ELL Environmental Holdings Limited — Capital/Financing Update 2010

Sep 16, 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 0598)

CONNECTED TRANSACTION

The Board announces that on 16 September 2010, the Company entered into the State-owned Equity Transfer Agreement with the Vendor pursuant to which, inter alia, the Company has agreed to acquire, and the Vendor has agreed to sell, 49% equity interest in the Target for an aggregate consideration of RMB16,970,000 (equivalent to approximately HK$19,563,016). The Consideration is to be satisfied in cash in a lump sum. As at the date of this announcement, the Company indirectly holds 51% equity interest in the Target. The Target will be a wholly owned subsidiary of the Company upon completion of the Acquisition.

As the Vendor is the controlling shareholder of the Company, it is a connected person of the Company, and the Acquisition pursuant to the State-owned Equity Transfer Agreement constitutes a connected transaction of the Company under Rule 14A.13 of the Listing Rules. As certain applicable percentage ratio in respect of the Acquisition is over 0.1% but less than 5%, the Acquisition will only be subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but will be exempt from the independent shareholders’ approval requirements under Rule 14A.32 of the Listing Rules.

STATE-OWNED EQUITY TRANSFER AGREEMENT

Date:

16 September, 2010

Parties:

• (1) the Company (as Purchaser), indirectly holding 51% equity interest in the Target as at the date of this announcement

• (2) SINOTRANS & CSC Holdings Co., Ltd. (as Vendor), holding 49% equity interest in the Target as at the date of this announcement

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Assets to be acquired: 49% equity interest in the Target

Consideration: RMB16,970,000 (equivalent to approximately HK$19,563,016)

The Consideration represents the best price offered under the public bidding process effected through the Chongqing United Assets and Equity Exchange in accordance with applicable PRC laws and regulations in respect of the sale of state-owned assets. In agreeing the consideration, the Company has taken into account the Target’s net asset value based on independent valuation of RMB33,502,200 (equivalent to approximately HK$38,621,336)as at 31 December 2009 and the potential synergies and enhancement of value to the Company upon integration of the Target in the Group after the Acquisition.

The Consideration is to be paid in a lump sum and will be put into the account of settlement center in Chongqing United Assets and Equity Exchange within five days from the date of the State-owned Equity Transfer Agreement taking effect. Tax and expenses arising from the equity transfer will be borne by the Company and the Vendor respectively in accordance with the relevant requirements. The Consideration will be financed by internal resources of the Company.

Completion and conditions precedent

The State-owned Equity Transfer Agreement will take effect from the date of signature and seal of the Company and the Vendor.

INFORMATION ON THE TARGET

As at 31 December 2009, the audited net assets value of the Target was RMB34,620,632 (equivalent to approximately HK$39,910,665) and the net asset value based on independent valuation as at 31 December 2009 was RMB33,502,200 (equivalent to approximately HK$38,621,336). The original amount that the Vendor invested in the Target was RMB49,000,000 (equivalent to approximately HK$56,487,200).

Based on the audited financial statements of the Target as at 31 December 2008 and 31 December 2009, the net loss for the two years ended 31 December 2008 and 2009 was approximately RMB20,129,120.73 (equivalent to approximately HK$23,204,850.38) and RMB29,146,401.82 (equivalent to approximately HK$33,599,972.02) respectively.

The Target is incorporated in Nanjing under the laws of the PRC. Sinotrans Eastern Company Limited (“Sinotrans Eastern”), a wholly owned subsidiary of the Company, and the Vendor hold 51% and 49% equity interest in the Target respectively. The Target is mainly engaged in container and bulk cargo transportation business along the Yangtze River. The Target has a registered capital of RMB100, 000,000(equivalent to approximately HK$115,280,000), which has been fully paid up as at the date of this announcement.

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The Company plans to reorganisation its subsidiaries operating along the Yangtze River through the Target with a view to establishing a platform for integrated operations and management of resources and business in the Yangtze area. The Acquisition is therefore an important step in the Company’s internal reorganisation plans, which would enhance the sustainable development of the Company, in line with the Company’s development strategy.

