Value Convergence Holdings Limited — Capital/Financing Update 2024

Aug 21, 2024

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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Value Convergence Holdings Limited

(Incorporated in Hong Kong with limited liability) Website: http://www.vcgroup.com.hk

(Stock Code: 821)

SUPPLEMENTAL ANNOUNCEMENT

DISCLOSEABLE TRANSACTION IN RELATION TO ACQUISITION OF 30% EQUITY INTEREST IN TARGET COMPANY

Reference is made to the announcement of Value Convergence Holdings Limited (the “ Company ”) dated 26 July 2024 (the “ Announcement ”) in relation to the acquisition of 30% equity interest in Hainan Zhongtian Jiahe Industrial Co., Ltd.* Unless herein defined otherwise, capitalised terms used in this announcement shall have the same meanings as those defined in the Announcement. The Company would like to provide further information in relation to the Acquisition.

AMENDMENTS OF ARTICLES OF ASSOCIATION

As disclosed in the Announcement, after the completion of the transfer of the Sale Interest, the articles of association of the Target Company will be amended. Prior to the Completion, the Target Company was wholly owned by the Vendor. To accommodate the change in corporate structure, it is necessary to amend the articles of association of the Target Company. These amendments will include, among other things, the names of the shareholders, the deadline and portions of the paid-up capital for the Vendor and the Purchaser, the composition of the board, and the rights of the shareholders. The total registered capital of the Target Company of RMB80 million shall remain unchanged after the revision of the articles of association of the Target Company. The revision of the articles of association has been completed on 14 August 2024.

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FURTHER REASONS FOR THE ACQUISITION

In addition to the reasons for and benefits of the Acquisition as disclosed in the Announcement, the Company would further elaborate the reasons and benefits of the Acquisition.

The acquisition aligns with the Group’s long-term strategic goals of sustainability and environmental stewardship. The natural gas industry, known for its relatively lower carbon footprint compared to other fossil fuels, offers a pathway for the Group to engage in greener energy solutions. This shift not only supports global efforts to combat climate change but also meets the increasing demand for sustainable energy sources from environmentally conscious consumers and investors. Therefore, the Acquisition not only diversifies the Group’s business portfolio but also enhances its corporate social responsibility profile.

Entering the natural gas industry by way of the Acquisition presents a significant growth opportunity due to the rising global demand for energy, particularly in fast-growing economies. The strategic acquisition allows the Group to capitalize on this demand, especially as natural gas is increasingly viewed as a transition fuel in the global shift towards renewable energy. By establishing a foothold in this industry through the Acquisition, the Group can tap into new markets which may provide a chance for the Group in driving long-term growth amidst the volatility of the financial services sector.

Given (i) the reasons as set out in the section headed “ REASONS FOR AND BENEFITS OF THE ACQUISITION ” of the Announcement; (ii) the consideration of the Acquisition is minimal; (iii) no further capital contribution will be made by the Purchaser in 2024; and (iv) the actual capital contribution amount in the future will be based on the business development situation of the Target Company, the Company considers that the total consideration (including the Consideration of RMB9,990 and the registered capital of RMB24 million) for the Acquisition is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

REGISTERED CAPITAL

Upon the Completion and after the revision of the articles of association of the Target Company, the Purchaser will hold a 30% equity interest in the Target Company. As a shareholder, the Purchaser is obligated to contribute its portion of the unpaid registered capital in the Target Company, which is 30% of RMB80 million, amounting to RMB24 million (equivalent to approximately HK$25,764,000). Based on the preliminary business plan of the Target Company and the anticipated capital requirements of the Target Company as below, the Purchaser expects to contribute RMB16.5 million in 2025 and RMB7.5 million in 2026.

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2024

Approximately RMB0.8 million is required for the overhead expenses and the preparation of the development of LNG trading business.

As agreed with the Vendor, being the substantial shareholder of the Target Company, the capital requirement in 2024 will be supported by the Vendor and the Purchaser will not contribute the registered capital at this stage.

2025

Approximately RMB5 million is required for overhead and storage facility rental expenses. Around RMB50 million will be utilised for the international trading of LNG, LPG, petroleum coke, and asphalt, etc.

The Vendor and the Purchaser will contribute to the registered capital according to their respective shareholding proportions to meet the funding needs at this stage.

2026

Approximately RMB7 million is required for overhead and storage facility rental expenses.

Approximately RMB100 million will be utilised for the international trading of LNG, LPG, petroleum coke, and asphalt, etc. This RMB100 million will be sourced partly from (i) the paid-up capital in 2025, (ii) the cash inflow generated from operations and (iii) the balance of the unpaid registered capital of the Target Company of approximately RMB25 million.

The Vendor and the Purchaser will contribute to the balance of the registered capital according to their respective shareholding proportions to satisfy the funding needs at this stage.

The Company will monitor the business development of the Target Company and adjust its contributions accordingly. It is anticipated that the source of funds of the Purchaser to contribute to the registered capital of the Target Company will be financed by the Group’s internal resources, including approximately HK$155.1 million in financial assets, as detailed in the 2023 annual report of the Company.

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The Consideration has been fully paid on 19 August 2024. Upon the Completion, the Purchaser is entitled to appoint one director and one supervisor to monitor the overall business situation of the Target Company. The Target Company will also update the Purchaser in relation to its business performance periodically including operational updates, and progress on strategic initiatives and financial performance. The Company will monitor the actual business development and funding needs of the Target Company and will make the capital contribution accordingly.

By order of the Board of Value Convergence Holdings Limited Fu Yiu Man, Peter Chairman & Executive Director

Hong Kong. 21 August 2024

As at the date of this announcement, the Board comprises four executive Directors, namely, Mr. Fu Yiu Man, Peter (Chairman), Mr. Wong Kam Fat, Tony (Vice Chairman), Mr. Lin Hoi Kwong, Aristo and Ms. Li Cindy Chen; and three independent non-executive Directors, namely, Mr. Wong Chung Kin, Quentin, Mr. Siu Miu Man, Simon, MH and Mr. Au Tin Fung, Edmund.

• For identification purposes only

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