Kingwell Group Limited — M&A Activity 2016

Mar 1, 2016

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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(Incorporated in Bermuda with limited liability)

(Stock Code: 559)

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF 60% EQUITY INTEREST IN XIAOGAN PETROCHINA KUNLUN GAS CO., LIMITED

THE INVESTMENT AGREEMENT

The Board is pleased to announce that on 1 March 2016 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company and the Vendor entered into the Investment Agreement, pursuant to which the Purchaser has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, the Sale Equity, at a cash consideration of RMB43,873,000 (equivalent to approximately HK$52,209,000). The Sale Equity represents 60% of the equity interest in the Target Company after the Capital Restructuring Completion.

The Purchaser agreed to invest in two new gas stations located Xiaogan City, the PRC to be constructed by the Target Company in accordance with the proportion of its shareholding in the Target Company. The total construction cost for each of the gas station shall be not more than RMB6,000,000. The Vendor guaranteed that the two new gas stations shall be in operation no later than 31 December 2016 (or such later date as agreed by the Vendor and the Purchaser).

The Vendor has undertaken to grant an option to the Purchaser to request the Vendor to transfer investment projects in relation to CNG and LNG stations and CNG transport trucks owned by the Vendor to the Target Company at a consideration to be further agreed by the Vendor and the Purchaser.

The Target Company has two operating CNG gas stations, one primary CNG gas station under construction which is expected to be in operation after April 2016 subject to relevant licences having been obtained from the relevant PRC authorities, and two CNG gas stations to be constructed. All of the CNG gas stations are located in Xiaogan City, Hubei Province, the PRC. All four CNG gas stations are designed with a daily gas filling capacity of 15,000 cubic metres. The primary CNG gas station is designed with a daily gas filling capacity of 300,000 cubic metres, supplying not only the four self-owned CNG gas stations, but also the nearby CNG gas stations operated by third parties.

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LISTING RULES IMPLICATIONS

As one or more of the relevant applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Acquisition exceeds 25% but less than 100%, the Acquisition constitutes a major transaction on the part of the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and Shareholders’ approval requirements.

The SGM will be convened at which the Shareholders will consider, and, where appropriate, approve the Investment Agreement and the transactions contemplated thereunder.

As additional time is required to prepare the accountants’ report and the valuation report on the Target Company, a circular containing, among other matters, (i) further details of the Acquisition; (ii) the accountants’ report on the Target Company; (iii) the unaudited pro forma financial information on the Enlarged Group; (iv) the valuation report on the Target Company; and (v) a notice to convene the SGM will be despatched to the Shareholders on or before 29 April 2016.

Warning: As the Completion is subject to the satisfaction and/or waiver (where applicable) of the conditions precedent set out in the Investment Agreement, the Acquisition may or may not proceed to completion. Shareholders and potential investors of the Company should exercise caution when dealing in the shares or any securities of the Company.

References are made to the announcements of the Company dated 3 November 2015 and 31 December 2015 in relation to, among other matters, the entering into of the Framework Agreement.

The Board is pleased to announce that on 1 March 2016 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company and the Vendor entered into the Investment Agreement, pursuant to which the Purchaser has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, the Sale Equity, at a cash consideration of RMB43,873,000 (equivalent to approximately HK$52,209,000). Details of the Investment Agreement are set out below.

INVESTMENT AGREEMENT

Date : 1 March 2016

Parties: (i) Able Zone International Limited, an indirect wholly-owned subsidiary of the Company, as purchaser; and

(ii) Hubei Qinlong Investment Group Limited as vendor.

To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are Independent Third Parties.

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Assets to be acquired

Pursuant to the Investment Agreement, the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell, the Sale Equity with all attaching rights, benefits, liability and obligations, representing approximately 60% equity interest in the Target Company after the Capital Restructuring Completion.

Capital Restructuring of the Target Company

As at the date of this announcement, the Target Company has a registered and paid-up capital of RMB30,000,000 and is beneficially owned as to 30% by the Vendor and 70% by Petrochina Kunlun. Pursuant to the Investment Agreement, the Vendor shall, before 31 July 2016 (or such later date as agreed by the Vendor and the Purchaser), acquire 40% of the equity interest in the Target Company from Petrochina Kunlun. Immediately after the Capital Restructuring Completion but before the Completion, the Target Company will be beneficially owned as to 70% by the Vendor and 30% by Petrochina Kunlun.