In view of the above, the Directors (including the independent non-executive Directors) consider that the terms of the State-owned Equity Transfer Agreement are normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The following Directors also hold the following positions in the Vendor:

• (i) Mr. Zhao Huxiang is the Vice Chairman, President and Vice Secretary of the Party Committee of the Vendor;

• (ii) Mr. Zhang Jianwei is a director of the Vendor;

• (iii) Ms. Tao Suyun is the Vice President of the Vendor;

• (iv) Mr. Li Jianzhang is the Vice Secretary of the Party Committee and Secretary of the Commission for Discipline Inspection of the Vendor;

• (v) Mr. Yang Yuntao is the General Manager of Legal Department of the Vendor.

• (vi) Ms. Liu Jinghua is the General Manager of the Finance Department of the Vendor;

According to the requirements under Article 125 of Company Law of the PRC, any director of a listed company who is affiliated with the enterprise involved in the matters discussed by the board of directors shall not exercise his own, or represent other directors to exercise voting right on such matters. Therefore, the above-mentioned Directors present at the Board meeting abstained from voting on the resolution approving the Acquisition in accordance with the requirements of the PRC laws.

GENERAL INFORMATION

The Group is a leading logistics service provider in China whose principal activities include freight forwarding, express services and shipping agency, complemented by ancillary operations in storage and terminal services, marine transportation and other truck-based transportation services.

The Vendor provides integrated logistics services and marine transportation services mainly through its subsidiaries.

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LISTING RULES IMPLICATIONS

As the Vendor is the controlling shareholder of the Company, it is a connected person of the Company, and the Acquisition pursuant to the State-owned Equity Transfer Agreement constitutes a connected transaction of the Company under Rule 14A.13 of the Listing Rules. As certain applicable percentage ratio in respect of the Acquisition is over 0.1% but less than 5%, the Acquisition will only be subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but will be exempt from the independent shareholders’ approval requirements under Rule 14A.32 of the Listing Rules.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise.

“Acquisition”	the proposed acquisition of 49% equity interest in the Target by the
	Company pursuant to the State-owned Equity Transfer Agreement
“Board”	the board of directors of the Company
“Company”	中國外運股份有限公司(Sinotrans Limited), a joint stock limited
	company incorporated in the PRC with limited liability, whose shares
	are listed on The Stock Exchange of Hong Kong Limited
“Consideration”	the consideration of RMB16,970,000 for the Acquisition of 49% equity
	interest in the Target by the Company under the State-owned Equity
	Transfer Agreement
“Controlling shareholder”	the meaning ascribed to it under the Listing Rules
“Director(s)”	director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange of
	Hong Kong Limited
“PRC”	People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC

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“Shareholder(s)”

holder(s) of domestic invested share(s) of RMB1.00 each and overseas listed foreign invested share(s) of RMB1.00 each in the share capital of the Company

“State-owned Equity the state-owned equity transfer agreement dated 16 September 2010 Transfer Agreement” entered into between the Company and the Vendor

“subsidiary(ies)” the meaning ascribed to such term in the Listing Rules

• “substantial shareholder” the meaning ascribed to it under the Listing Rules

“Target” 中外運長江有限公司 (Sinotrans Changjiang Company Limited*), owned as to 51% by Sinotrans Eastern Company Limited ( 中國外運 華東有限公司 ), a wholly owned subsidiary of the Company, and as to 49% by the Vendor

“Vendor” 中國外運長航集團有限公司 (SINOTRANS & CSC Holdings Co., Ltd.), the controlling shareholder of the Company and a substantial shareholder of the Target

By order of the Board Sinotrans Limited Gao Wei Company Secretary

Beijing, 16 September, 2010

For the purpose of this announcement, unless otherwise indicated, the exchange rate of RMB1.00=HK$1.1528 has been used for currency translation, where applicable. Such exchange rates are for the purpose of illustration only and do not constitute a representation that any amount in RMB or HK$ have been, could have been or may be converted at such or any other rates or at all.

As at the date of this announcement, Zhao Huxiang, Zhang Jianwei, Tao Suyun and Li Jianzhang are executive directors of the Company; Yang Yuntao, Liu Jinghua, Jerry Hsu and Mok, Chiming Victor are non-executive directors of the Company; and Sun Shuyi, Lu Zhengfei and Miao Yuexin are independent non-executive directors of the Company.

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