capital of the Fund Company attributable to the Henghua Global New Opportunity Fund SP II designated as Class B shares at an initial subscription price of HK$1,000 per participating share (exclusive of any subscription fee) and the investment sum and payment for the subscription be determined and settled by the transfer of various listed securities on The Stock Exchange of Hong Kong Limited held by Orient Time to the Fund Company (the “ Transfer of Listed Securities ”) be and is hereby confirmed and approved; and
(b) any one of the Directors be and is hereby authorised to do all such acts, deeds and things and to sign and execute all such documents, including under seal where applicable, on behalf of the Company, as he may, in his absolute discretion, consider necessary, desirable or expedient to implement and give effect to the Subscription Agreement and the transactions contemplated thereunder (including the Transfer of Listed Securities).”

Yours faithfully By order of the Board China Environmental Energy Investment Limited Chen Tong Chairman

Hong Kong, 11 May 2017

For identification purposes only

– 40 –

NOTICE OF SPECIAL GENERAL MEETING

As at the date of this notice, the board of Directors of the Company comprises three executive Directors, namely Ms. Chen Tong (Chairman), Mr. Xiang Liang and Ms. Hong Jingjuan; 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.

– 41 –

AI assistant

Dufu Liquor Group Limited — Proxy Solicitation & Information Statement 2017

49605_rns_2017-05-10_b084a03e-c2f9-4f64-84a3-bbec9720f7f7.pdf

China Environmental Energy Investment Limited

(1) PROPOSED VERY SUBSTANTIAL ACQUISITION – INVESTMENT IN A FUND; (2) PROPOSED VERY SUBSTANTIAL DISPOSAL – TRANSFER OF LISTED SECURITIES; AND

(3) NOTICE OF SPECIAL GENERAL MEETING

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

China Environmental Energy Investment Limited

(1) PROPOSED VERY SUBSTANTIAL ACQUISITION – INVESTMENT IN A FUND; (2) PROPOSED VERY SUBSTANTIAL DISPOSAL – TRANSFER OF LISTED SECURITIES; AND (3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

INVESTMENT IN A FUND AND TRANSFER OF LISTED SECURITIES

INFORMATION OF THE FUND AND THE FUND COMPANY

LETTER FROM THE BOARD

Share capital

Classes of Participating Shares

Investment objective

Investment strategy

LETTER FROM THE BOARD

Investment restrictions

Leverage

Currency hedging and trading

LETTER FROM THE BOARD

Distribution policy

Determination of net asset value

Management

The Investment Manager

The Investment Advisor

LETTER FROM THE BOARD

The Administrator

LETTER FROM THE BOARD

Financial information

MAJOR TERMS OF THE SUBSCRIPTION AGREEMENT

Subscription price

Subscription fee

Performance fee

LETTER FROM THE BOARD

Management fee

Fees payable to the Investment Advisor

Fees payable to the Administrator

Lock-up period

Redemption

Voting rights

Transfer of Participating Shares

LETTER FROM THE BOARD

Summary of the key features of Class A Shares and Class B Shares

LETTER FROM THE BOARD

THE LISTED SECURITIES

LETTER FROM THE BOARD

LETTER FROM THE BOARD

REASONS FOR THE SUBSCRIPTION

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE SUBSCRIPTION AND THE TRANSFER OF LISTED SECURITIES

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

GENERAL

RECOMMENDATION

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

1. THREE YEARS’ SUMMARY OF FINANCIAL RESULTS

2. STATEMENT OF INDEBTEDNESS

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

(i) For the six months ended 30 September 2016

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

Dufu Liquor Group Limited Proxy Solicitation & Information Statement 2017