Earnest money and refund mechanism

A sum of RMB4,387,300 (equivalent to approximately HK$5,221,000) shall be payable in cash within 10 Business Days upon signing of the Investment Agreement by the Purchaser to the Vendor or its nominee as earnest money. If any of the conditions precedent under the Investment Agreement have not been fulfilled or waived by the Purchaser (as the case may be) on or before the Long Stop Date, the Vendor shall refund such earnest money without interest to the Purchaser within 5 Business Days upon receiving the written notice from the Purchaser. Such earnest money shall not be regarded as part of the consideration of the Acquisition and shall be refunded without interest in full from the Vendor to the Purchaser upon the date of payment of the First Instalment (as defined below).

Consideration

The consideration for the Acquisition is RMB43,873,000 (equivalent to approximately HK$52,209,000), which shall be payable by the Purchaser to the Vendor’s designated account in the following manner:

• (i) as to RMB30,711,100 (equivalent to approximately HK$36,546,000) being the first instalment (the ‘‘First Instalment’’) shall be payable in cash within 7–14 Business Days after the date on which the Target Company obtained the New Business License;

• (ii) as to RMB8,774,600 (equivalent to approximately HK$10,442,000) shall be payable in cash within 6 months after the date on which the Target Company obtained the New Business License; and

• (iii) the balance of the consideration of RMB4,387,300 (equivalent to approximately HK$5,221,000) shall be payable in cash within 1 year after the date on which the Target Company obtained the New Business License.

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The consideration for the Acquisition was determined after arm’s length negotiations between the Purchaser and the Vendor having taken into account of the preliminary valuation of the Target Company and the option of transferring the development rights of the investment projects as mentioned below. The Acquisition will be funded by the internal resources of the Group.

Conditions precedent

Completion is subject to fulfilment of the following conditions:

• (i) the Investment Agreement being duly signed by the parties to the Investment Agreement;

• (ii) all representations, warranties and undertakings given by the Vendor under the Investment Agreement remaining true and accurate without material omission, and there being no circumstances which constitute or may constitute any breach of representations, warranties and undertakings or other provisions under the Investment Agreement by the Vendor as at the date of the Investment Agreement and up to the date of Completion;

• (iii) the business scope of the Target Company not having any items which would adversely affect the Acquisition by the Purchaser as a foreign investor; the business scope and other matters of the Target Company conforming to the laws of the PRC which allow the Purchaser to complete the Acquisition without any legal obstacles;

• (iv) prior to signing of the Equity Transfer Agreement, the Vendor having legally acquired 40% of the equity interest in the Target Company from Petrochina Kunlun under the Capital Restructuring. The necessary approval for the Capital Restructuring having been obtained from state-owned assets supervision and administration commission and other relevant PRC government authorities and the Capital Restructuring having complied with necessary procedures for transfer of state-owned equity (including but not limited to having obtained the approval from state-owned assets supervision and administration commission, the asset valuation report approval/filing, on-market transaction, signing of agreement regarding the Capital Restructuring, and registration with the Administration for Industry and Commerce of the PRC) and the consideration for the Capital Restructuring and other relevant tax (if any) having been paid in accordance with the laws;

• (v) prior to signing of the Equity Transfer Agreement, the approval by the Ministry of Commerce of the PRC for the acquisition of the 40% equity interest in the Target Company by the Vendor from Petrochina Kunlun having been obtained and the registration with the Administration for Industry and Commerce of the PRC having been completed; after the Capital Restructuring Completion, the shareholders of the Target Company being the Vendor (holding 70% equity interest) and Petrochina Kunlun (holding 30% equity interest);

• (vi) prior to signing of the Equity Transfer Agreement, the entire registered capital of the Target Company having been paid up; a verification report in respect of the paid up registered capital of the Target Company issued by a PRC certified public accountant

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having been obtained; and the registration of the paid-up registered capital of the Target Company with the Administration for Industry and Commerce of the PRC having been completed;

• (vii) prior to signing of the Equity Transfer Agreement, the Vendor having procured the Target Company to sign a confirmation letter confirming its cooperation for the Capital Restructuring and the Acquisition and making undertakings and warranties in relation to its operation;

