SPT Energy Group Inc. — M&A Activity 2011

Sep 28, 2011

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 Hong Kong with limited liability) (Stock code: 570)

DISCLOSEABLE TRANSACTION ACQUISITION OF THE ENTIRE EQUITY INTEREST IN FOSHAN NANHAI YIKANG PHARMACEUTICAL CO., LTD. *

THE ACQUISITION

On 28 September 2011, the Purchaser and the Vendor entered into the Acquisition Agreement pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the entire equity interest of Nanhai Yikang at the Consideration of RMB6.8 million (equivalent to approximately HK$8.31 million). Further details of the Nanhai Yikang are set out in the section headed “Information on the Vendor and Nanhai Yikang” below.

Completion of the Acquisition is subject to fulfilment or waiver of certain conditions precedent as set out in the section headed “Conditions Precedent” below.

LISTING RULES IMPLICATIONS ON THE ACQUISITION

As the relevant percentage ratio calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirement under the Listing Rules.

On 28 September 2011, the Purchaser and the Vendor entered into the Acquisition Agreement pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the entire equity interest of Nanhai Yikang at the Consideration of RMB6.8 million (equivalent to approximately HK$8.31 million). Details of the Acquisition Agreement are set out below.

THE ACQUISITION AGREEMENT

Date

28 September 2011

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Parties

• Purchaser: 廣東環球制藥有限公司 (Guangdong Medi-World Pharmaceutical Co., Ltd*), an indirect wholly-owned subsidiary of the Company

Vendor: 佛山市雅信醫藥有限公司 (Foshan Yaxin Pharmaceutical Co., Ltd.*)

Assets to be acquired

The assets to be acquired represents 100% of the equity interest in Nanhai Yikang. Further information on Nanhai Yikang is set out in the section headed “Information on the Vendor and Nanhai Yikang” below.

Consideration

The Consideration is RMB6.8 million (equivalent to approximately HK$8.31 million). The Consideration shall be payable in cash by the Purchaser to the Vendor at completion of the Acquisition. The Consideration will be funded by internal resource of the Group.

The Consideration was determined after arm’s length negotiations between the Vendor and Purchaser with reference to the estimated market value of Nanhai Yikang, taking into account a number of factors including the financial position and performance of Nanhai Yikang, the prevailing price-earning indicators in the relevant industries, the potential earnings growth of Nanhai Yikang in the future and the reasons for, and benefits to be derived from, the Acquisition as described below.

Conditions precedent

Completion of the Acquisition is conditional upon the satisfaction or waiver by the Purchaser (as the case may be) of the following conditions:

• (i) the execution of the Acquisition Agreement and the Acquisition having been approved by the shareholders of the Vendor at a shareholders’ meeting;

• (ii) the execution of the Acquisition Agreement and the Acquisition having been approved by the board of directors of the Vendor;

• (iii) the Purchaser being satisfied with the results of the financial, business and legal due diligence in respect of Nanhai Yikang and such due diligence not having revealed that the representations, undertakings or warranties given by the Vendor under the Acquisition Agreement being materially breached, inaccurate or misleading;

• (iv) the Vendor having agreed to and procured the resignation of the existing directors and legal representative of Nanhai Yikang and agreed to the appointment of the directors and legal representative nominated by the Purchaser;

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• (v) the announcement(s) regarding the Acquisition Agreement having been released by the Company in accordance with the Listing Rules and the execution of the Acquisition Agreement having been approved by the Directors; and

• (vi) the obtaining of a notification of approval issued by the Administration of Industry and Commerce of Foshan City for the registration regarding the transfer of the entire equity interest in Nanhai Yikang to the Purchaser and the appointment of the persons nominated by the Purchaser as director(s) and legal representative(s) of Nanhai Yikang.

If any of the aforementioned conditions precedent is not fulfilled or waived by the Purchaser within three months from the date of the Acquisition Agreement, or such later date as may be agreed in writing between the Vendor and the Purchaser, the Acquisition Agreement shall lapse and be of no further effect.

Completion

Completion of the Acquisition Agreement shall take place on the third Business Day following the date of fulfilment or waiver (as the case may be) of all the conditions precedent, or such other day as agreed by the Vendor and the Purchaser.

Upon completion of the Acquisition, Nanhai Yikang will become an indirect wholly-owned subsidiary of the Company and its financial results and position will be consolidated into the Group’s financial statements.

INFORMATION ON THE VENDOR AND NANHAI YIKANG

The Vendor is the legal and beneficial owner of the entire equity interest in Nanhai Yikang. The Vendor is principally engaged in the sale of Chinese patent medicine, chemical medicine, antibiotic medicine, biochemical medicine, biological products (other than preventive biochemical medicine), protein anabolic agents, peptide hormones. To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Vendor is a third party independent of the Company and its connected persons.