• (viii) the Vendor, the Purchaser and the Target Company having signed the Management Service Agreement on terms to the satisfaction of the Purchaser;

• (ix) prior to signing of the Equity Transfer Agreement, the Vendor having procured Petrochina Kunlun to sign a letter of undertaking confirming that Petrochina Kunlun (a) shall provide unconditional cooperation for all relevant procedures when it receives notice from the Vendor for the Capital Restructuring (including but not limited to signing all relevant documents and handling all relevant procedures of the Capital Restructuring); (b) shall change the managerial composition of the Target Company pursuant to the Management Service Agreement; (c) undertakes that, unless written consent has been given by the Purchaser, Petrochina Kunlun would not transfer its equity interest in the Target Company to any parties other than the Purchaser or any third parties designated by the Purchaser within three years upon Completion; (d) undertakes to give up its right of pre-emption on the Sale Equity with respect to the Acquisition; and (e) knows and agrees to the signing and the terms of the Management Service Agreement by the Purchaser, and agrees to cooperate with the parties to the Management Service Agreement for its implementation (if necessary);

• (x) the Vendor and the Purchaser having signed the deed of indemnity to provide indemnity on taxation;

• (xi) the Purchaser in its absolute discretion being satisfied with the due diligence review in respect of the due and proper establishment of the Target Company, its relevant assets, liabilities and operation, and all the information provided to the Purchaser for the execution of the Investment Agreement having no discrepancies and being satisfactory to the Purchaser;

• (xii) the Purchaser having obtained a valuation report issued by a registered valuer approved by the Purchaser showing the valuation of the Target Company to be approximately RMB73,122,000; in the event the valuation of the Target Company is different, the consideration payable by the Purchaser under the Investment Agreement in relation to the Acquisition shall be subject to further agreement to be entered into between the Vendor and the Purchaser;

• (xiii) the Target Company having obtained all necessary land use permits for all of its already built gas stations with the Target Company being the land use rights user and the holder of all land use permits;

• (xiv) the Target Company having paid all tax arising from its daily operation;

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• (xv) the Target Company having provided a guarantee in writing that the name used for its continued operation shall contain ‘‘中石油’’, and such use is in compliance with the provisions of the laws and regulations of the PRC;

• (xvi) the Vendor guarantees that the Target Company shall maintain at least a 3-month working capital in its bank account, the amount of which shall be agreed by the Purchaser;

• (xvii) for the investment projects (the details of which are set out in the section headed ‘‘Investment projects’’ in this announcement), the Vendor having provided the relevant documents to show that the internal rate of return of such investment projects can reach 25%; and

• (xviii) the Shareholders having approved the Investment Agreement and the transactions contemplated thereunder at the SGM and all the other consents and necessary actions (if necessary) having been obtained and completed in accordance with the Listing Rules.

All parties to the Investment Agreement shall use its best endeavours to procure the fulfilment of the conditions above. The Purchaser may in its absolute discretion at any time waive the conditions set out in (ii), (vii), (ix), (xi), (xiii), (xiv), (xv), (xvi) and (xvii) by notice in writing to the Vendor. Neither the Purchaser nor the Vendor may waive any of other conditions. If any of the above conditions have not been fulfilled or waived by the Purchaser (as the case may be) on or before the Long Stop Date, the Investment Agreement shall be terminated by unilateral notice from the Purchaser to the Vendor and neither party to the Investment Agreement shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the Investment Agreement and the obligation of the Vendor to return the earnest money to the Purchaser.

Investment projects

The Vendor has undertaken to grant an option to the Purchaser to request the Vendor to transfer the following investment projects owned by the Vendor to the Target Company at a consideration to be further agreed by the Vendor and the Purchaser:

Fuxing LNG Gas Station

The gas station is situated by the side of the provincial level main trunk road, Xinhesha First Class Highway, Hanchuan City, the PRC with a site area of 3,800 square metres and an usable area of 3,000 square metres. The gas station has a gas storage capacity of 60 cubic metres, and a daily gas filling capacity of 20,000 cubic metres. Its estimated construction cost shall be no more than RMB10,000,000. The Purchaser agreed to invest in the project in accordance with the proportion of its shareholding in the Target Company after the acquisition of the project by the Target Company.

Xiaotian LNG Gas Station

The gas station is situated by the side of Xiaohan Main Road, Xiaogan City, the PRC with a site area of 4,000 square metres and an usable area of 3,400 square metres. The gas station has a gas storage capacity of 80 cubic metres, and a daily gas filling capacity of 28,000 cubic metres. Its estimated construction cost shall be no more than RMB10,000,000. The

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Purchaser agreed to invest in the project in accordance with the proportion of its shareholding in the Target Company after the acquisition of the project by the Target Company.

Wuhan Airport Second Expressway (CNG Gas Filling Islands)

The three gas filling islands are situated in the service area of Tianhe Airport Expressway, Wuhan city, the PRC. The underground facilities including the pipelines for gas stations in the service area have been completed and are in operation. Its estimated construction cost shall be no more than RMB10,000,000. The Purchaser agreed to invest in the project in accordance with the proportion of its shareholding in the Target Company after the acquisition of the project by the Target Company.

CNG Transport Trucks

The Vendor shall enter into a contract with the Target Company in relation to the provision of CNG transportation service at a service fee which is more favourable than the market fee.

The consideration of the transfer of the rights to develop the above projects shall be subject to further agreement between the Vendor and the Purchaser.

Management of the Target Company

Pursuant to the Investment Agreement, the Purchaser, the Vendor and the Target Company shall enter into a Management Service Agreement upon the due fulfilment of the conditions precedent under the Investment Agreement and prior to signing of the Equity Transfer Agreement in relation to the operation and management of the Target Company.

Pursuant to the Management Service Agreement, the Vendor will be responsible for daily operation including project operation, project safety and technology for the projects and relationship management in the district of the Target Company. The Purchaser will be responsible for the financial management and deployment and replacement of important managerial staff (including but not limited to directors, supervisors, legal representative, general manager and department managers of the Target Company).

Pursuant to the Management Service Agreement, upon the Completion, the Vendor and the Purchaser shall procure the relevant parties and the Vendor undertakes to procure Petrochina Kunlun to change the managerial composition of the Target Company as follows: (i) if there will be a board of directors, the board of directors of the Target Company will comprise three directors, of which two directors (and the chairman of the board and the legal representative of the Target Company) will be nominated by the Purchaser and one director will be nominated by either the Vendor or Petrochina Kunlun; (ii) if there will not be a board of directors, the executive director of the Target Company shall be nominated by the Purchaser and the executive director shall also be the legal representative; (iii) the Target Company will not have a board of supervisors and will only have one supervisor which shall be nominated by the Purchaser; (iv) the Target Company will have one general manager which shall be nominated by the Purchaser; and (v) the financial controller or the responsible person for finance shall be nominated by the Purchaser.

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Capital investment in gas stations

Pursuant to the Investment Agreement, the Purchaser agreed to invest in two new gas stations located at Huanchuan road, Xiaogan and Huanrong Main Road, Xiaogan City, the PRC respectively to be constructed by the Target Company in accordance with the proportion of its shareholding in the Target Company. The total construction cost for each of the gas station shall be not more than RMB6,000,000. The Vendor guaranteed that the two new gas stations shall be in operation no later than 31 December 2016 (or such later date as agreed by the Vendor and the Purchaser).

Completion

Upon the due fulfilment of the conditions precedent under the Investment Agreement, the Vendor and the Purchaser shall execute the Equity Transfer Agreement for the transfer of the Sale Equity in conformity with the requirements of the relevant authorities.

To complete the registration and approval of the transfer of the Sale Equity with the relevant PRC government authorities, the Vendor and the Purchaser shall submit all required documents for the application of the approval of the transfer of the Sale Equity (including the Equity Transfer Agreement) to the Ministry of Commerce of the PRC within 10 Business Days after the due fulfillment of the conditions precedent under the Investment Agreement. After such approval has been obtained, the Vendor and the Purchaser shall submit the application for the registration of the transfer of the Sale Equity to the Administration for Industry and Commerce of the PRC within 10 Business Days after the approval of the transfer of the Sale Equity from the Ministry of Commerce of the PRC.

Upon Completion, the Target Company will become a 60% owned subsidiary of the Company and the financial statements of the Target Company will be consolidated into the financial statements of the Group.