Nanhai Yikang is principally engaged in wholesale of Chinese herbal medicine tablets, Chinese patent medicine, chemical medicine, antibiotic medicine, biochemical medicine, biological products (other than vaccine), protein anabolic agents, peptide hormones; wholesale of medical devices; wholesale of health food; wholesale and retail of pre-packaged foodstuffs; sale of disinfection supplies, cosmetics, daily necessities and health appliances.

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Based on the management accounts of Nanhai Yikang which have been prepared in accordance with the PRC accounting standards:

• (i) Nanhai Yikang recorded profit before tax of approximately RMB407,930 (equivalent to approximately HK$498,490) and approximately RMB457,401 (equivalent to approximately HK$558,944) for the two years ended 31 December 2010 respectively;

• (ii) Nanhai Yikang recorded profit after tax of approximately RMB292,331 (equivalent to approximately HK$357,228) and RMB343,051 (equivalent to approximately HK$419,208) for the two years ended 31 December 2010 respectively; and

• (iii) Nanhai Yikang recorded profit before and after tax for the six months ended 30 June 2011 of approximately RMB386,917 (equivalent to approximately HK$472,813) and RMB289,566 (equivalent to approximately HK$353,850), respectively.

As at 31 December 2010, the unaudited net assets value of Nanhai Yikang was approximately RMB1,013,568 (equivalent to approximately HK$1,238,580).

REASONS FOR THE ACQUISITION

The principal activity of the Company is investment holding and the principal activities of its principal subsidiaries are research and development, production and sale of pharmaceutical products in the PRC.

The Board considers that the Acquisition would allow the Company to make use of Nanhai Yikang as an integrated sales platform for the Company’s major products manufactured by its various subsidiaries. As one of the Group’s strategies is to establish the integrated sales platform in order to lower the selling and administrative costs through economies of scale, the Board believes that the Acquisition would create synergistic benefits to the Group and may enable the Company to further improve its financial performance.

The Directors consider the terms of the Acquisition Agreement to be fair and reasonable so far as the Shareholders are concerned and that the Acquisition is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS ON THE ACQUISITION

As the relevant percentage ratio calculated pursuant to Rule 14.07 of the Listing Rules in respect of the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirement under the Listing Rules.

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DEFINITIONS

Unless the context requires otherwise, the following expressions shall have the following meanings in this announcement:

“Acquisition”	the proposed acquisition by the Purchaser of the entire equity interest of
	Nanhai Yikang pursuant to the Acquisition Agreement
“Acquisition Agreement”	the equity transfer agreement dated 28 September 2011 entered into
	between the Purchaser and the Vendor in relation to the Acquisition
“Board”	the board of Directors
“Business Day”	a day (other than a Saturday, Sunday or public holiday) on which banks
	are open for business in the PRC
“Company”	Winteam Pharmaceutical Group Limited (盈天醫藥集團有限公司), a
	company incorporated in Hong Kong with limited liability, the issued
	shares of which are listed on the Main Board of the Stock Exchange
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the consideration of RMB6.8 million (equivalent to approximately
	HK$8.31 million) payable by the Purchaser for the Acquisition
“Director(s)”	director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
	(as amended from time to time)
“Nanhai Yikang”	佛山市南海益康醫藥有限公司(Foshan Nanhai Yikang Pharmaceutical
	Co., Ltd.*), a company incorporated in the PRC with limited liability
	and a wholly-owned subsidiary of the Vendor as at the date of this
	announcement
“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
“Purchaser”	廣東環球制藥有限公司(Guangdong Medi-World Pharmaceutical Co.,
	Ltd.*), a company established in the PRC with limited liability and an
	indirect wholly-owned subsidiary of the Company

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“Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Vendor” 佛山市雅信醫藥有限公司 (Foshan Yaxin Pharmaceutical Co., Ltd.*), a company incorporated in the PRC with limited liability “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For illustration purposes, all amounts denominated in RMB in this announcement have been translated into HK$ at the exchange rate of RMB1 = HK$1.222. They do not form any representations or guarantees of any person that the aforesaid currencies could be, have been, or will be converted into the other currency at the exchange rate used in this announcement.

By Order of the Board Winteam Pharmaceutical Group Limited DU Richeng Chairman

Hong Kong, 28 September 2011

As at the date of this announcement, the Board comprise nine Directors, of which Mr. DU Richeng is a non-executive Director; Mr. XU Tiefeng, Mr. YANG Bin, Mr. SITU Min and Mr. LI Songquan are executive Directors; and Mr. LO Wing Yat, Mr. PANG Fu Keung, Mr. WANG Bo and Mr. ZHANG Jianhui are independent non-executive Directors.

• The English translation is for identification purpose only

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