INFORMATION ON THE VENDOR AND THE TARGET COMPANY

The Vendor is a company established in the PRC with limited liability. The Vendor is principally engaged in investment in petrochemical, liquefied gas and transport industries, sales of chemical products (not including dangerous goods), and sales and development of real estate. The Target Company was established in the PRC with limited liability on 30 October 2007. As at the date of this announcement, the Target Company is beneficially owned as to 30% by the Vendor and 70% by Petrochina Kunlun. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Petrochina Kunlun is an Independent Third Party. Upon the Capital Restructuring Completion, the Target Company will be beneficially owned as to 70% by the Vendor and 30% by Petrochina Kunlun. Upon Completion, the Target Company will be beneficially owned as to 60% by the Purchaser, 10% by the Vendor and 30% by Petrochina Kunlun.

The Target Company is principally engaged in procurement and sale of ethanol gasoline, diesel fuel, kerosene, lubricating oil, asphalt, petroleum and natural gas, liquefied petroleum gas, propane gas, material and equipment of petroleum (the above operations can only be operated by branch corporations), and provision of consultancy services in relation to the energy industry (subject to valid licenses or specific approval from the PRC authorities in relation to specific projects). The Target Company has two operating CNG gas stations, one

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primary CNG gas station under construction, which is expected to be in operation after April 2016 subject to relevant licences having been obtained from the relevant PRC authorities and two CNG gas stations to be constructed. All of the CNG gas stations are located in Xiaogan City, Hubei Province, the PRC. All four CNG gas stations are designed with a daily gas filling capacity of 15,000 cubic metres. The primary CNG gas station is designed with a daily gas filling capacity of 300,000 cubic metres, supplying not only the four selfowned CNG gas stations, but also the nearby CNG gas stations operated by third parties.

Financial information of the Target Company

Set out below is the summary of the net assets and total assets extracted from the unaudited financial statements of the Target Company for the period ended 31 December 2014 and 2015:

			As at	As at
			31 December	31 December
			2014	2015
			RMB’000	RMB’000
			(unaudited)	(unaudited)
Net	profit	before taxation	3,471	3,534
Net	profit	after taxation	2,603	2,650

As at 31 December 2015, the unaudited net assets of the Target Company amounted to approximately RMB46,009,000.

REASONS FOR THE ACQUISITION

The Group is principally engaged in the businesses of manufacturing and trading of electric cycles, trading and distribution of liquor and wine, provision of money lending services and investments in listed securities.

Developing clean energy and reducing the coal consumption have become the recent trend all over the world. The PRC is now the largest energy consuming country and its consumption volume keeps rising steadily, together with encouragement from the Chinese national policy ‘‘13th Five Year Plan’’, the Group seizes this opportunity to further expand and diversify its business portfolio by entering into the natural gas station business. The Board foresees a good prospect with high and sustainable growth in the new energy sector.

In consideration of the above, the Directors are of the view that the terms of the Investment Agreement are fair and reasonable and the Acquisition is in the interests of the Company and Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the relevant applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Acquisition exceeds 25% but less than 100%, the Acquisition constitutes a major transaction on the part of the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and Shareholders’ approval requirements.

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The SGM will be convened at which the Shareholders will consider, and, where appropriate, approve the Investment Agreement and the transactions contemplated thereunder.

As additional time is required to prepare the accountants’ report and the valuation report on the Target Company, a circular containing, among other matters, (i) further details of the Acquisition; (ii) the accountants’ report on the Target Company; (iii) the unaudited pro forma financial information on the Enlarged Group; (iv) the valuation report on the Target Company; and (v) a notice to convene the SGM will be despatched to the Shareholders on or before 29 April 2016.

WARNING

As the Completion is subject to the satisfaction and/or waiver (where applicable) of the conditions precedent set out in the Investment Agreement, the Acquisition may or may not proceed to completion. Shareholders and potential investors of the Company should exercise caution when dealing in the shares or any securities of the Company.

DEFINITIONS

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

‘‘Acquisition’’ the acquisition by the Purchaser of the Sale Equity from the Vendor pursuant to the terms and conditions of the Investment Agreement ‘‘Board’’ the board of Directors ‘‘Business Day’’ a day (excluding Saturday, Sunday or public holiday) in the PRC on which licensed banks are generally open for business ‘‘Capital Restructuring’’ the acquisition of 40% equity interest in the Target Company by the Vendor from Petrochina Kunlun ‘‘Capital Restructuring completion of the Capital Restructuring Completion’’ ‘‘CNG’’ compressed natural gas ‘‘Company’’ DeTai New Energy Group Limited, a company incorporated in Bermuda with limited liability whose issued Shares are listed on the main board of the Stock Exchange ‘‘Completion’’ completion of the Acquisition according to the terms and conditions of the Investment Agreement ‘‘Director(s)’’ the director(s) of the Company ‘‘Enlarged Group’’ the Group together with the Target Company upon completion of the Acquisition

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• ‘‘Equity Transfer Agreement’’ the equity transfer agreement to be entered into between the Vendor and the Purchaser in relation to the transfer of the Sale Equity upon the due fulfilment of all conditions precedent under the Investment Agreement

• ‘‘Framework Agreement’’

• the non-legally binding strategic cooperation framework agreement dated 3 November 2015 and entered into between the Vendor and the Company setting out the preliminary understanding in relation to the Acquisition

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘Hong Kong’’

• Hong Kong Special Administrative Region of the PRC

• ‘‘Independent Third Party(ies)’’

• third party(ies) independent of and not connected with the Company and its connected persons

• ‘‘Investment Agreement’’

• the investment agreement dated 1 March 2016 and entered into between the Vendor and the Purchaser in relation to the Acquisition

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

• ‘‘Long Stop Date’’ 31 August 2016, or such later date as the Vendor and the Purchaser may agree

• ‘‘Management Service the management service agreement to be entered into by the Agreement’’ Vendor, the Purchaser and the Target Company in relation to the operation and management of the Target Company upon the due fulfilment of the conditions precedent under the Investment Agreement and prior to signing of the Equity Transfer Agreement

• ‘‘New Business License’’ the new business license of the Target Company to be issued by the Administration for Industry and Commerce of the PRC after the Administration for Industry and Commerce of the PRC has approved the transfer of the Sale Equity

• ‘‘Petrochina Kunlun’’ 中石油昆侖燃氣有限公司 (Petrochina Kunlun Gas Co., Ltd*), a company established in the PRC with limited liability which as at the date of this announcement, directly holds 70% equity interest in the Target Company

• ‘‘PRC’’

• the People’s Republic of China, which for the purpose of this announcement excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

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• ‘‘Purchaser’’ Able Zone International Limited (興域國際有限公司), a company incorporated in Hong Kong with limited liability and an indirectly wholly-owned subsidiary of the Company

• ‘‘Sale Equity’’ 60% equity interest in the Target Company after the Capital Restructuring Completion

• ‘‘SGM’’

• the special general meeting of the Company to be held and convened for the purpose of considering and, if thought fit, approving the Investment Agreement and the transactions contemplated thereunder

• ‘‘Share(s)’’ ordinary share(s) of HK$0.05 each in the share capital of the Company

• ‘‘Shareholder(s)’’ the holder(s) of issued Share(s)

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Target Company’’ 孝感中石油昆侖燃氣有限公司 (Xiaogan Petrochina Kunlun Gas Co., Limited*), a company established in the PRC with limited liability, of which 30% and 70% of the equity interest are beneficially owned by the Vendor and Petrochina Kunlun respectively as at the date of this announcement

• ‘‘Vendor’’

• 湖北秦龍投資集團有限公司 (Hubei Qinlong Investment Group Limited*), a company established in the PRC with limited liability which as at the date of this announcement, directly holds 30% equity interest in the Target Company

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

• ‘‘RMB’’ Renminbi, the lawful currency for the time being of the PRC

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In this announcement, amounts in RMB are translated into HK$ on the basis of approximately RMB1 = HK$1.19 The conversion rate is for illustration purpose only and should not be taken as a representation that RMB could actually be converted into HK$ at such rate or at all.

• for identification purposes only

By order of the Board DeTai New Energy Group Limited Wong Hin Shek Chairman and Executive Director

Hong Kong, 1 March 2016

As at the date of this announcement, the executive Directors are Mr. Wong Hin Shek and Mr. Chi Chi Hung, Kenneth; the non-executive Director is Mr. Chui Kwong Kau; and the independent non-executive Directors are Mr. Chiu Wai On, Mr. Man Kwok Leung and Dr. Wong Yun Kuen.

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